By Gerri Elder
Disaster and crisis can bring out the best in some people, with stories of courage and heroism warming our hearts in the aftermath. However, there are few heroes apparent in the foreclosure crisis. Instead, this nationwide financial disaster has brought a new breed of scam artists out of the woodwork.
While some homeowners facing foreclosure may have recklessly over-extended themselves financially, many others were deceived by predatory mortgage brokers and pushed into adjustable-rate home loans that they now cannot afford.
During the housing market explosion, many people failed to realize that what goes up, must come down. When the housing market fell, it came down with a boom that few ever expected.
These unfortunate situations have put many families in financial crisis and have led to a wave of mortgage foreclosures across the country. People of all income levels have lost, and continue to lose their homes to foreclosure. This situation is not isolated to any one segment of the population - everyone is being hit hard.
Many homeowners, desperate to save their homes from foreclosure, are now falling prey to foreclosure scams.
A recent article in the Washington Independent explains that most foreclosure rescue scams involve the homeowner being approached by someone willing to "help" them out by buying the property in order to save it from foreclosure.
These supposedly helpful buyers collect rent from the homeowners after the sale and generally promise to sell the home back to the homeowner at some point in the future. Instead, these scammers generally strip the home of any equity and then skip out on the mortgage payments. The distressed homeowners are then faced with eviction and the permanent loss of their homes.
Homeowners in many of the areas that were courted aggressively by subprime lenders are now falling prey to these foreclosure rescue scammers.
After being victimized by predatory lenders, these homeowners have become desperate for assistance. Since the credit market has dried up and mortgage loans are more difficult to get, many are trapped in these bad loans and panic when the foreclosure process begins.
This is the point at which the foreclosure rescue scammers attempt to step in and "save the day."
According to some homeowners who have been the target of foreclosure rescue scams, foreclosure "helpers" are relentless in pursuing victims. They reportedly call several times daily, leave notes in the homeowners' mailboxes and put fliers on car windshields. For one woman, even telling these callers that she is an unemployed single mother did not curtail their efforts.
The Star Tribune reported that foreclosure rescue scam operations have not gone unnoticed by Minnesota Attorney General Lori Swanson. Swanson has filed two new lawsuits against firms that have charged homeowners cash upfront for supposed foreclosure assistance. This practice is illegal in Minnesota.
Florida-based Law & Associates is one of the two "foreclosure counselors" that Swanson has recently sued. The lawsuit against Law & Associates alleges that the company promises to help homeowners who are facing foreclosure, demands money from them and then does nothing to help save the homes from foreclosure.
A lawsuit with the same allegations has been filed against New Jersey-based Davis Foreclosure Assistance.
These lawsuits mark the 9th and 10th time this year that Swanson has taken action against foreclosure rescue operations.
Consumer advocates say that they know of no instance in which a foreclosure rescue operation has helped a homeowner. Any limited services that are provided by these high-cost operations are no more than what credit counselors who work for nonprofit agencies routinely provide for free. These foreclosure rescue operations are not operated by bankruptcy, and cannot offer legal assistance or legitimate foreclosure help to clients.