You are hereConsumer Alerts
Consumer Alerts
Home Mortgage Relief Through Litigation Scam
Home Mortgage Relief Through Litigation and “Too Good to Be True” Claims Regarding Its Use to Avoid and/or Stop Foreclosure, Obtain Loan Principal Reduction, and to Let You Have Your Home “Free and Clear” of Any Mortgage).
This alert is written to warn consumers about marketing companies and others that offer and sell false hope and request the payment of upfront fees for so-called class litigation that will supposedly result in extraordinary home mortgage relief.
Principal Reduction Scam Alert
Based on current trends in real estate fraud investigations, the following summary of a new version of a foreclosure rescue scam has been provided by a prosecutor in Northern California.
We have seen similar seminars and scams operating in Ventura County. One such scam has already resulted in the filing of criminal charges.
This is a relatively new variation of loan modification scam. I have started calling it the "Principal Reduction Scam". Here is how we see it working up in Alameda County, although I'm sure their are minor variations in each case.
1) Con artist opens company called TCP Trust, or CAA, Inc., or any other name. Puts up simple website or goes trolling at foreclosure rescue seminars at your local Holiday Inn.
2) Offer to homeowner is: We use loopholes in the Federal Reserve, or existing UCC law, or the sovereign power of the Constitution -- i.e., any kind of lie to make it look like the bad guy has found some secret loophole in the banking law. The bad guy tells the homeowner that with this new process they can either buy the homeowner's loan outright, or get it voided under UCC law, or take over servicing of the loan. Whatever the lie, the homeowner is tricked into believing the con artist can get control of their loan and wipe it out.
3) Con artist may file fraudulent Reconveyance Deeds to "show" the homeowner that their existing loan has been paid off. They will also give the homeowner all sorts of confusing, legal-looking documents. Many of our con artists seem to be right-wing extremists and use language consistent with groups such as the Sovereign Citizens groups (i.e., radical groups who disavow the Federal Government).
4) The con artist then "renegotiates" a new loan with the homeowner, and tells them that the loan is 20-40% of their original loan. Thus, if the homeowner had a $500,000 loan, the con artist offers a loan for $100,000. They give the homeowner a promissory note and file a new Deed of Trust in the name of TCP Trust, etc.
5) The homeowner is given a payment coupon book and told to use the book to make monthly payments to TCP, etc. The homeowner is instructed to STOP paying on their original loan, because it has been paid off! The homeowner is happy because they think they have gotten rid of their old loan and are paying thousands less per month.
6) We all know how this ends. The filing of all these wild deeds stops any foreclosure process, but only for about 4-6 months (and in some case, we are seeing homeowners going into these sham programs who are NOT in default -- they are just seeking to lower their monthly payments). Ultimately, the homeowner goes into default on the original loan because: A) It was never really paid off, and B) They stopped paying it.
7) By the time the homeowner has lost their home, been evicted, and made a report to law enforcement, it's too late. The bad guys will have laundered the money, closed up shop, and opened up a new company in a new city.
8) We are seeing a lot of this in Alameda County, and we have also heard from investigators in San Joaquin, Stanislaus, and Riverside Counties who are seeing these. I'm afraid it's going to literally cause the next big wave of foreclosures.
Forensic Mortgage Loan Audit Scams: A New Twist on Foreclosure Rescue Fraud
Fraudulent foreclosure “rescue” professionals use half-truths and outright lies to sell services that promise relief to homeowners in distress. In exchange for an upfront fee of several hundred dollars, so-called forensic loan auditors...
False and Misleading Designations and Claims of Special Expertise, Certifications and/or Credentials
The DRE has noticed an increase in the use of questionable and possibly misleading terms such as "expert", "certified", and "specialist"...and many of these designations and claims seem to be nothing more than marketing ploys by unscrupulous fraudsters to capitalize on the desperation and vulnerability of unsophisticated and/or financially strapped homeowners.
Update to DRE Consumer and Industry Alert Regarding Short Sales Fraud
Several months ago, the Calif.Department of Real Estate issued a warning to the real estate industry about short sales and growing fraud in this area. This update is on the growing, questionable, and sometimes unlawful practice requiring buyers to pay the fees charged by short sale negotiators.
Short Sale Fraud Alert
Attorney General Edmund G. Brown Jr. warns that while short sales can provide homeowners with a last-ditch alternative to foreclosure, this market is rife with scam artists. Homeowners and buyers, agents, and lenders should beware of short sale negotiators who operate without licenses, use straw buyers or charge illegal fees.
Short Sale Payments Outside of Escrow-A Very Bad Idea!
Multiple scams have recently come to light with the increase in Short Sales. By definition, a Short Sale occurs when a property needs to be sold and the value is less than what is owed to the lender(s). A successful Short Sale requires the lender(s) approval to accept less than what is owed on the property.
Warning Regarding Residential “Short” Sales
If you are considering engaging in a short sale transaction, you should fully educate yourself about the mechanics of the process and the related legal and ethical issues and work only with legitimate professionals. This report from the California Department of Real Estate will help you avoid some serious pitfalls.
Rental Scams-REFAT Fraud Alert
Unscrupulous people find homes listed for sale and post those same homes on a community posting board, like CraigsList, for what seems like an incredibly reduced rental price. Find out how to identify and protect yourself from this common scam.
Fraud Warning Regarding Forensic Loan Audits
This alert and warning is issued by the California Deparment of Real Estate to call to your attention the often overblown and exaggerated “sales pitches” regarding the supposed value of Forensic Loan Audits. It is critical to note that a loan audit report has absolutely no value as a stand-alone document.
