Mortgage Foreclosure Rescue – Fraudulent Rescue Plans Help No One
In my daily practice I am approached by homeowners with a sad story to tell. All too often I hear of a company, which offered to help a struggling homeowner save their home; but instead left the homeowner high and dry – out of cash and feeling out of options.
Some homeowners are lucky enough to see though the smoke and mirrors presented by these Rescue Companies and they seek assistance of a qualified attorney shortly before or after entering into a deal. Other homeowners, unfortunately, only seek out the help of a qualified attorney when they realize that they have been taken for a ride by the Rescue Company and now are either facing the Foreclosure Auction Sale of their property or are very close to an Eviction, under a court issued Writ of Possession from the Sheriff.
Don’t think that because you are at this stage, there is nothing to be done for you and your property. There is hope, but the options at this point are usually more difficult to maneuver and also more expensive due to all the clean-up work involved. When a judicial proceeding has gone unattended for far too long, undoing the damage is easier said than done. If you are already at this point – call an attorney, schedule a consultation and act quick to save your property. If your property is in Florida; then The Florida Bar has many options to assist you, call them at (850) 561-5600. If your property is in another state, then contact your local Attorney General’s Office and your State Bar Association for assistance. There are many qualified attorneys out there, just waiting to help get you back on the right foot.
If you are in the process of contracting a Rescue or Relief Company, my advise to you is don’t. Call a local attorney or the State Bar Association for a referral to a local licensed attorney who may be able to assist you with your case. Most of these companies will advertise on your local news or radio station, will send you direct mail; or may even be recommended by a friend, family member, co-worker or acquaintance that is already using them. Do not be too trusting, most companies of this type feed off of these types of referrals and relationships; do your research and become informed – ask the right questions, no matter who recommended them to you.
If you still wish to go forth with the Rescue or Relief Company, here are some helpful tips to make sure that you are not another victim:
1. NO UPFRONT FEES – many states, such as Florida, do not allow these companies to collect any upfront fees in order to negotiate or handle your Modification or Negotiations. This is in order to prevent the practice of these companies closing shop, taking your money and doing no work on your case. If they are asking you for upfront payments be weary.
The exception in Florida is that attorney’s may request upfront fees, as attorney’s fees, to process your case. Unfortunately, this has created a trend where many companies advertise that they are “attorney-owned”, “attorney-backed” or that they have an “attorney on staff”. Do not be mislead! These are all violations of Rules governing attorney advertising practices. Attorneys and Non-Attorneys cannot work in this manner; therefore, unless are being asked for upfront fees by an Attorney Law Firm, this is a violation. If you are unsure if the office that you are visiting is a law firm, then call your State Bar Association, they can let you know this matter very easily and are very helpful to consumers. This matter has become such a widespread epidemic that even attorneys are under strict scrutiny with the Bar Associations.
2. FORECLOSURE DEFENSE – in all states attorneys and law firms can offer Foreclosure Defense to its clients facing Foreclosure, but the trick here is – are you really being represented by a licensed attorney. In my practice I have come across clients who “thought” they were being represented by an attorney, or even worse were actively “told” that they were being represented by an attorney, but in reality were not I have seen mortgage brokers practicing law, real estate agents, paralegals and legal assistants, attorneys from other countries not familiar with our laws, nor licensed to practice in this country and the worst of all – disbarred attorneys. All of these categories of people can present you with a very credible story and with documents that appear to satisfy the court requirements, but unfortunately these people cannot represent you adequately. What usually happens in these scenarios is that they file some documents, or non at all; take your money and let you be foreclosed on by the bank in several months; usually 8-10. By the time you realize that you have been scammed, your home is probably close to or at a Foreclosure Auction date. Remember, if you are being represented by an attorney – he or she should be signing all your court documents on your behalf, under their license number; also, he or she should be attending all hearings on the motions filed for you in front of the Judge.
Before you sign a retainer with a company stating that they offer Foreclosure Defense, here are some questions to ask: a. Request to have an interview with the attorney. (If you cannot, then that’s your clue to run); b. If you meet the attorney, ask where he or she got their degree, how long they have practiced in the state, what other types of law they practice and what they can do for your case. Most importantly ask them for a business card. Then, go online to research them, there you can find if they are in good standing, what their background is and most importantly if they have ever had any disciplinary complaints filed against them.
