Foreclosure Rescue Fraud Scams to be Regulated by New State Law
Scammers have been found to be preying on distraught homeowners, offering their services along with promises of too-good-to-be-true outcomes. Although there are genuine foreclosure rescue companies, many of them charge their clients extensive upfront fees and then walk away without helping distressed homeowners save their houses.
For high upfront fees, “counselors” involved in the scams would claim to raise the credit rating of the homeowner or modify their existing mortgage’s terms. In some cases, they ask the homeowner to sign over a deed to another who promises to rent back the residence and in the future, will allow the original owner to purchase it.
Additional mortgage on the properties would then be taken out by the foreclosure companies, all done without the knowledge of the homeowner, and sometimes, falsifying information on the loan application.
A law which was signed into effect this week seeks to change all that. The Foreclosure Rescue Fraud Prevention Act, which will regulate the industry and oblige foreclosure consultants to secure a license from the state Department of Banking and Insurance, was signed by Gov. Chris Christie on Tuesday.
Phyllis Salowe-Kaye, New Jersey Citizen Action’s executive director who has worked with the sponsor of the bill, said, “It really toughens the rules and regulations for those people. It will regulate that industry of scammers and those who would do harm to folks who are already facing a horrific situation.”
Salowe-Kaye said hundreds of upset homeowners who paid as much as $7,000 in upfront fees to these “foreclosure consultants” approached his organization.
New Jersey Assemblyman Gary S. Schaer who sponsored the bill said that he first proposed the measure four years ago and seeing it already become a law is a relief. He said, “New Jerseyans will be protected from scam artists.”