The Boston Herald Reports: “Attorney General Martha Coakley today imposed emergency regulations to crack down on ‘foreclosure rescue’ schemers who have been accused of cheating homeowners out of their properties.”
“The regulations, coming amid a surge of foreclosures across the state, would bar so-called ‘rescuers’ from making profits on homeowners struggling to pay their sky-high mortgage payments.”
The attorney general says she knows of no case in which a deed was returned after a successful bailout.
What are the different types of foreclosure schemes out there? Here's a video from KiroTV in Seattle in a recent article titled Hazards Of Foreclosure Rescues explaining the different types of scams to look out for.
From the National Consumer Law Center in Boston: What is a Foreclosure “Rescue” Scam?
Foreclosure rescue scams most often appear in one of three varieties. The first might be called “phantom help,” where the “rescuer” charges outrageous fees either for light-duty phone calls and paperwork the homeowner could have easily done or makes a promise of additional robust representation that never occurs. In either event the homeowner is usually left without enough assistance to save the home, and with little or no time left to prevent the loss of the home or seek other assistance.
A second variety of the scam is the “bailout” that never quite works. This scenario includes various schemes under which the homeowner surrenders title to the house in the belief that she is entering a deal where she will be able to remain as a renter, then repurchase the home over the next few years. Homeowners are sometimes told that surrendering title is necessary so that someone with a better credit rating can secure new financing to prevent the loss of the home. Beware! The terms of these deals are almost invariably so bad that the buyback becomes impossible, the homeowner permanently loses possession, and the “rescuers” walk off with all or most of the home’s equity.
The third variety is a bait-and-switch where the homeowner does not realize she is surrendering ownership of the house in exchange for a “rescue.” Many homeowners later insist that they believed they were only signing documents for a new loan to make the mortgage
Update: There is also a video available from channel 5 on this news event.
Friday, June 1, 2007