Anne Milgram, the Attorney General of New Jersey filed suits against 37 false foreclosure rescuers. They were loan providers together with their employees who had taken recourse to fraudulent ‘foreclosure rescue’ plans to persuade troubled foreclosure victims to sign over their title deeds. The charges against them related to consumer fraud and civil racketeering.
It is alleged that the accused preyed on 48 foreclosure victims by taking advantage of their condition. They were at that time in a state of fear of losing their houses and readily agreed to participate in a plan related to sale and leasing back of their units. They were made to believe that if they wrote off their titles to another third party they would be able to continue to stay in their houses as renters. Their damaged credit would be repaired and they would get the time to purchase back their reo homes.
The truth was that they were cheated. The Attorney General scathingly remarked, “What is particularly egregious about the exchanges is that the defendants preyed on struggling homeowners, who turned to them for hope in their darkest financial hour. Our complaints charge the defendants with capitalizing on the desperation of homeowners by inducing them to surrender their titles to co-conspiring third parties or ‘straw’ buyers.” Milligram termed the move as “greed-driven fraud.” Milligram apprehends that such cases of foreclosure scam will continue to increase.
The straw buyers retained most of the proceeds of the sale for themselves and thus ate up whatever equity had been left on the house. The original borrowers could not restore their credit ratings and often failed to pay the high rent. Inevitably the house ended up by being foreclosed and the owners evicted. By turning to the scammers the foreclosed victims jumped from the frying pan into the fire.
Among the victims was an aged widow who had been asked to pay $3,000 per month as rent. She desperately needed to continue to stay in the house that was her home after the death of her husband.
In 2007 there had been 34,457 foreclosure postings in New Jersey. It was double the numbers of 2006 and an increase of 90% from the foreclosure figures of 2005. In the first quarter of 2008 there have been 12,000 foreclosure listings. Governor, Jon S. Corzine has made it mandatory for foreclosure negotiations to be held before the process continues. The idea is to stop the blight of neighbourhoods from reo houses.
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