The defendants deny the allegations, saying that they saved the houses from foreclosure and that the homeowners understood the terms of the deals, under which they would be renting back the houses they once owned. The deals give people the chance to repurchase their house after a year. In Bilaal's case, the price would be $110,000, according to the lawsuit.
"All of my clients had one year to raise over $100,000 to buy their home back," said AARP lawyer James T. Sugarman. "This would be on top of their present mortgage loan amount. Even if my clients did understand the terms of the so-called buy-back option, it would be impossible for them to do because they could never qualify for a $100,000-plus loan on top of their current loan."
Idriis Bilaal points to pictures of his family in the 100-year-old house in Northeast Washington where he was born. He has filed suit claiming he and two other D.C. homeowners were duped into selling their homes.
(Len Spoden For The Washington Post)
|
Forearmed Before Foreclosure
AARP lawyer James T. Sugarman says "there are dozens of ways to save your house from foreclosure" but that those in desperate times too frequently jump at bad deals.
His rule of thumb is, "Never do business with anyone who comes to your door or calls you out of the blue or sends you a flier. It's so bad out there that you can't afford to trust a stranger."
If you're facing foreclosure:
• Look into renegotiating the loan with the lender or working out a repayment plan.
• If you can afford it, get a lawyer from the local bar association referral program or a lawyer recommended by a trusted friend to help fight the foreclosure. If you have a low income, contact the local legal services network.
• Contact a government-approved housing counselor. Counselors are listed by state at www.hud.gov, the Web site for the Department of Housing and Urban Development.
• File a Chapter 13 bankruptcy to reorganize your debts. That will stop a foreclosure. But you must keep up the mortgage payments during reorganization. Be sure you get a reputable bankruptcy lawyer. (Some con artists offer to file bankruptcy petitions for a homeowner but never file the appropriate follow-up paperwork.)
• If you suspect the lender won't agree to cooperate or has included abusive terms, contact the local licensing regulator, consumer protection agency or federal banking regulators.
If you think you have been scammed:
• Any D.C. resident who is over 60, living on a low income and suspects a rescue scam can contact AARP's Legal Counsel for the Elderly at 202-434-2120.
• Contact HUD's National Servicing Center at 888-297-8685. The center refers callers alleging scams to local authorities and HUD-approved agencies, as well as the Better Business Bureau.
• Seek a temporary restraining order in your state (or D.C.) court.
Before the foreclosure notice comes:
• Elderly homeowners on fixed incomes can apply for reverse mortgages, the kind for which you draw money against the equity in your house for as long as you live rather than having to pay a mortgage. Such loans are fairly complicated, but certified housing counselors are very familiar with them. AARP's Web site offers information at www.aarp.org/revmort, and the Federal Trade Commission has advice at www.ftc.gov/bcp/conline/pubs/homes/rms.htm.
And finally:
• If you go through all the steps and you hear repeatedly that the best thing to do is to sell the house to a legitimate buyer, don't resist.
-- Sandra Fleishman
|
| |
|
Reports of problems with foreclosure rescues have increased in the past 18 months, according to consumer advocates and regulators. The number of homeowners in delinquency or facing foreclosure has steadily marched on, while at the same time home values have skyrocketed. About 435,000 loans nationally were in the foreclosure process in the third quarter of 2004, and 1.7 million were delinquent.
"It's happening more and more frequently because there is the potential for significant gains in this housing market," Niemann said. "The people who are being preyed upon are the most vulnerable -- the elderly, for instance."
Borrowers with poor credit and higher-cost "subprime" mortgage loans have the highest delinquency and foreclosure rates, according to national statistics. That makes them the biggest targets. And although not all subprime loans are abusive, borrowers with abusive high-cost loans have even fewer resources to fight scams, consumer lawyers say.
"The people who are in these situations more often than not have had a series of horrible subprime loans," said AARP lawyer Jean Constantine-Davis. "And now they've been conned into a transaction that they think is a loan but isn't."
Catherine Meads, 64, a co-plaintiff in Bilaal's suit, transferred title to Abell in 2002 on a house appraised later at $270,000. She said, "I didn't think I was selling my house for $9,000. When my sons said I had signed away the house, I couldn't explain to them what I had done. It took me about four months to understand, and I still don't understand what I have done."
What the homeowners don't realize or don't want to accept, advocates say, is that their problems could be solved if they simply sold their houses -- in this market, the houses could fetch much more than is owed. Or they could work with nonprofit, government-approved housing counselors to develop plans to work out their debt.
While foreclosure notices have been public record for years and could be found by investors who checked newspapers ads or government offices, records are now computerized and firms are set up to immediately sell the lists, consumer advocates say.
Those facing foreclosure quickly receive five to 10 fliers a day offering "help," said Pamela Sah of South Brooklyn Legal Services in New York. People also show up at their door and call.
