Scammers descend on homeowners facing foreclosure

http://www.businessweek.com/magazine/content/07_26/b4040041.htm

The Foreclosure "Rescue" Racket
As soon as a lender raises the red flag, scammers descend. Here's how they wind up holding the deed


For Darrell Sa'lley, the past two years have been a case of bad to worse. After being diagnosed with cancer, the Virginia Beach (Va.) resident underwent two surgeries that put him out of work for more than a year—and months behind on his mortgage. Fearful he would lose his home, Sa'lley perked up when he heard a spot on a Christian radio station from a local firm, D&D Home Loans Corp., promising to help homeowners facing foreclosure and other financial crises. "All of the things that the ad was offering I really needed," the 37-year-old recalls.


After meeting with D&D owner W. Michael Robinson, who quoted from Scripture during the visit, Sa'lley signed a stack of documents for what he thought was an advance loan on a refinancing that Robinson had arranged with a private investor. Sa'lley now says he unwittingly signed over the deed to his home to Robinson's stepson, giving him claim to the $230,000 in equity Sa'lley had built up over the years. "I felt as if the world had opened up and I was devoured," says Sa'lley, one of three D&D clients who has filed a civil suit against the company. Robinson says he had no financial interest in the deal and contends his stepson only took the deed after Sa'lley was unable to repay the advance. "I was more like a white knight who stepped up to assist someone, and now I'm being smeared," says Robinson, whose stepson has since given ownership of the home back to Sa'lley.

Situations like Sa'lley's are increasingly common. With the housing bust in full force and millions of homeowners facing foreclosure, the sketchier side of the real estate industry is coming into view. Although there are plenty of legitimate, mostly nonprofit, operations that help distressed homeowners, there's also a growing army of deceptive outfits that prey on and profit from this troubled group. While statistics on these schemes are hard to come by, law enforcement authorities confirm that foreclosure scams are rising sharply—so sharply that more than 10 states have recently enacted laws aimed at protecting homeowners.

MILLIONS OF TARGETS
In most states, it's not illegal for one person to persuade another to sign his or her home over. And proving it was done through deceptive means can be tricky if the promises to help the owner were made verbally, as is often the case. So many victims have little recourse except through civil proceedings. But with the number of foreclosures estimated to soar to more than 2 million over the next couple of years, more and more policymakers are scrambling to keep the situation from turning into an epidemic by enacting tougher penalties for such practices. Massachusetts Governor Deval Patrick, a Democrat, filed legislation on June 11 that would criminalize abusive "foreclosure rescue" schemes. "In the coming months we're going to see a growing population that can be preyed upon by these schemes," says Massachusetts Attorney General Martha Coakley, who on June 1 added emergency provisions to the state's consumer laws to prohibit foreclosure rescues in which the so-called rescuer profits from the transaction.

While the schemes vary in their mechanics, all follow a similar pattern. An individual or group, in the guise of helping a homeowner avoid losing his or her house, persuades the owner to transfer the title to the rescuer or another designated buyer. The practice has become easier with the rise of Web sites like PreForeclosure.com and All-foreclosure.com, which give subscribers listings as soon as mortgage lenders file a "notice of trustee sale" with the courts, the first step in the foreclosure process. Such sites, which compile public records to provide legitimate leads for investors in distressed properties, as well as services for homeowners, also give unscrupulous individuals direct access to potential targets.

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while talking about money is automatically suspect.

The middle class/working poor is always fair game in this Bushie world of ours.

Maybe I can rationalize it by saying I am only helping him get to the other side sooner. Isn't that what they want?