“Foreclosure rescue” scam exposed by mortgage fraud expert

By David F. Ashton

The Bee, Jan 30, 2008, Updated Oct 30, 2009 (3 Reader comments)

Richard Hagar, a nationally-known expert on real estate and mortgage fraud, exposes current scams.

David F. Ashton / THE BEE

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Nationally, and locally, real estate and mortgage fraud is rising to unprecedented levels — according to Richard Hagar, a nationally-known expert on real estate and mortgage fraud, at an East Portland meeting a few weeks ago.

“This crime is affecting our local economy, and consumers need to be aware of its impact on home values in their neighborhoods,” said Portland Police Bureau Detective Liz Cruthers, as she introduced Hagar. “Fraudulent transactions by real estate professionals are also fueling foreclosure rates and the sub-prime meltdown.”

Hagar’s presentation exposed the seedy world of fraudulent real estate transactions, including foreclosure rescue and mortgage elimination schemes, predatory lending, adjustable rate mortgages with huge balloon payments, and other scams.

“People who run ‘foreclosure rescue’ operations are the lowest of the low,” Hagar stated. “They offer an individual in dire circumstances false hope — and then shaft them.”

Here’s how it works: A homeowner gets behind on mortgage payments. A “helpful” person comes along, claiming to be able to help them eliminate the foreclosure problem.

The “rescuer”, Hagar said, tells the homeowner that the only remedy is for them to sign a “Quit-Claim Deed” over to them. The rescuer gives the homeowner $5,000, offers to rent the house back to the homeowner, and “gives them the option” to purchase the home back later. However, if the homeowner misses one rent payment, they’re evicted.

“The rescuer — the scammer — now has title to the home, for pennies on the dollar and a promise,” explained Hagar. “And, it is usually an oral — not written — promise.”

Hagar told of a local widow who was emotionally distraught following the death of her husband. Because her late husband always had taken care of the bills, the widow didn’t make any payments for a couple of months; her mortgage payments fell behind, and the bank started foreclosure procedures.

“One of these slimy stinkers got wind of the situation,” said Hagar, as he told the horror story. “He offered to refinance the widow’s home for her, but never took an application. He then offered to sell the widow’s house for her; but he didn’t. He said he’d stop the foreclosure process himself; and then he did nothing.”

On the courthouse steps, Hagar explained, this scam artist purchased the property for the amount remaining on the mortgage — a mere $10,000. Out of the “kindness of his heart”, he gave the widow $5,000 “moving money”. Within two months, he sold her house for $300,000 and pocketed the money.

When Hagar asked if anyone in the audience had personal experience with this kind of fraud, a woman in the back of the room timidly raised her hand. She said her mother, who had a home in Sellwood, had just lost her nearly-paid-off home to such a “foreclosure predator”.

Spotting the scam

Hagar said he’s been to classes taught by traveling promoters who instruct people how to become a “foreclosure rescue” expert. “I personally think this is evil behavior. It isn’t illegal, but it is evil.”

Common instructions for the “deals” which foreclosure-rescue promoters teach, Hagar said, include:

· Check foreclosure listings frequently — perhaps daily — to find “fresh” prospects;

· Look for homes with high equities (value of a home over the mortgage);

· Approach the victim homeowner early in the foreclosure process;

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