Monday, Sept 22, 2008
Angela Carter’s family has lived for 46 years in the same small two-story home in Chicago, perhaps a 15-minute ride from Barack Obama’s adopted Hyde Park neighborhood. But today a piece of paper says someone else owns the property, and a judge will soon decide if Carter and her mom get to stay in her home.
The reason Carter, 55, is facing eviction, she says, is that she fell for a high-stakes scam that’s sweeping the nation, preying on the 1 in 11 consumers who are either behind on their mortgage payments or already in foreclosure.
Interviews with legal aid offices and law enforcement officials around the nation indicate the problem of so-called “foreclosure rescue scams” has spread like wildfire, neatly paralleling the downturn in the mortgage market.
(Article continues below)
The problem is so bad that in Portland, Ore., local police now automatically send a letter to homeowners who enter foreclosure warning them that they will be inundated with shady offers of help. In one case in Maryland, a single firm is accused of bilking hundreds of residents out of their homes and stealing $60 million in equity. Similar large-scale scams are happening elsewhere; in fact, foreclosure fraud is so common that it’s exacerbating the nationwide housing slump, adding to the ranks of distressed homes that pull down the housing market in general, according to some experts.
There are many variations on the scams, but they all boil down to two types. There’s a simple fee-based racket, in which the criminal offers to help the homeowner stave off foreclosure, collects an up-front fee and then disappears. But the more lucrative scheme involves seducing homeowners into complicated transactions that allow the middlemen to steal equity in the house or walk away from the closing table after netting thousands in phony payouts.
How serious is the problem? The proliferation of roadside signs with entreaties like “We buy houses” and late night infomercials promising easy real estate riches offers a clue.
“There is a booming business in selling information on foreclosures,” said Melissa Huelsman, a Seattle-based lawyer who represents victims in predatory lending cases. “There are whole companies that do that and little else. That gives you an idea how big this is.”
This article was posted: Monday, September 22, 2008 at 11:33 am