For Desperate Homeowners, Scams Abound

(CBS)  California led the nation in foreclosures last month, and scam artists seem to be coming out of the woodwork to prey on desperate homeowners, reports CBS News correspondent Bill Whitaker.

Alexendria Craig's house is full of memories. It was her parents' home and she inherited it when they died. A picture of her great grandfather sits on the mantle.

Now she is about to lose that home after taking out a series of high interest loans that have left her hopelessly in debt. She says the loans "helped balance out what [she] was short" on payments.

Her salary as a paralegal for Los Angeles County was not enough to make ends meet. Desperate to hold onto her house, she answered a slick sounding ad that turned out to be too good to be true.

Craig agreed to pay $30,000 and to share title on her house to a foreclosure rescue company. The company said it would use equity in her house to pay off her debts, and that her credit would be repaired. After a year she thought she'd get her house back.

The company's agreement promises that clients have "sufficient equity in your home" for "paying off debt liability," "repairing your current credit," and most importantly that they'll "remain in your home without further concerns or worries."

It's a classic foreclosure rescue scam, says attorney Debra Zimmerman.

"There should be a huge red flag for anybody who offers to do this for money, because there is no reason to pay for help," said Zimmerman, of Bet Tzedek Legal Services. "Loan modifications can be done for free."

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Avoiding Foreclosure
Free assistance for homeowners facing foreclosure is available from Hope Now. Visit www.hopenow.com or call 888-995-HOPE to talk to a counselor for free.

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In the typical scam, the homeowner transfers title to a third party who promises to secure a lower interest rate on the mortgage. But what often happens is the third party cashes out the home's equity, leaving the homeowner as a renter.

"This is the American dream, and they're losing it. And somebody is coming and they're going to rescue them," Zimmerman said. "[The scam] is very, very appealing."

In California so many people have fallen for these scams the attorney general has issued a consumer alert.

Bbut that warning came too late for Alexandria Craig. Her house is in foreclosure, and next week she's facing eviction. Both the foreclosure rescue company and the bank foreclosing on her house deny any wrongdoing.
"You feel like you're drowning and you feel like there's nobody sending you a life raft," said Craig, sobbing.

Barring a miracle, Craig says she'll be moving into her car on next week, losing family memories and her American dream.

[solarrays247-2009]

Solarrays247...

You are trying too hard. Your posts reveal your true fears and inadequacies. I can smell your urge to brag about about false success.

I repeat, the majority of those facing foreclosures brought it on themselves via greed and stupidity. The scamming element is inconsequential. Very few fall prey to the "scumbag" mortgage brokers you refer to.

So happy for you and all your wisdom regarding the real estate market.

I have posted no untruths, nor ignorant remarks, while you resort to petty accusations and engage in self adoration. How sad.

Posted by drivelphobe at 10:28 PM : Dec 28, 2008

No, my opinions are from experience over many years in the financial markets. I''m not trying to prove anything. You can continue to believe whatever you want! It is people like you that oftentimes have the most to learn. Good luck.

[solarrays247-2009]

With her being a paralegal, I would think she would have known better.

Posted by FLSunJnky at 03:06 PM : Dec 28, 2008

Yes, you might think so, but I don''t believe anyone is immune to falling for a scam. For examples, you only need to look at some of the headlines over the last couple weeks.

[flsunjnky]

With her being a paralegal, I would think she would have known better.

[solarrays247-2009]

Solarrays247..

Sorry about your financial condition and your foreclosure situation. I forgive you for being so angry and making such petty accusations.
Posted by drivelphobe at 01:21 AM : Dec 28, 2008

And what gave you the idea that I was experiencing any financial difficulty? Because I am standing up for others who are not as fortunate as I am? Your login name is quite appropriate, and says it all!

[solarrays247-2009]

Solarrays247..

Sorry about your financial condition and your foreclosure situation. I forgive you for being so angry and making such petty accusations.
Posted by drivelphobe at 01:21 AM : Dec 28, 2008

Boy! Have you barked up the wrong tree! I have been buying properties since 1974, and there is not much that you can tell me that I don''t already know.

