Rampant foreclosures feeding thriving scam

Rampant foreclosures feeding thriving scam

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Story Published: Jan 22, 2008 at 10:48 PM PDT

Story Updated: Jan 23, 2008 at 8:06 AM PDT

By Connie Thompson

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OLYMPIA -- The astronomical increase in foreclosures in this state is feeding a thriving scam.

The rip-off: Someone gets you to sign your house away, under the guise of helping you avoid foreclosure.

These scams are rampant and now state lawmakers are trying to do something about it.

The businesses and individuals behind the scheme use public records to locate homeowners facing foreclosure.  You might get letters, postcards, phone calls -- even someone coming to your door.

The scammers appear very sympathetic and say all the right things to gain your confidence. The plan? You transfer the house to them, then pay rent, with them as the landlord, until you get back on your feet.  After anywhere from one to three years, you can buy the house back, they say in their pitch.

But instead of being able to buy your house back, you get buried in bills because the rental agreement often ends up charging you higher payments than the mortgage payment you could not afford in the first place.

Eventually, you're evicted and lose not only your home, but all the equity.

Now, state lawmakers are taking testimony on a new bill to protect homeowners from foreclosure predators.

Under the new foreclosure rescue bill:
  • There must be a written contract before any property is transferred, with all terms clearly disclosed.

  • The purchaser must prove the homeowner can afford to meet the terms of the contract.

  • The foreclosed homeowner gets five business days to cancel the contract.

  • And the foreclosed homeowner must receive at least 82 percent of the profit, if their home is sold to a third party.

In addition to HB 2791, there's a companion bill in the Senate, SB 6431. A hearing on the Senate bill is scheduled for Friday morning at 8:30 in Olympia.

State legislators want to hear from anyone who has fallen victim to a foreclosure rescue scheme.

Investigators tell me they've never seen any foreclosure rescue plan help anyone save their home.

Previous reports:

www.komotv.com/news/consumer/8257012.html

http://legalnewsline.com/news/192046-mckenna-joins-pursuit-of-foreclosure-help-scams

HB2791:

http://apps.leg.wa.gov/billinfo/summary.aspx?bill=2791&year=2008

Sponsors:

http://www1.leg.wa.gov/house/lantz/

http://www1.leg.wa.gov/house/rodne/

http://www1.leg.wa.gov/house/kelley/

SB6431:

http://apps.leg.wa.gov/billinfo/summary.aspx?bill=6431&year=2007

Sponsors:

http://www1.leg.wa.gov/senate/Tom

http://www1.leg.wa.gov/senate/Hobbs

http://www1.leg.wa.gov/senate/Delvin

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