DREAMS FORECLOSED: The Rampant Theft of Americans' Homes

DREAMS FORECLOSED: The Rampant Theft of Americans’ Homes Through Equity-stripping Foreclosure “Rescue” Scams
PART 2: THE HIDING-IN-PLAIN-SIGHT PANDEMIC
This report goes into some detail in this section, including stories of similar scams from
several states, for three reasons:
-- We want to definitively prove that a common rebuttal to news of consumer scams,
that “it’s just a few bad apples doing it,” is categorically beyond rational claim when it comes
to foreclosure “rescue” scams.
-- We want the public and the news media to be aware of the many different tactics
these scammers employ to cash in other people's home equity.
-- We also want to show, through others' experience, the difficulties of fighting these
scams at present, in order to bolster the case for reform that we’ll make later in this report.
In December 2004, after hearing many reports of a new spike in foreclosure “rescue”
scams, National Consumer Law Center advocates asked members of the consumer law and
consumer advocacy communities if they’d been seeing the problem. Within two business days
of our initial inquiry, often-detailed responses from fifteen states and the District of Columbia
poured in. A few others came later.
What follows is a state-by-state rundown of what NCLC’s investigators heard as a
result of this single round of inquiries. We undoubtedly could have uncovered many more
problems in many more states with further probing. Widespread consumer abuse like this scam
often hides in plain sight because consumers don’t report it and because the relatively few
counselors, attorneys and law enforcement officials who tackle these problems mostly do so
case-by-case, with limited communication between them. So no one’s connecting the dots.
Please note that many of these stories represent fluid situations, and though we tried to
give the latest information a few have likely been evolving since these words were written in
Spring 2005.
l. CALIFORNIA:
"An explosion...like I've never seen before"
“2945. (a) The Legislature finds and declares that homeowners whose residences are
in foreclosure are subject to fraud, deception, harassment, and unfair dealing by
foreclosure consultants..... (who) represent that they can assist homeowners who have defaulted on
obligations secured by their residences. These foreclosure consultants, however, often charge high
fees, the payment of which is often secured by a deed of trust on the residence to be saved, and
perform no service or essentially a worthless service. Homeowners, relying on the foreclosure
consultants' promises of help, take no other action, are diverted from lawful businesses which could
render beneficial services, and often lose their homes, sometimes to the foreclosure consultants who
purchase homes at a fraction of their value before the sale. Vulnerable homeowners are increasingly
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