Quantcast
4S Ranch Allied Gardens Alpine Baja Balboa Park Bankers Hill Barrio Logan Bay Ho Bay Park Black Mountain Ranch Blossom Valley Bonita Bonsall Borrego Springs Boulevard Campo Cardiff-by-the-Sea Carlsbad Carmel Mountain Carmel Valley Chollas View Chula Vista City College City Heights Clairemont College Area Coronado CSU San Marcos Cuyamaca College Del Cerro Del Mar Descanso Downtown San Diego Eastlake East Village El Cajon Emerald Hills Encanto Encinitas Escondido Fallbrook Fletcher Hills Golden Hill Grant Hill Grantville Grossmont College Guatay Harbor Island Hillcrest Imperial Beach Imperial Valley Jacumba Jamacha-Lomita Jamul Julian Kearny Mesa Kensington La Jolla Lakeside La Mesa Lemon Grove Leucadia Liberty Station Lincoln Acres Lincoln Park Linda Vista Little Italy Logan Heights Mesa College Midway District MiraCosta College Miramar Miramar College Mira Mesa Mission Beach Mission Hills Mission Valley Mountain View Mount Hope Mount Laguna National City Nestor Normal Heights North Park Oak Park Ocean Beach Oceanside Old Town Otay Mesa Pacific Beach Pala Palomar College Palomar Mountain Paradise Hills Pauma Valley Pine Valley Point Loma Point Loma Nazarene Potrero Poway Rainbow Ramona Rancho Bernardo Rancho Penasquitos Rancho San Diego Rancho Santa Fe Rolando San Carlos San Marcos San Onofre Santa Ysabel Santee San Ysidro Scripps Ranch SDSU Serra Mesa Shelltown Shelter Island Sherman Heights Skyline Solana Beach Sorrento Valley Southcrest South Park Southwestern College Spring Valley Stockton Talmadge Temecula Tierrasanta Tijuana UCSD University City University Heights USD Valencia Park Valley Center Vista Warner Springs

Slam the Door on "Foreclosure Consultant"

— If you're like a record number of San Diegans, you're having an anxiety attack: you've got a mortgage you can't afford, and higher home prices won't bail you out. Save yourself additional angst: if you get a cold call from someone representing himself as a foreclosure consultant or a debt elimination specialist, hang up the phone.

The rascal will tell you he wants to help you avoid foreclosure. Chances are, he wants to relieve you of your money or even your home. These scams utilize the Internet and sometimes target religious or ethnic groups. Not surprisingly, San Diego is a haven for them. "People will be contacting you saying, 'I know how to get you out of foreclosure,' " says Sheryl Charleston, president of the San Diego Better Business Bureau. "These guys will collect money from the consumers, who then find out that they are going to lose their homes."

Notices of default and possible foreclosures are a matter of public record that are printed in some newspapers. "They're a shopping list for the crooks," says Stephen Robinson, head of the economic crimes unit of the district attorney's office. "The crooks determine which homes have equity in them and start cold-calling. One of my pieces of advice is if you get a cold call, you probably don't want to do business with them."

"We are hearing that the increases in foreclosures will take a giant spike, and we are trying to get the word out that we will take action against people who violate the equity-skimming laws or the foreclosure consultant laws," says Al Shelden, senior assistant state attorney general, who is based in San Diego. "It's conceivable there could be criminal penalties, civil penalties, restitution to consumers."

Already, there has been a spike. According to DataQuick Information Systems, foreclosures in the county zoomed last year to 1612 from a mere 212 in 2005. Notices of default, early steps preceding foreclosures, more than doubled from 3933 to 8816.

So what are these scams? The so-called "foreclosure rescue" scam takes many forms. Recently, "most of the local cases were the straightforward cons where the crook promises to negotiate with the homeowner's lender in exchange for one month's mortgage payment. Typically, the crook takes the money and runs," says Robinson.

Or homeowners may be conned into letting the foreclosure "rescuer" take over the mortgage payments. "When somebody says, 'I will take over your payments,' it almost always ends in disaster," says Shelden.

In some cases, the slick operator says he can save the residence from foreclosure if the homeowner will turn over the title to him for a year or two. During the interim, the homeowner can live in the house and pay rent. But often, unknown to the homeowner, the house is sold to an investor; the equity is stripped out, and the homeowner is evicted.

Then there are "mortgage elimination" scams. The strapped homeowner is told he can pay off the mortgage quickly by altering the payment terms. Some people are even told they can pay off a 30-year mortgage in 7 months.

The scamsters may claim there are loopholes in the original mortgage that make it invalid. Often these swindles are pulled by fringe groups that believe the Federal Reserve System is illegal; therefore, the money the bank advanced to the borrower wasn't real money; ergo, the loan doesn't have to be paid back. Over and over, courts have rejected this specious argument.

