Victims Of A Foreclosure "Rescue"

foreclosure CBS

The number of Americans struggling to pay their mortgages is higher than it's ever been before.

New data released Thursday shows that so far this year, there have been a total of 925,986 foreclosures filing nationwide — an increase of 56 percent from last year. But homeowners in distress could face a double whammy: A growing scam is exploiting people who are in foreclosure in a way that leaves them with nothing. Chief investigative correspondent Armen Keteyian shows how the scam works.



Annie Stephens, a 70-year-old grandmother, has lived in her Atlanta home for 40 years.

"I just don't feel like I belong anyplace else," Stephens said.

But after suffering a stroke, she found herself unable to work — and unable to pay her bills.

"Once you get behind, it's hard to catch up. Hard," Stephens said.

Within days of foreclosure, Stephens was overwhelmed with ads promising instant relief, an easy way out.

They proved anything but. She says a con artist claiming he'd help refinance her home instead stole it, then stripped away tens of thousands of dollars in equity.

"They're just no-good scamming vultures," Stephens said.

It's known as "foreclosure rescue" but a CBS News investigation has uncovered an unending trail of victims across the country.

As the number of foreclosures soars to record levels — up nearly 90 percent from this time last year — so does mortgage fraud. CBS News has learned the FBI currently has more than 1,100 cases pending; in 2003 that number was just 436.

Sources say the Metropolitan Money Store in Maryland was one of them.

When Keteyian knocked on the door there, it was apparent the place had been shut down.

"We have helped stop over 250 foreclosures and have refinanced thousands of homes," the company's radio ad says.

A major class action law suit now charges the Metropolitan Money Store of being "the single largest mortgage scam in Maryland history ... an elaborate scheme to dupe" more than 400 homeowners "of millions of dollars in lost equity."

State investigators describe the scheme as a classic come-on: a desperate homeowner buried in debt and facing foreclosure is convinced to transfer the deed of their home to a third-party investor with the promise of getting it back. Instead, the company sucks the equity out of the house, leaving the original owner in desperate straits.

One group says they were victims of the Maryland scheme.

"It's an empty feeling. It feels like a bottomless pit," a member of the group told Keteyian

"Do you feel like you were cheated?" Keteyian asked.

"Absolutely. Out of our home and more," one said.

"They took the equity and make the credit worse than it was before," another explained.

"I think this is one most outrageous scams in the United States at this time," said Elizabeth Renuart of the National Consumer Law Center.

Renuart says such shady deals are skyrocketing as the mortgage market implodes. "Financial distress is the weakness that they exploit because people are so concerned about losing their homes they'll do almost anything to save them," she said.

Only seven states specifically regulate foreclosure rescues; only one, Massachusetts, makes it illegal.

In Maryland, CBS News wanted to talk to the people who allegedly ran the scheme.

Despite repeated attempts, CBS News was unable to reach Joy Jackson Fordham or her husband, Kurt Fordham, who is also implicated in the scheme. The only trace of them were photos of their $800,000 wedding last year. It was an over-the-top, Hollywood-style affair at which they gave away cash, a Porsche and — in a final insult to folks like those CBS News interviewed — a house.

"What?" one of the victims said.

Could it have been one of their houses?

"That was our wedding!" one woman said. "We didn't get invited."

  • Christine Lagorio

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