3. SHORT SALES AND LEASE-OPTION AGREEMENTS – the new foreclosure rescue fraud trend is the Short Sale Financing Lease-Option deal. Before we even cover this scam, let’s get something clear – if you are in Foreclosure you cannot under any circumstance recover your home under a Short-Sale or by virtue of a Rental Lease of the property including an Option to Purchase clause. This type of scenario is Mortgage Fraud and illegal principal reduction of your foreclosure debt. Therefore, if you are being given this scenario by a Mortgage Foreclosure Rescue Company or a Private Investor, be very very careful and do not relinquish any Upfront fees for this type of program. It’s a scam!
Here’s how it works – Homeowner enters into a Short-Sale contract with an individual purchaser, provided by the Foreclosure Rescue Company (this person is often an Investor). This Person will get the bank to Short-Sale the property for less than the amount owned, for this service you may be required to give some deposit money. They will claim that these deposit amounts will be credited to your Rental Lease and Option to Purchase Contract on your property. I have seen these deposits grow to as much as $15,000.00 when the transaction is done. Then they will negotiate with your bank, buy your property and give you Lease. In the best case scenario the relief company might actually do the transaction, if the investor wants to buy the home. In the worst scenario, they take your money and no Short-Sale ever occurs.
If the Short-Sale goes through, then they may either put you in a Lease with terms that you cannot meet, and payments that are so high that would trigger an immediate default and eviction; or because they know that renting you back your home is a scam – they might try to get you into another home, of a previous homeowner under the plan, with the promise that they will soon let you move back to your home when the hold period expires, so that the bank wont suspect anything fraudulent. Truth is, they will probably sell your home to make back their money quick, keep your deposit funds and not let you live in your home. They know that you won’t go to the authorities because they have just involved you in a fraudulent transaction and won’t report them for fear that your involvement might be revealed also.
THE LEASE-OPTION BUY BACK SHORT SALE IS A SCAM. Don’t fall prey to any version of it; consult with an attorney before you take any affirmative steps on this type of transaction.
4. QUIT CLAIM DEED, FORECLOSURE WORKOUT – this scam works differently from the Short Sale scam. Here the company or investor offers to let you Quit Claim Deed the property to them, so that they may defend on your foreclosure, stall the judicial proceedings and negotiate a Modification on your behalf. This is an all-out lie. For starters, transferring your property to another person, entity or company name in title causes the loan under the mortgage to automatically default and accelerate into a full repayment of the mortgage amount. This is the same as a defaulted Foreclosure Loan. Therefore, transferring the property will put you in a worse position than you were before, not a better one.
Additionally, only you can negotiate with the bank – this other person has no part to your mortgage loan, they cannot negotiate and they cannot obtain a beneficial Modification for you; only you or your Real Estate Attorney can do this. Also, when you give this person title to your property there is no recourse for you. You have given away your right to your home; just the same as if you had sold it to a new homeowner – there is no way to recover that home back unless that person is willing to sign it back to you. What I often see is that the person who scammed the homeowner will evict the homeowner, negotiate the defaulted loan with the bank to keep the home at a substantially reduced price and sometimes will even be so bold as to rent out your home for profit.
IF YOU ARE IN FORECLOSURE, DO NOT FALL VICTIM TO MORTGAGE FORECLOSURE RESCUE OR MORTGAGE FORECLOSURE RELIEF FRAUD. KEEP AN OPEN LINE OF COMMUNICATION WITH YOUR BANK, REQUEST A MODIFICATION; CONSULT WITH AN ATTORNEY AND BE INFORMED. THERE ARE OPTIONS OUT THERE TO HELP YOU. DO NOT DESPAIR.
For More information on Foreclosure Rescue Fraud, visit the following government sites:
Federal Trade Commission: http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre42.shtm
Florida Bar: http://www.preventloanscams.org/
Nerlin Ontivero, Esq is an attorney in Florida, who works in the area of Real Property Law and Community Association Law. Her firm, The Law Offices of Nerlin Ontivero, PA, may be reached at http://www.ontiverolaw.com or by phone at 954-272-6116. This article is for informational purposes only and should not to be interpreted as legal advise.