This current financial fiasco can only be attributed to creed and corruption. You can paint any other color on it that you wish!

I don''t have to worry about my situation. But I still consider myself a part of humanity. And I learned some great lessons of humility and compassion from some wealthy and wise relatives when I was quite young. And I''m so glad for that! It can''t be much fun living a life such as yours! How lonely you must be to be the only perfect human around!

[pforeclosure]

For those folks who keep on displacing their anger on the people who are losing their homes, besides my argument for compassion, I urge everyone to think about how your neighbors foreclosure is affecting the economy at large. Whether next door or further away, the foreclosures en masse are and will continue to act as a heavy weight on the economy and maybe more importantly, on the collective psyche of the nation which in large part drives our economy, our expectations, and ultimately our actions.

Instead of easily passing judgment on those who are victims, perpetrators or just those less-than-financially-capable individuals looking for relief from the daily grind, it would be in all our interests to help as much as possible. For the homeowners looking to avoid being scammed, here is a good place to start doing your research: http://preventingforeclosure.org (specifically the article on how to avoid being scammed http://preventingforeclosure.org/2008/10/beware-of-foreclosure-rescue-scams/)

We call ourselves adults and all that this word invokes, but ironically not even children would treat each other the way we do sometimes.

[pforeclosure]

For those folks who keep on displacing their anger on the people who are losing their homes, besides my argument for compassion, I urge everyone to think about how your neighbors foreclosure is affecting the economy at large. Whether next door or further away, the foreclosures en masse are and will continue to act as a heavy weight on the economy and maybe more importantly, on the collective psyche of the nation which in large part drives our economy, our expectations, and ultimately our actions.

Instead of easily passing judgment on those who are victims, perpetrators or just those less-than-financially-capable individuals looking for relief from the daily grind, it would be in all our interests to help as much as possible. For the homeowners looking to avoid being scammed, here is a good place to start doing your research: http://preventingforeclosure.org (specifically the article on how to avoid being scammed http://preventingforeclosure.org/2008/10/beware-of-foreclosure-rescue-scams/)

We call ourselves adults and all that this word invokes, but ironically not even children would treat each other the way we do sometimes.

[solarrays247-2009]

I can see why some people will believe some this slick people...those of you who are above scams, or so believe you have not met the right one yet.
The key is never do anything legal without an attorney...your attorney no theirs.
A law could be passed that any change of title or loans have to have approval from the an attorney representing the person and you solve the problem.

Posted by lee2261 at 06:57 AM : Dec 28, 2008

Yep, great advice. I made that promise to myself after I purchased my first home in 1974. Although I was lucky and came out okay on that purchase, I saw enough at that closing/settlement table to know that I would always have an attorney with me on any future purchases! And that is the advice I have always given to anyone who came to me for help!

[solarrays247-2009]

Deregulation was just another word for legalizing scamming.

Phil Gramm was the Head of this Massive ripoff scheme.

And we''''re paying the price right now!

Posted by jerr11 at 12:43 PM : Dec 28, 2008

Yep! Good point, jerr11. And accurate!

[solarrays247-2009]

I left the business because of scumbags out to snare the public. There are still some decent people in the mortgage business.
Posted by Solarrays247 at 11:44 PM : Dec 27, 2008

And I bet that you never told a lie to get a bigger commission or slid a little shaft into someone when they were not looking.

Posted by d7767w at 02:07 PM : Dec 28, 2008

Absolutely not!!!! If you would take the time to learn your profession, and know your product, and have some pride in your own integrity and honesty....the scamming is not necessary to be successful!

Why? Are you one of those scumbags that can only be successful by being one of those (to quote you) "lie to get a bigger commission or slid a little shaft into someone when they were not looking"?

You are a great example of the mindset that has penetrated our society, and has led to this horrible financial fiasco.

Enough said....I can only look to our young people now to get this country back on the right track...that is those young people who are lucky enough not to have losers like you as parents.