DREAMS FORECLOSED: The Rampant Theft of Americans' Homes

DREAMS FORECLOSED: The Rampant Theft of Americans’ Homes Through Equity-stripping Foreclosure “Rescue” Scams
‣ Criminalize the conduct of these persons and render any such transactions void;
‣ Penalize by making violations a felony;
‣ Pursue restitution to the homeowner in every case;
‣ Provide authority to the state prosecutor or attorney general to freeze the assets of the
perpetrators during the pendency of the prosecution.
b. To Permit but Regulate This Behavior
The recommendations in this section are listed under two categories: those that are the
most critical and those that are additional important protections. Many of the provisions listed
below are contained in some form in the laws of California, Georgia, Maryland, Minnesota, or
Missouri.
The “Critical Provisions” list addresses the concern that current laws exempt some of
the very people involved in the scams, a problem noted in this report. And in cases where the
foreclosure rescuer or a confederate “buys” the home and the consumer has an option to buyback
or lease-back, the law must require an accurate assessment of the homeowner’s ability to
repay within a specified period of time. Otherwise, these deals are doomed to fail from the
outset and the loss of the home is a foregone conclusion. In addition, the fees and any interest
charged by the foreclosure “rescuer” must be reasonably capped to protect the homeowner
from equity stripping and price gouging. Finally, the homeowner must have access to a court
that has the authority to award appropriate legal and equitable remedies and is also able to
preserve the abusers’ assets during the course of the litigation.
The “Additional Important Protections” list builds upon provisions in the laws of
California, Maryland, and Minnesota. They are provided to give state legislators suggestions
for a more comprehensive act.
b(1). Critical Provisions
‣ Licensing and exemptions
Tightly define the activities of the foreclosure consultant, property purchaser, and
equity surplus purchaser (hereafter referred to as the “covered entities”); create a
licensing regime that only exempts persons who are licensed under other laws but
conditions retention of licensure under other law on the compliance with the nonlicensing
provisions of this law; failure to obtain a license, if required, voids the
transaction.
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