DREAMS FORECLOSED: The Rampant Theft of Americans' Homes

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DREAMS FORECLOSED: The Rampant Theft of Americans’ Homes Through Equity-stripping Foreclosure “Rescue” Scams The documents in the case reflect a cash advance to the family of about $35,000, however. “It turns out the balance of this money is primarily comprised of questionable fees the trust imposed on the family in connection with the transaction,” says Roddy – another way of sucking equity out of the home. Among these are: 1. Documentation fee ($2,500) 2. Facilitation fee ($2,500) 3. Investor transaction fee ($750) 4. Trust set up ($250) 5. Credit counseling ($250) 6. Contingency Fund ($6,917) Roddy calculates that if this deal were measured as a credit transaction the effective annual interest rate on the “real” money advanced would be about 50%. “This deal is made all the more egregious by the family’s circumstances,” he says, “three disabled family members and an income which clearly cannot support the contemplated method of winding up the trust.” In other words, the deal virtually assures that the family will lose its home and much of their built-up equity. Elsewhere in Greater Boston “they’re getting to be more and more entrepreneurial in this (foreclosure scam) business, and they’re getting more skillful,” says housing counselor Norma Moseley of ESAC, the Ecumenical Social Action Committee. In the largely minority neighborhoods where most of her clients live, Moseley says she’s seen increasing involvement in these scams by local clergy (something NCLC investigators heard from several other states as well), and also a bankruptcy attorney who does the “favor” of putting the homeowner in touch with the equity-stripper. Moseley also says she’s seen many forged documents in these cases. Moseley’s ESAC colleague Virginia Pratt says she’s handled cases where homes are deeded to scammers as part of a deal where home repairs will supposedly be performed, and she’s also seen a case where equity-stripping “rescue” scammers set up a sale of the home that entangles both the original homeowner and the new buyer while the scammer walks off with a big payday. 28
DREAMS FORECLOSED: The Rampant Theft of Americans’ Homes Through Equity-stripping Foreclosure “Rescue” Scams lX. MICHIGAN: "This is not just a bunch of small fish" The Michigan Poverty Law Program and Michigan’s Center for Civil Justice (CCJ) have asked Attorney General Mike Cox to look into the activities of a “rescue” business called Advanced Mediation Services. CCJ attorney Terri Winegarden says the business is a reincarnation of a differently-named “rescue” operation, J.D. Klein and Associates, that CCJ put out of business two years ago after filing a lawsuit alleging violations of state law. Winegarden’s letter to the Attorney General’s Consumer Protection Division describes the operation this way: “Discussions with several of his clients show that Mr. Klein charges people an exorbitant amount of money for a couple of futile phone calls to their mortgage company or referral to a bankruptcy attorney -- all phone calls the clients could have made themselves. Once he feels his job is done, he refuses to have any more contact with his clients. If he refers his clients to a third party, he often fails to explain to whom he is referring these clients and what this person/business’s function is in relation to the pending foreclosure (bankruptcy attorney, lender, loan officer, etc…). “As part of our previous litigation, a Circuit Court informed Mr. Klein that by taking money in advance of completing all of his services he is in violation of the Michigan Credit Services Protection Act. Yet he continues to do it. He knows that no one would pay him the amount of money he asks for little to no services. Our office has interviewed many of Mr. Klein’s former clients. The most common complaint we heard was how they were convinced to pay a large sum of money for ‘nothing.’ ” The letter then cites the cases of four Klein clients in some detail. Two clients lost their homes and the equity in them. Michigan Poverty Law Program attorney Lorray Brown says she’s handling four other foreclosure “rescue” cases and that at least two of her clients are anxious to speak publicly about their experiences. In Grand Rapids, attorney Mike Nelson has discerned some patterns in these cases. “I’ve seen the same players, and also a lot of the same techniques, which makes me think this is not just a bunch of small fish,” Nelson says. “I think these schemes are being marketed. 29
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DREAMS FORECLOSED: The Rampant Theft of Americans' Homes

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