Cheats and Fraudsters Find the Sun Shining Amidst the Gloom of Foreclosures

February 2nd, 2009 | Tags: Foreclosure Notice

For some the sun is shining and they are making hay. This group comprises of swindlers, cheats and fraudsters who are finding the sun shining in the midst of the gloom of foreclosures.

Real estate values continue to fall. The administration complains that this decay is attracting a new type of cheats who are preying on millions of house owners who are frantic to prevent foreclosure. Till recently the scammers had been concentrating on milking the equity from the houses but now that the golden cow is dry, they have clubbed together to form foreclosure rescue firms. These companies take upfront fees promising to modify loans but in reality they do nothing but pocket the fees.

The FTC (Federal Trade Commission) brought legal suits against five such companies on behalf of 20,000 victims. The state as well as local prosecutors had brought charges against dozens of others for similar crimes. Recently the Attorney General of Florida, Bill McCollum sued one such firm for having swindled more than 600 victims. McCollum said, “There’s no way for the consumer to sort out the legitimate companies.” He bemoaned that compared to the volume of work, the funds at their disposal are very limited.

Typically these fraud companies charge about $3,000 with offers of help. They promise to lower the rates by talking with the lenders. Many of the victims cannot afford the fees. The services promised are totally false and to further worsen matters the foreclosure victims lose the time they had to genuinely negotiate with their lenders or file for the protection of bankruptcy.

There are genuine legal firms that offer help but the group is not organized and this makes it difficult for the help seekers to separate the sugar from the sand. Former real estate agents and many mortgage brokers have set up these fraud firms. Some work locally while others operate on a national level. Many have smart websites that look very official suggesting government help. It gives the traumatized victims a false sense of security.

Angela Rosenau said, “That’s all I’ve been doing for the last year.” She has handled 300 complaints about such firms during the previous year – the number being exclusive of those that had been tackled by local prosecutors. The worrying side is that the cases are increasing with a spike in foreclosure numbers.