RENT STRIKES: Work with Neighbors and Community Organizations

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NO “NOVEL” MORTGAGE SCAMS: Beware of Attorneys and Others Who Exploit Crises

While the Coronavirus is known as “Novel,” there’s nothing new in the world of mortgage scams. As homeowners lose work due to closures, self-isolation, quarantines, or infrastructure breakdowns, “SAVE YOUR HOME” attorneys are gearing up to steal money and cost people homes. They are the real virus and must be isolated—if you sneeze these boogers into your elbow, burn your shirt. People in a weakened, panicked state will be particularly susceptible to the new wave of scams.

I fought against lawyers and others who unethically caused homeowners to lose their homes after the economic crisis of 2008. Despite being given every chance (with exhibits and witnesses I offered alone), the organization that disciplines attorneys, the courts, and law enforcement failed to put scammers in the slammer where they belonged. Most scammers got a slap on the wrist, if that. In some cases, the courts did reasoning acrobatics to paint me as the villain for pursuing justice for people who wrongly lost their homes and thousands of dollars in fees for illusory (or damaging) services. One court went so far as to bar me from talking to my own client, co-counsel, or the general public (about foreclosure) for nearly 16 months! This is well-documented at www.kellidudley.com and in my book: INIQUITY: How courts systems, lawyers, and legal aid organizations cheated homeowners in foreclosure.  My book is available at no cost on Amazon Kindle Unlimited. In addition, you can get a free copy by joining Mercari here and using your free $10.00 to purchase the book there. After joining and getting the credit, you can search for my book here. (My current pricing includes shipping and will leave you with some extra money.) Similarly, you can join www.Poshmark.com with code KELLIDUDLEY and order my book with your $10.00 gift, but there will be a slight remaining cost with shipping.

Leading up to the economic collapse (and largely a cause of it), there were “easy mortgage” signs and storefronts. These were especially located in vulnerable neighborhoods, like those not served by mainstream brick-and-mortar banks. As soon as the economy collapsed, the very same buildings and signs changed to “SAVE YOUR HOME,” “REFINANCE,” “MODIFICATION.” The scammers simply re-branded. Mortgage foreclosure scammers have a long history of changing their stripes. Prior to 2005, many of them made their bread and butter scamming people to pay for a bankruptcy, taking the money, and only filing a “cover sheet”—never completing all the steps to do a competent bankruptcy. After bankruptcy was reformed in 2005, the scammers knew they could not stand up to scrutiny. Many slimed over to “foreclosure defense” and re-branded as “SAVE YOUR HOME” lawyers. They proceeded to take large monthly fees and do nothing, often not even filing an appearance in the court case. Sometimes, their work was so incompetent as to cause people who hired the scammer lawyers to lose their homes faster than someone who ignored the foreclosure process completely. Their pleadings, when they bothered to turn any in, were so incompetent—in today’s atmosphere, they might have utility in solving the toilet paper shortage.

It is easy to predict the scams that will be aimed at homeowners in the pandemic. With the virus threatening lives, “SAVE YOUR HOME” predators threaten homes, savings, and sanity.

First, scammers are going to tell people to miss their mortgage payments. They may cite other countries or jurisdictions that have offered some mortgage relief, telling people the same has happened or is about to happen in the United States. It is highly unlikely mortgages will be “cancelled” in the United States. Aside from the immense control mortgage companies and banks exercise over every level of government, taking away a mortgage lien would likely run afoul of the Constitution. Even during the financial crisis, efforts to coerce lenders into negotiating with homeowners were based on coddling them and were spotty at best. However, scammers will make loan forgiveness sound like a “done deal.” The scammer may demand money up front to arrange some “forbearance,” “modification,” or “forgiveness.” They will do nothing (or worse).

Next, scammers playing the longer game will, as above, misrepresent the likelihood of mortgage relief to induce the homeowner to pay the lawyer “instead of” their mortgage (a phrase actually used by these criminals in the prior crisis—some even tie the monthly retainer fee to the now-unpaid monthly mortgage amount). They will wait for the homeowner to go into foreclosure, then charge more to “defend” the mortgage. They will do nothing, incompetently defend the mortgage, and—at best—ultimately offer an illusory “resolution.” These illusory resolutions are covered extensively at www.KelliDudley.com or in a free Medium article. Generally, they include deeds-in-lieu, short sales, and similar solutions that include an economic benefit for everyone but the homeowner who is forced to move.

Finally, scammers will offer incompetent bankruptcies. Most typically, they fail to explain the difference between a Chapter 7 and Chapter 13 bankruptcy, causing the homeowner to agree to a bankruptcy that involves giving up the home while the lawyer falsely promises to save it. Since the scammer I knew who most splendidly pulled off this scam became a judge, it is unlikely anyone will crack down on it soon. It is covered extensively in my book and on my blog.

It is important homeowners keep up payments during any crisis. No matter what scammers want you to pay them to believe, mortgage documents do NOT contain clauses letting you off the hook—or even giving you a break of any kind—in medical or other emergencies. The government has little power to force mortgage companies to negotiate, let alone force them to “forgive” mortgages. To the contrary, mortgage law is bought and paid for by the mortgage industry. In addition to hiring powerful lawyers, mortgage industry representatives do everything from write statutes and regulations governing mortgage foreclosure to drafting the documents given by “free” legal assistance programs to unrepresented homeowners.

If you have trouble with your payments, speak only with a reputable lawyer or a FREE HUD-certified housing counseling agency. HUD-certified housing counseling agencies can be found at https://apps.hud.gov/offices/hsg/sfh/hcc/fc/. DO NOT hire a “SAVE YOUR HOME” lawyer with a high up-front cost, monthly retainer, “pay me instead of your mortgage” plan, no written retainer contract clearly outlining your rights and responsibilities and how money will be used, or “housing counselor” who does not work for one of the agencies listed at the HUD link. Toilet paper or not, flush these scammers before they infect your home!