Foreclosure Fraud
Equity Robbers

It feels like the wolves at your door. You have a home, and if you have some equity, you cannot be diligent enough to protect yourself.

One of the more common foreclosure scams are the equity robbers. They find it easier to strip your equity than out right theft of your home. Below are explanations of how it works and how to protect yourself to stop foreclosure fraud.

Toward the bottom is information of how homeowners are fighting back.

Today's Thieves Feast on Homeowner's Equity

The Roanoke Times
Sunday, August 07, 2005

As housing prices soared, scam artists feasted on homeowners' equity like wolves savaging sheep.

Consumers need tougher regulations.

Depression-era crook Willie Sutton explained, when asked, why he robbed banks: "Because that's where the money is."

Today, "the money" is in people's homes -- not stuffed in mattresses or buried in cellars, but in the equity people have built up, or just hope to build up as renters scramble to realize the "American dream."

Today's crooks are robbing people of their dreams of homeownership, their home equity and sometimes their homes outright.

The Washington Post reported recently that superheated housing markets such as New York and Washington are rife with mortgage scams. But the human vermin who feed on the desperate and the naive have swarmed in to the less pricey markets of Southwest Virginia, too.

People facing foreclosure on their mortgages, for just one example, are telling the Legal Aid Society of Roanoke Valley that they are being bombarded with offers from people who want to "help."

Debtors: Beware, beware. The "rescue" business is the latest twist on predatory lending practices that cost homebuyers unnecessary fees or saddle them with onerous interest payments, or both, sometimes assuring foreclosures that might have been avoided with legitimate advice.

Cruelest of all, perhaps, some "rescuers" assure trusting homeowners that if they will sign over their deeds -- "temporarily," of course -- someone with a better credit rating will be able to secure new financing and prevent the loss of their homes.

"But the terms of these deals are almost invariably so onerous that the buyback becomes impossible," the National Consumer Law Center reports, "the homeowner permanently loses possession, and the 'rescuers' walk off with all or most of the home's equity."

Scam artists have put families out of their houses, or have "kindly" allowed them to buy back their homes at vastly inflated prices, entering into rent-to-own schemes with rents sometimes higher than the previous mortgage payments. Any wealth the erstwhile homeowners had built, from years of payments or rising home values, the crooks swallow up.

The public's first line of defense against the unscrupulous and ruthless is, as always, skepticism. But the growing pervasiveness and complexity of these mortgage scams demand a tightening of the loose regulatory standards so in vogue today.

Henry Woodward, the valley Legal Aid Society's general counsel, explains that the mortgage "rescue" business builds on reliable old standbys of the unscrupulous lending game: fly-by-night rent-to-own and option-to-purchase schemes.

As predatory schemes proliferate, the need for regulation becomes all the more urgent. Rules should at least protect a seller's equity in sale and lease-back transactions, for example. Sellers who lose their homes in unscrupulous refinancing schemes should have time -- perhaps 90 days -- to arrange legitimate refinancing and buy their houses back for no more than the investment their "rescuers" made.

Lawmakers can't make predators fair or the credulous skeptical. They can, however, write laws that guard the interests of the lambs against those of the wolves.

Mortgage fraud is booming right along with the price of houses, and elderly homeowners with lots of equity are prime targets.

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Consumer Lawyers Turn Tables on Equity Robbers

Monday, January 29, 2007

If you've been in foreclosure, or had bad credit, then you know the perils of securing a decent loan. They have many names, but the two most common are:

1. Lease Back

2. Lease Buyback

This were the operator convinces you, the homeowner, to sign your home over to them and they will help you get out of trouble and then you can buy the home back from them.

The abuses are so flagnant and most are fraud, that lawmakers are starting to address the problem. Consumer lawyers have been suing these people under federal regulations and gaining headway.

Under the Equitable Mortgage Doctrine, The Truth In Lending Laws, Usury & Foreclosure Rescue, the foreclosure rescue operators a financially strapped homeowners around the country have been suing foreclosure operators citing the the "sale leaseback" / "lease buyback" arrangements they agreed to, were based on fraud and non compliance with state and federal lending laws.

The consumer attorneys have been successful at having the agrement voided based on the court first issuing an order that the loan was in fact an equitable mortgage. As such, the lender, i.e. foreclosure operator, violated the disclosure requirements of the Federal Truth In Lending Act, commonly referred to as TILA.

This puts the foreclosure operators at a disadvantage. If they comply with the disclosure requirements of the TILA as part of a typical rescue sale leaseback / buyback arrangement, they are in a precarious predictment where they would have to operate legitimately in that TILA requires full disclosure because it is a secured loan. That makes the sale buy back rescue know to the buyer that it is not an actual loan, but the loss of their home.

If the court rules that the transaction qualifies as an equitable mortgage, the foreclosure operators' profit or aniticipated profit is immediately transformed into "interest" on the "deemed" mortgage loan, possibly subject to the Federal Home Ownership and Equity Protection Act of 1994 (HOEPA) as well as to the civil and criminal usury statutes of your home state.

In addition, it appears that proof of actual fraud, deception, excessive overreaching, or any egregious conduct on the part of the operator in dealing with the homeowner is not necessary in having a deed be deemed a mortgage.

To the extent that there is an organized group of people, working together, that makes up a particular foreclosure rescue operation, and the group typically does these deals as part of their normal course of business, I suppose this may expose the operator and the entire group to possible additional allegations of impropriety, i.e. civil conspiracy, civil racketeering.

Some U.S. District Court cases regarding foreclosure operators can be found on the Federal Courts' PACER system.

Moore v. Cycon Enterprises, Inc., et al., Case No. 1:04-cv-800, Western District of Michigan (Southern Division) (decided as to liability against foreclosure rescue operator, motion for summary judgment as to damages, other equitable relief, and attorney's fees pending)

Armstrong v. Real Estate International, Inc., et al., Case No. 1:05-cv-05383, Eastern District of New York (Brooklyn Division) (case settled, settlement agreement between homeowner and foreclosure rescue operator filed and made part of the record)

Wilson v. Bel Fury Investment Group, LLC., et al., Case No. 8:04-cv-00640, District of Nebraska (Omaha Division) (case settled privately, no settlement agreement in the record)

Perry v. Queen, et al., Case No. 3:05-cv-00599, Middle District of Tennessee (Nashville Division) (case settled privately, no settlement agreement in the record).