| As we’ve often said, whenever money and property are involved, you’ll find sharks in the water. Some of the worst are those that purport to “rescue” distressed homeowners whose mortgages are in default, but actually are out to steal the homes. Or they strip the hapless homeowners of any equity or money they may have and leave them twisting in the wind.
This has been going on for some time, and despite legislation aimed at putting these bandits out of business, they continue to work their reprehensible schemes today. The sharks combine outright fraud, deception and predatory lending to achieve their criminal objectives. Here’s Norman Paz Garcia of the west coast regional office of the Consumer’s Union writing about these abuses: One form of home equity abuse inflicted on homeowners is so-called foreclosure “rescue.” Homeowners who fall behind in their mortgage payments may have notices of default entered against them by the lender. These notices mark the beginning of the foreclosure process and are a matter of public record. Mortgage Lenders target people in default for “foreclosure rescue” services, often in the form of a “refinance” loan. Although the loans are presented to consumers as a “bailout” oftentimes they generally postpone the inevitable loss of the home while draining most or all of the homeowner’s remaining equity. Frequently, homeowners who must resort to this type of last-ditch financing would be better off selling the home earlier than accepting a short-term “rescue” at such a high cost. Typically, owners in default are bombarded with unsolicited visits, phone calls and mailings from so-called “foreclosure rescuers.” These lenders claim to offer credit without a verifiable source of income as long as there is equity in the borrower’s home. Often, a “rescuer” will persuade an unsuspecting homeowner to deed the property to him by making lofty promises. In exchange for the deed to the property, the “rescuer” promises to make all mortgage payments, help the homeowner restore his credit, and allow the homeowner a lifelong right to stay in the home as a renter. The promises these foreclosure rescuers use to lure homeowners are rarely honored. For example, a so-called rescuer may take title to the house and agree to make the payments, then collect rent from the homeowner but fail to make the mortgage payments. In Los Angeles, for example, the FBI and U.S. Attorney’s Office are investigating a man named Bernard Gross (he changed his name to David Love Paris in 1993, but uses his old name). The Los Angeles Times reported that papers had been filed in court alleging that Gross defrauded homeowners and mortgage holders of financially distressed properties by falsely promising to prevent foreclosure though similar white knight techniques. Gross, who maintains his innocence, allegedly “failed to make payments or otherwise negotiate with the mortgage holder” after obtaining title, according to a federal court affidavit. One couple said they paid Gross about $9,900 in rent only to later lose their home anyway. They said they had no idea payments were not being made until a notice was mailed to their home that the house was identified as an asset in another’s bankruptcy proceedings. An additional problem is an investor cannot legally buy the house of a defaulted homeowner, rent it to them, and then offer them the right to repurchase at a higher price at a later date. Read more about the “Sale-Leaseback Scheme” HERE. According to the Los Angeles Times report and the Los Angeles County Department of Consumer Affairs, Gross kept the original mortgage holders from obtaining transferred properties by dividing ownership into shares, and then deeding them to other individuals or businesses who had just filed, or were about to file, for bankruptcy. Records obtained by the Times showed a handyman for one of Gross’ firms had received an interest in nearly 300 properties. As a result, the mortgage holders had to travel a seemingly endless trail of bankruptcy hearings before they could take title to a property. * * * * Confusing? You bet, but that’s the idea. Allegedly, Gross was collecting rent from hundreds of homeowners, and had no intention of ever paying a lender one dime, but created such a legal maze that the lenders were going nuts trying to foreclose. Bear in mind that, while he had title to the properties, the original borrowers’ names were still on the notes. Aaarrgh! Next month we’ll take a look at how these sharks bite off their victims’ financial future with impossible loans and steal houses with blank documents. |
