The independence and financial security of older adults can be threatened by abusive practices in the consumer world. A growing scam that disproportionately targets older Americans can, and often does, literally cost them the homes they have lived in for years and worked hard to obtain. It is called a foreclosure “rescue” scam, and it is anything but what the word “rescue” implies.
Foreclosure “rescue” scams target those who have fallen behind on their mortgage payments. In this scam, a con artist who promises to help consumers save their home actually plans to steal the home – often an older American’s most precious asset – or most of its accumulated equity.
Why are older Americans special targets?
Many have lived in their homes for decades, paid down their mortgages, and earned equity in the house. Unfortunately, many older Americans have trouble paying their bills and need to tap into their home equity because of rising medical bills and other age-related expenses.
Foreclosure rescue scams come in one of three varieties.
Phantom Help Scams
Phantom help is where the “rescuer” charges outrageous fees for simple phone calls and paperwork the homeowner could have easily done, or makes a promise of additional representation that never occurs. In either event, the homeowner is usually left without enough assistance to save the home, and with little or no time left to prevent the loss of the home or seek other assistance.
False Bailouts
False bailouts include various schemes where the homeowner signs over title to the house in the belief that they are entering into a deal where they can remain as a renter, and then repurchase the house over the next few years. This is also known as a lease/buyback scheme. Homeowners sometimes are told signing over title is necessary, so that someone with a better credit rating can secure new financing and prevent the loss of the home. But the terms of these deals are almost always so bad that the buyback becomes impossible, the homeowner permanently loses possession, and the “rescuers” walk off with all or most of the home’s equity.
Bait-And-Switch
Bait-and-switch is where the homeowner does not realize they are surrendering ownership of the house in exchange for a “rescue.” Many homeowners believe they were only signing documents for a new loan to make the mortgage current. Many also say they made it clear to the “rescuer” that they had no intention of selling or giving up their home to anyone. It is important to note that substantial numbers of this third type of scenario involve fraud and forgeries of deeds.
Ways Consumers Can Avoid Foreclosure Rescue Scams
Consumers who have fallen behind on their mortgage payments should proceed with extreme caution if an individual or company:
- Calls itself a “mortgage consultant,” “foreclosure consultant,” “foreclosure service,” or something similar.
- Contacts or advertises to people whose homes are listed for foreclosure, including anyone who sends fliers or solicits door-to-door or by phone.
- Charges a fee before providing services, even if they promise a refund or “satisfaction guaranteed.”
- Tells the consumer to make home mortgage payments directly to the individual or company (and not the mortgage lender) or tells the consumer to stop making mortgage payments.
- Tells the consumer to transfer the property deed or title to the individual or company.
Homeowners in trouble should stay in touch with their mortgage company. Homeowners should contact the mortgage company, a free housing counselor certified by HUD (the U.S. Department of Housing and Urban Development), or a lawyer when in trouble. There are many ways to prevent the loss of a home, or at least to walk away with all or most of its equity if all else fails and the homeowner is forced to sell.
Older homeowners who have been victimized by foreclosure scammers have many legal options. For more information on foreclosure “rescue” scams and how to avoid them, please see NCLC’s reports:
- Dreams Foreclosed: The Rampant Theft of Americans’ Homes Through Equity-Stripping Foreclosure ‘Rescue’ Scams. http://www.nclc.org/images/pdf/foreclosure_mortgage/scam/report-foreclosure-rescuescams-2005.pdf
- Desperate Homeowners: Loan Mod Scammers Step in When Loan Servicers Refuse to Provide Relief. http://www.nclc.org/images/pd f/foreclosure_mortgage/scam/ loanmodscamsreport0709.pdf
Our Justice for Older Adults Project helps those ages 60 and older with their civil legal issues.
We can help with:
- Protection orders
- Divorces
- Securing, challenging, limiting, or terminating guardianships
- Instituting and revoking powers of attorney
- Recovering assets
- Restoration of public benefits
- Creating trusts; evicting an abusive caregiver
- Modifying and voiding legal instruments
- Removal of social security representative payees for funds mismanagement and abuse of fiduciary duties
- Identity theft and debt collection
- Foreclosure and eviction
- Unlawful nursing home discharges
- Deceptive and unfair business practices
TX Counties Served by Project:
Anderson, Angelina, Bowie, Camp, Cass, Cherokee, Gregg, Harrison, Henderson, Houston, Jasper, Marion, Nacogdoches, Newton, Tyler, Panola, Rains, Rusk, Sabine, San Augustine, Shelby, Smith, Upshur, Van Zandt and Wood.
If you or someone you know has issues with your mortgage, property taxes, or homeowner’s association, you can apply for free legal assistance by visiting www.lonestarlegal.org or calling 1-800-733-8394.
Lone Star Legal Aid is a 501(c)(3) nonprofit law firm focused on advocacy for low-income and underserved populations. Lone Star Legal Aid serves millions of people at 125% of federal poverty guidelines that reside in 72 counties in the eastern and Gulf Coast regions of Texas, and 4 counties of Southwest Arkansas. Lone Star Legal Aid focuses its resources on maintaining, enhancing, and protecting income and economic stability; preserving housing; improving outcomes for children; establishing and sustaining family safety and stability, health and well‐being; and assisting populations with special vulnerabilities, like those with disabilities, or who are elderly, homeless, or have limited English language skills. Lone Star Legal Aid does not discriminate on the basis of race, color, religion, creed, gender, gender expression, sexual orientation, age, national origin, ancestry, disability, marital status, or military status, in any of its activities or operations. To learn more about Lone Star Legal Aid, visit our website at www.lonestarlegal.org.
Media contact: media@lonestarlegal.org
