Rising mortgage payments have paved the way for scammers who peruse foreclosure listings. Grasping at any offer for help, their victims have paid for false promises, been cheated out of equity and, in severe cases, were tricked into transferring ownership of their homes.
Now, in an effort to shelter consumers from equity skimmers, the Washington Attorney General's Office is using those same listings.
"It's a new twist on 'search and rescue,'" Attorney General Rob McKenna said. "So-called foreclosure 'rescuers' comb through public listings for targets. We have the same lists and we're sounding the alarm on their underhanded tactics."
The Attorney General's Consumer Protection Division is mailing more than 14,000 letters this week to homeowners facing foreclosure because of missed mortgage payments.
Also, starting in September, many county treasurers will include a warning from the attorney general along with the certified foreclosure notices mailed to those who have neglected to pay property taxes.
Other treasurers will post the AGO warning in their offices and on county Web sites or distribute them through local newsletters and weekly newspapers.
"The issue of foreclosure is certainly making a lot of headlines and the issue of foreclosure rescues is too," Kristin Alexander of the Washington State Attorney General's office, says. "The Attorney general has taken action in two cases and is getting ready to file a third—personally, I've taken a handful of calls from people on this."
But, Alexander says, the key is in prevention and outreach.
McKenna, whose office has brought enforcement actions against businesses found to be preying on vulnerable property owners, says he's working to protect homeowners facing foreclosure by making sure the alert reaches homeowners before they're contacted by illegitimate investors.
"I received a phone call a couple days ago from a woman, she had to refinance and thought she was going in for a refinancing appointment but the mortgage broken steered her to a private investor, who let the property go to auction and it proceeded very quickly," Alexander said.
She cautioned that homeowners are signing contracts for what they think are helpful services, "but it turns out to be anything but that."
Some are getting re-rental contracts where they think they are renting to buy back the house -- but then are charged a rent that's bigger than the original mortgage.
Alexander said one case involved homeowners who paid money to a Florida company, that they were pressed into paying money to.
"Basically they were offered all kinds of help, the customers paid them all kinds of money -- and they agreed never to contact the mortgage company directly," Alexander said.
"We know the scam artists are contacting people simply by getting their names from county foreclosure letters and public information sources, so we're trying to contact people using the same sources," Alexander said. "We're letting people know these offers are too good to be true."
Benton County Treasurer Duane Davidson has already taken measures to warn local residents about foreclosure-related scams and believes letters featuring the AGO seal will help spread the message further.
"There is nothing worse than being betrayed by individuals claiming they'll help you," Davidson said. "Foreclosure 'rescue' schemes quite often do not rescue the individual from foreclosure at all, but instead put at risk what equity the owner has in the home."
The Attorney General's Office has placed an additional warning about foreclosure rescue scams along with resources on its Web site at www.atg.wa.gov/foreclosure.aspx.
The letters and the Web site encourage property owners to seek the advice of a housing counselor before signing any contract or sale agreement.
Free foreclosure and homeownership counseling is available at www.homeownership.wa.gov or by contacting the Washington State Homeownership Information Hotline at 1-877-894-HOME (1-877-894-4663).