Why do homeowners fall for these
scams? Tripoli blames the failure of lenders to adequately
spell out the foreclosure terms, time frame and owners' rights,
and the hesitancy of homeowners facing foreclosure to talk about
it. That silence you hear is the deafening silence of shame.
"The consumer makes rushed
judgments that are not good judgments. They get entangled in this
and they think that what happened to them is just the way it works,"
he says. "Americans have the really admirable quality that
they want to take responsibility for their own lives. They are too
willing to take too much responsibility at times and take too much
of the blame."
Desperation born of the housing crisis can also make homeowners easy targets for fraud. Dana Simas, a spokeswoman for the California Department of Justice, says several high-profile fraud cases have centered around promises to modify mortgages for behind-the-eightball homeowners. One such case, involving fraudulent 'counseling service' First Gov, is typical.
"They took people's money, they said that they would talk to their lender and modify their loan and get them lower interest rates, lower payments -- the works," says Simas. "They charged an upfront fee, usually ranging about $1500 to $3000, and they told the victim, 'Don't talk to your lender, don't contact your lender, because it will interfere with our renegotiation process.'"
"Obviously, they were just pocketing the money and weren't providing any services."
Unfortunately, help for victims caught up in foreclosure-related fraud is becoming harder to find. Even
if someone in foreclosure could afford to hire an attorney, fewer
and fewer lawyers are inclined to take cases against scammers because
the prospect of ever collecting a court award is extremely slim.
In his former position as staff
attorney for Clark
County Legal Services in Las Vegas, Daniel
Ebihara, now a deputy attorney general with the
state of Nevada, helped foreclosure victims through
a network of real estate attorneys who volunteered
their time to help. One of his success stories
involved winning a trial on behalf of a young
couple who thought they had sold their home to
fend off foreclosure, until they went to buy a
car and found that the 30-year mortgage was still
Sometimes scammers are far from strangers.
"This doesn't just happen with rescue companies,"
Ebihara says. "We also see the elderly being taken advantage
of by their own children, where they come in and say, 'We'll help
you out. Just put us on the mortgage and we'll take care of you
for the rest of your life.' As soon as the papers are signed, the
kids are kicking their own parents out on the street. It's horrible."
With fewer places to turn, more homeowners are falling
prey to the wolves that are literally at their door.
Tripoli says,"When you marry
deregulation and the erosion of consumer protection
to what's going on with consumer debt today, when
you put consumers in this crunch and then you
strip all their protection, you get a perfect
storm. It's not a huge, huge number of Americans,
it's not a majority, but it's a much bigger number
than we've seen in the past."