Beware of The Wolves
Posted by Mark Martella on Wed, Dec 19, 2012 @ 3:15 PM
In every economic downturn, the imaginative criminals in society look for ways to make a fast buck by taking advantage of the most desperate and vulnerable in our community, like wolves looking for the lost lamb. This downturn has been no exception.
I can remember my first encounter with this phenomenon when I was a young attorney back in the early Nineties in New Jersey. For those of you too young to remember, the country was going through a downturn with high interest rates, lenders not lending, people facing foreclosure and looking to refinance their mortgages, and get loans to cover their bills. This was also before the internet had taken off, so the old fashioned media was still a good mechanism to hunt for victims. This particular scam started with an inexpensive small ad in the classified section of the newspaper, offering a low interest loan, almost guaranteed for just an application fee of $299. Well, as you guessed, only about 1 in 100 applicants got a loan. The perpetrators of this scam had a room with 25 college students taking calls 24 hours a day. They would bring in $10-20,000 a day. They were eventually prosecuted by the Postal Service for mail fraud but the money was long gone for the victims.
There are new scams today that the Federal Trade Commission is warning consumers about, but all with similar themes as above. They all use some headline to grab attention like, “Stop Foreclosure Now”, “Get a loan modification” or “100% Money Back Guarantee.” Once they get the consumer’s attention, they then have various ways to defraud them out of their money.
One scam offers phony counseling or assistance. They charge a fee and say that they can negotiate a deal with your lender to reduce your mortgage payment and save your home. They even are so bold to tell the consumer not to contact their lender or attorney! After the consumer has paid the fee, they stop returning calls and are gone with the money.
A second scam that I have seen is the “Rent-to-Buy” scheme if someone has equity in their home but can’t afford the payment. The con-artist, gets the owner to transfer title to him and says he will lease it back, and “take care of everything else with the mortgage company”. Instead, they take the rent money, raise the rent to a point where they homeowner can’t afford it, evict them and then sell the house and take the equity. If the house is upside down, then they just re-rent it because they know it can take two years before the bank completes the foreclosure, and they can pocket the rent in the meantime.
In another arena, while not illegal, in my humble opinion I find it patently unfair, if not unconscionable, bankruptcy trustees sell their interest on upside down homes to investors who will pay $2,500 to $5,000 to purchase an interest in someone who has filed bankruptcy’s home. Again, because lenders can take one to three years to foreclose, the investor will make its money back in rent and not pay the mortgage, taxes or insurance. The losers are the debtor homeowner who will be evicted from their home, the lender who will not be getting mortgage payments, the county who will not be receiving the tax revenue, and the neighbors who will have a neighboring property poorly maintained, and further hurting their properties fair market value. While not illegal, it is a manipulation of the law caused by the financial crisis to the benefit of the waiting wolves.
Remember the simple saying that we all know: “If it sounds too good to be true, it probably is.” If you think you have been the victim of scam or are suspicious of an offer, you can contact our office for assistance and report the scam to the FTC at www.ftc.gov or call them 1-877-FTC-HELP.
Contact a Professional Foreclosure Attorney
If you have a situation as we described in this article and have questions or concerns, please do not hesitate to contact us to answer your foreclosure law questions.