A classic case is the Dorean Group of Oakland. Its two founders -- one of whom had gone to the slammer in the 1990s for securities fraud -- claimed they had erased 1000 mortgages around the country. One of their Internet sales pitches featured an audio clip questioning the legitimacy of the Federal Reserve. The Better Business Bureau, including the San Diego branch, warned of this one early.

Two years ago, the Federal Bureau of Investigation raided the headquarters and carted off records. Eventually, the founders were indicted for mail and bank fraud, among several things. But Dorean acolytes are still peddling this one around the country, even as the founders sit in the pokey awaiting trial.

Shelden was in on the prosecution of a Garden Grove company, Housing Assistance Services. Claiming it would help people negotiate with their lenders, it charged an up-front fee of $750 to $1250, plus additional fees later on. But victims claimed the company did little for its money. The attorney general's office won an asset freeze in mid-2004, charging that the company illegally and deceptively sold the service. Eventually the case was settled out of court, and the company was forced to stop the practices.

In the mid-1990s, a company named Boston Harbor began placing high-octane ads in San Diego. The pitch: when your loan balance becomes larger than the property is worth (common in those days), you deed the property to Boston Harbor, which stops making mortgage payments and tries to sell the property for a discount and pay off the lender for less than the original loan. Problem: any homeowner's gain is taxable. (If the owner owes $300,000 on a loan, and the lender agrees to take $275,000, then the owner has incurred debt relief taxes on $25,000.) No problem, said Boston Harbor: it would take care of that tax obligation. The Internal Revenue Service said such a deal was unacceptable, as did the Federal National Mortgage Association. The attorney general sued, charging multiple misrepresentations, and the case went to trial. Shelden handled it, with help from the district attorney's office. In the end, Boston Harbor agreed that it would not make any claims about tax relief and would stop boasting about other services it claimed to provide.

So what do you do? Robinson says to be very wary of anyone asking for an up-front fee; anyone refusing to sign a contract; anyone wanting you to sign over your title or asking for power of attorney; anyone promising to eliminate the tax burden on a gain on a foreclosure sale; and anyone promising to restore your credit or making cold calls.

Says Shelden, "Don't sign with a person who knocks on your door the same day he knocks without doing a lot of checking. He might have to be registered with the Department of Real Estate. Explore what other loan products are out there." For example, there may be legitimate ways that you can get a loan you can handle -- say, with a longer maturity.

Most of all, "Go talk with your lender to see what the lender is willing to do," says Shelden.

Stan Sexton of New Horizons Realty in La Mesa notes that one alternative to foreclosure is the short sale. In such a case, the lender agrees to accept less than the amount due. There is also the deed in lieu of foreclosure, by which the borrower turns over the property to the lender without any foreclosure proceedings. Both sides must enter into the transaction voluntarily and in good faith.

Thus far, the foreclosure statistics, despite their sharp rise, are lower than economists expected. Therefore, some say the housing woes are coming to an end. But, says Saxton, "Deeds in lieu of foreclosure and short sales are big," and the optimism may be unwarranted.

Attorney Mark L. Miller is seeing some deeds in lieu of foreclosure and short sales but not as many as could be expected. The industry "is still in denial. Mortgage companies keep coming up with toxic loans" that will eventually increase foreclosures, he says. He is seeing people in trouble grabbing 50-year loans. "I'm the doctor. People want me to fix their mortgages. But bankruptcy is the answer," and bankruptcies are going up sharply.

Here's something you might be interested in.
Submit a free classified
or view all

Previous article

Black Lives Matter offshoot chooses street outside Police Headquarters for street mural

Placing the BLAME

— If you're like a record number of San Diegans, you're having an anxiety attack: you've got a mortgage you can't afford, and higher home prices won't bail you out. Save yourself additional angst: if you get a cold call from someone representing himself as a foreclosure consultant or a debt elimination specialist, hang up the phone.

The rascal will tell you he wants to help you avoid foreclosure. Chances are, he wants to relieve you of your money or even your home. These scams utilize the Internet and sometimes target religious or ethnic groups. Not surprisingly, San Diego is a haven for them. "People will be contacting you saying, 'I know how to get you out of foreclosure,' " says Sheryl Charleston, president of the San Diego Better Business Bureau. "These guys will collect money from the consumers, who then find out that they are going to lose their homes."

Notices of default and possible foreclosures are a matter of public record that are printed in some newspapers. "They're a shopping list for the crooks," says Stephen Robinson, head of the economic crimes unit of the district attorney's office. "The crooks determine which homes have equity in them and start cold-calling. One of my pieces of advice is if you get a cold call, you probably don't want to do business with them."

