Scam Leaves Homeowners Empty-Handed

(CBS)  Kaylene Gainor's first home was a bargain: A fixer-upper with a mortgage she could afford on her teacher's salary.

She paid it on time for seven years. But when her daughter started college, "things came up financially that I thought she just had to have," Gainor said.

Gainor was days from foreclosure when a stranger appeared on her doorstep offering help, CBS News correspondent Kelly Cobiella reports.

"She came with someone I knew, so I kind of felt safe in saying 'OK, well, let me hear what you have to offer,'" Gainor said.

She had never heard of the company National Foreclosure Management, but their solution sounded like a godsend. She and her grandchildren could stay in her home; all she had to do was sign over the title.

She agreed, but about a year later, another surprise at her door: an eviction notice.

"When I walked up and saw that, I thought, 'it's over,'" she said.

Gainor fell victim to a foreclosure rescue scam. Here's how it works: Companies like Foreclosure Rescue Management offer to hold the title to your home for a year. You're allowed to live there while they refinance your debt.

But behind the scenes, they sell the title to a new buyer who demands high rent you can't possibly pay. You end up in the same place you began - out of your home.

"We know that they were bad apples," said Florida Attorney General Bill McCollum.

Florida's Attorney General has filed suit against National Foreclosure Management for bilking at least 80 homeowners of nearly $2 million.

"There are at least 20 other businesses being investigated right now, and I suspect we will unearth more as we go through this," McCollum said.

Nationwide, foreclosure fraud is a booming business. In Cleveland, 21 rescue companies opened in the last year alone. Twelve states are fighting back with tough new anti-fraud laws.

Federal lender Freddie Mac posted its own "beware" sign on YouTube. But for those who have already fallen into the scammer's trap, it's nearly impossible to get out.

Gainor lost $50,000 in equity. She'd like to buy back her home, but the mortgage payments have more than doubled.

"I will stay as long as I can and after that…?" she said.

She wants her story to serve as a warning, so others aren't robbed of house …and hope.

[twebster321]

More importantly - appraisal regulation assists in pushing up the money supply (by way of helping to increase the value of collateral), economic activity (via higher and higher loan amounts in cash out refinancings), and lender profits. As such, regulation is little more than a ruse designed to shift financial liability for losses from the appraisal client (i.e., the lending industry) to the Federal government who is now responsible for appraisal oversight. Now that the Nation is experiencing another serious financial "adjustment" like the S&L Crisis, lenders and GSEs will be able to point to Federally mandated appraisal regulation as their free pass to escape a Congressional inquisition (where property valuations may be called into question). They will have the appearance of having done everything according to "the book." The investor groups suffering damages from having purchased loan packages (with this designer gift wrap) will have to seek a bail out from the government - the ultimate underwriter and the overseer of lending and appraisal regulation. But like a bank that leaves the vault open, lenders are "surprised" that the values are inflated and property conditions mischaracterized. What rational person or entity lends without knowing the collateral''s value? Lenders do business exactly this way.

[twebster321]

UP UP UP and AWAY!!! So here''s the billion dollar question - Who fell asleep at the wheel regarding over-inflated real estate appraisals? Think about it, Lenders control the entire real estate appraisal process from beginning to end. They use ''preferred'' vendors, AVM''s and appraisal management companies and have no obligation to look objectively at property values. Many local appraisers went out of business due to appraisal automation and that''s a fact! We all know the parallel investor/speculator market helped push ''comps'' and ''property values'' to astronomical levels - and they went unchecked for years. The Government, Banks, Lenders, Taxing Authorities, Media, etc. went from discussing ''Record Gains'' to ''Financial Ruin''. Too bad the American people heard very little about the possibility of over-valued real estate prices until it was way too late.

[dianaoakley]

6 years ago my husband family farm was in forclosur. It has been in the family over 200 years. We had a group get a mortgage and put farm in thirr name with the written contract to allow us to buy back all land. evry time we tried, they found a way to block it, weather it was just not returning calls or saying never got papers that were sent to them. now we are fighting to get the farm back and they azre trying to sell it off in pieces. We are working with the attorney general but are worried we may loose some or all land before disputeis finalized. can anyone help us?
Diana Oakley

[ralphj53]

February 28, 2008
Hello;

Concerning this MORTGAGE MELDOWN that a lot of homeowners have gotten themselves into, and really, they can blame NOBODY... but themselves for their STUPIDITY

It''s like..."I''m going to have a NERVOUS BREAKDOWN......I owe it to myself.... I worked hard for it.... and nobody''s going to DEPRIVE me of it."

So, o.k.. mister... I won''t stop you... Have it your way. After all, it''s your WAY... or the HIGHWAY.

And you''re headed towards that HIGHWAY... after they throw you out of your home.

CAn we EVER learn?

Thanks,
rjm

[ralphj53]

February 28, 2008
Hello;
Many years ago, I thought about paying $50,000.00 for a four bedroom home was too much. And then, it went up to $100,000.00 for that same four bedroom home. This was years later. I said..."What?"
And then several more years later... that same home had an asking price of %150,000.00 This whole thing reminded me of the ROARING TWENTIES.. that is... until 1929... and the BUBBLE burst. And we went BUST!!!

This American tradition of "instant gratification" I think started with the introduction of the State Lottery. Everyone had a GOD given right to DREAM... and make that dream come true... come HELL or HIGH WATER. After all, this was AMERICA... where everything is possible "under the sun".

This is where we are now. I predict that housing prices will CONTINUE to DECLINE... until at leat 75% of ALL home EQUITY... is VAPORIZED. And then some.

This is what you can call a "reality check". And it''s not a check for money.
Thanks,
rjm

[lajb96]

I was asked to be an Investor by my mortgage broker, & the only thing they needed was my credit score. with a good credit score I could purchase as many houses'' as I wanted to within a month or less till other mortgages might show up on my credit report & that would stop my purchasing at that time. But for every home I would purchase they would pay A minimum of $5000.00 per house. They would pay all mortgage payments, insurance, taxes, & all the bills incurred while they managed the home until the people bought it back within a year or if not bought back sell it out right to someone else.

[eggstraspace]

Frankly, none of what was reported here indicates that there was any fraud. According to the reporter, the "victim" was only days away from losing her home to a legitimate foreclosure, one that would have eliminated her equity.

In exchange for transferring her home, she got to live in it for another year. In order to stave off the foreclosure, the company would have had to pay all of the past due payments, penalties and accrued interest, something Gainor couldn''t have done on her own because she didn''t have the money.

Then the company sells the property to recoup its investment and generate a profit on it. Gainor ultimately doesn''t end up any worse than she would have, but meanwhile gets to live in the house for another year. So, I''m not certain based on the reporting where the problem is. Did the documents she signed not disclose what the company was going to do? You say they did it behind the scenes, but is that the way it appeared to Gainor because she didn''t read the contract?

This is very poor legal reporting, in my view.

[piercetheval]

USURY IS A SIN, USURY IS A SIN, USURY IS A SIN, USURY IS A SIN, USURY IS A SIN...Any ?s. Usurers can burn in hell!

[neoconslayer]

Foreclosure Rescue Management: Republican owned and operated since Day One!

[jntlw-2009]

Face it people, we have turned into a society based on greed, scams, thievery, corruption, and souless rippoffs with no conern for the poor or the weak. Christian nation? I doubt it!