"We are hearing that the increases in foreclosures will take a giant spike, and we are trying to get the word out that we will take action against people who violate the equity-skimming laws or the foreclosure consultant laws," says Al Shelden, senior assistant state attorney general, who is based in San Diego. "It's conceivable there could be criminal penalties, civil penalties, restitution to consumers."

Already, there has been a spike. According to DataQuick Information Systems, foreclosures in the county zoomed last year to 1612 from a mere 212 in 2005. Notices of default, early steps preceding foreclosures, more than doubled from 3933 to 8816.

So what are these scams? The so-called "foreclosure rescue" scam takes many forms. Recently, "most of the local cases were the straightforward cons where the crook promises to negotiate with the homeowner's lender in exchange for one month's mortgage payment. Typically, the crook takes the money and runs," says Robinson.

Or homeowners may be conned into letting the foreclosure "rescuer" take over the mortgage payments. "When somebody says, 'I will take over your payments,' it almost always ends in disaster," says Shelden.

In some cases, the slick operator says he can save the residence from foreclosure if the homeowner will turn over the title to him for a year or two. During the interim, the homeowner can live in the house and pay rent. But often, unknown to the homeowner, the house is sold to an investor; the equity is stripped out, and the homeowner is evicted.

Then there are "mortgage elimination" scams. The strapped homeowner is told he can pay off the mortgage quickly by altering the payment terms. Some people are even told they can pay off a 30-year mortgage in 7 months.

The scamsters may claim there are loopholes in the original mortgage that make it invalid. Often these swindles are pulled by fringe groups that believe the Federal Reserve System is illegal; therefore, the money the bank advanced to the borrower wasn't real money; ergo, the loan doesn't have to be paid back. Over and over, courts have rejected this specious argument.

A classic case is the Dorean Group of Oakland. Its two founders -- one of whom had gone to the slammer in the 1990s for securities fraud -- claimed they had erased 1000 mortgages around the country. One of their Internet sales pitches featured an audio clip questioning the legitimacy of the Federal Reserve. The Better Business Bureau, including the San Diego branch, warned of this one early.

Two years ago, the Federal Bureau of Investigation raided the headquarters and carted off records. Eventually, the founders were indicted for mail and bank fraud, among several things. But Dorean acolytes are still peddling this one around the country, even as the founders sit in the pokey awaiting trial.

Shelden was in on the prosecution of a Garden Grove company, Housing Assistance Services. Claiming it would help people negotiate with their lenders, it charged an up-front fee of $750 to $1250, plus additional fees later on. But victims claimed the company did little for its money. The attorney general's office won an asset freeze in mid-2004, charging that the company illegally and deceptively sold the service. Eventually the case was settled out of court, and the company was forced to stop the practices.

In the mid-1990s, a company named Boston Harbor began placing high-octane ads in San Diego. The pitch: when your loan balance becomes larger than the property is worth (common in those days), you deed the property to Boston Harbor, which stops making mortgage payments and tries to sell the property for a discount and pay off the lender for less than the original loan. Problem: any homeowner's gain is taxable. (If the owner owes $300,000 on a loan, and the lender agrees to take $275,000, then the owner has incurred debt relief taxes on $25,000.) No problem, said Boston Harbor: it would take care of that tax obligation. The Internal Revenue Service said such a deal was unacceptable, as did the Federal National Mortgage Association. The attorney general sued, charging multiple misrepresentations, and the case went to trial. Shelden handled it, with help from the district attorney's office. In the end, Boston Harbor agreed that it would not make any claims about tax relief and would stop boasting about other services it claimed to provide.

So what do you do? Robinson says to be very wary of anyone asking for an up-front fee; anyone refusing to sign a contract; anyone wanting you to sign over your title or asking for power of attorney; anyone promising to eliminate the tax burden on a gain on a foreclosure sale; and anyone promising to restore your credit or making cold calls.

Says Shelden, "Don't sign with a person who knocks on your door the same day he knocks without doing a lot of checking. He might have to be registered with the Department of Real Estate. Explore what other loan products are out there." For example, there may be legitimate ways that you can get a loan you can handle -- say, with a longer maturity.

Most of all, "Go talk with your lender to see what the lender is willing to do," says Shelden.

Stan Sexton of New Horizons Realty in La Mesa notes that one alternative to foreclosure is the short sale. In such a case, the lender agrees to accept less than the amount due. There is also the deed in lieu of foreclosure, by which the borrower turns over the property to the lender without any foreclosure proceedings. Both sides must enter into the transaction voluntarily and in good faith.

Thus far, the foreclosure statistics, despite their sharp rise, are lower than economists expected. Therefore, some say the housing woes are coming to an end. But, says Saxton, "Deeds in lieu of foreclosure and short sales are big," and the optimism may be unwarranted.

Attorney Mark L. Miller is seeing some deeds in lieu of foreclosure and short sales but not as many as could be expected. The industry "is still in denial. Mortgage companies keep coming up with toxic loans" that will eventually increase foreclosures, he says. He is seeing people in trouble grabbing 50-year loans. "I'm the doctor. People want me to fix their mortgages. But bankruptcy is the answer," and bankruptcies are going up sharply.

Sponsored
Here's something you might be interested in.
Submit a free classified
or view all
Previous article

Bounce and Twerk: common moves for Megan Thee Stallion and Danyelle “Sweet Dee” Solana

“I use Megan’s music when teaching my classes.”
Next Article

Hard times for San Diego County cities

Hard times for 17 San Diego County cities
Comments
0

Be the first to leave a comment.

Sign in to comment

Sign in

Art Reviews — W.S. Di Piero's eye on exhibits Ask a Hipster — Advice you didn't know you needed Best Buys — San Diego shopping Big Screen — Movie commentary Blurt — Music's inside track Booze News — San Diego spirits City Lights — News and politics Classical Music — Immortal beauty Classifieds — Free and easy Cover Stories — Front-page features Excerpts — Literary and spiritual excerpts Famous Former Neighbors — Next-door celebs Feast! — Food & drink reviews Feature Stories — Local news & stories From the Archives — Spotlight on the past Golden Dreams — Talk of the town Here's the Deal — Chad Deal's watering holes Just Announced — The scoop on shows Letters — Our inbox [email protected] — Local movie buffs share favorites Movie Reviews — Our critics' picks and pans Musician Interviews — Up close with local artists Neighborhood News from Stringers — Hyperlocal news News Ticker — News & politics Obermeyer — San Diego politics illustrated Of Note — Concert picks Out & About — What's Happening Overheard in San Diego — Eavesdropping illustrated Poetry — The old and the new Pour Over — Grab a cup Reader Travel — Travel section built by travelers Reading — The hunt for intellectuals Roam-O-Rama — SoCal's best hiking/biking trails San Diego Beer News — Inside San Diego suds SD on the QT — Almost factual news Set 'em Up Joe — Bartenders' drink recipes Sheep and Goats — Places of worship Special Issues — The best of Sports — Athletics without gush Street Style — San Diego streets have style Suit Up — Fashion tips for dudes Theater Reviews — Local productions Theater antireviews — Narrow your search Tin Fork — Silver spoon alternative Under the Radar — Matt Potter's undercover work Unforgettable — Long-ago San Diego Unreal Estate — San Diego's priciest pads Waterfront — All things ocean Your Week — Daily event picks
4S Ranch Allied Gardens Alpine Baja Balboa Park Bankers Hill Barrio Logan Bay Ho Bay Park Black Mountain Ranch Blossom Valley Bonita Bonsall Borrego Springs Boulevard Campo Cardiff-by-the-Sea Carlsbad Carmel Mountain Carmel Valley Chollas View Chula Vista City College City Heights Clairemont College Area Coronado CSU San Marcos Cuyamaca College Del Cerro Del Mar Descanso Downtown San Diego Eastlake East Village El Cajon Emerald Hills Encanto Encinitas Escondido Fallbrook Fletcher Hills Golden Hill Grant Hill Grantville Grossmont College Guatay Harbor Island Hillcrest Imperial Beach Imperial Valley Jacumba Jamacha-Lomita Jamul Julian Kearny Mesa Kensington La Jolla Lakeside La Mesa Lemon Grove Leucadia Liberty Station Lincoln Acres Lincoln Park Linda Vista Little Italy Logan Heights Mesa College Midway District MiraCosta College Miramar Miramar College Mira Mesa Mission Beach Mission Hills Mission Valley Mountain View Mount Hope Mount Laguna National City Nestor Normal Heights North Park Oak Park Ocean Beach Oceanside Old Town Otay Mesa Pacific Beach Pala Palomar College Palomar Mountain Paradise Hills Pauma Valley Pine Valley Point Loma Point Loma Nazarene Potrero Poway Rainbow Ramona Rancho Bernardo Rancho Penasquitos Rancho San Diego Rancho Santa Fe Rolando San Carlos San Marcos San Onofre Santa Ysabel Santee San Ysidro Scripps Ranch SDSU Serra Mesa Shelltown Shelter Island Sherman Heights Skyline Solana Beach Sorrento Valley Southcrest South Park Southwestern College Spring Valley Stockton Talmadge Temecula Tierrasanta Tijuana UCSD University City University Heights USD Valencia Park Valley Center Vista Warner Springs
Close