By Sam Baker, Local Morning Edition Host
http://stream.publicbroadcasting.net/production/mp3/kera/local-kera-852220.mp3
Dallas, TX –
Some homeowners desperate to avoid home foreclosure can fall victim to criminals promising their help. The Texas Attorney General's office already has shut down eight of these so-called rescue scams.
Navigate the recession with KERA! Get tips on avoiding foreclosure, access job resources and more at kera.org/economy.
Local prosecutors also are on the lookout for the scammers. Special Investigator Andrew Masters and Assistant D-A Stephanie Martin work in the Specialized Crime Division of the Dallas County District Attorney's office. In KERA's Monday economy feature, Martin and Masters talk with KERA's Sam Baker about the difficulties of prosecuting foreclosure rescue scammers, including the point at which the scam becomes illegal.
Andrew Masters: If there are legitimate companies out there, that work on behalf of the consumer and if they're diligent in their efforts to try and help the consumer and try to stop the foreclosure then there's no criminal liability. There's nothing wrong with that. The problem comes in is if I ask you for money upfront and once I receive that money I do little to nothing afterwards then that becomes a potential crime.
Sam Baker: To what lengths do they go to do this?
Masters: Typically, you'll see the money upfront is what they're looking for. That's where they'll charge, we've seen, anywhere from a thousand to 2,500 dollars ($2500) upfront fee and then after that, they'll do very little or nothing at all to assist in the stopping of the foreclosure.
Sam: How do they find their victims?
Masters: There is a service out there that lists all the properties that are about to go into foreclosure or are actually in foreclosure. Anybody can get this list and once they obtain it they'll go out to the pre-foreclosure individuals and tell them we can stop your mortgage or we can stop your foreclosure and we can help you but you have to act now.
Sam: What should they have done first?
Stephanie Martin: They should have contacted their mortgage company and explained the situation to them. They can't be afraid of the mortgage company, because a lot of times that's what we see is I was afraid they were going to tell me no.' Well you have to ask before they can tell you no.
Sam: Are these kind of crimes difficult to prosecute?
Masters: Yes, there are several obstacles that we have to overcome before we can bring a case to the court system. The first is where do you draw the line in the reasonableness of what the company does. If a homeowner pays the company money and they've gone into near foreclose two or three times before, it may not be likely that the lending institution wants to work with them at all no matter how hard the company tries. So the hard part for us is finding that line of distinction of reasonableness as to whether or not the company acted in good faith or not.
Sam: So let's say then if such a company accepts a homeowner's money and they make a call or two, they know nothing's going to happen but nevertheless they made a call or two and can say they did. Are they still within the law?
Martin: It depends. I say that because there are a lot of different things you have to look at. You have to look at the totality of the circumstance. What contracts did they sign? What assurances did the bad guy fuel? What did that person say to the homeowner to get that homeowner to give him money? Did he promise I will absolutely save your home? Did he make promises that he knew he couldn't keep? Did he make promises that he knew weren't going to be able to be fulfilled? Those are the questions that we have to be able to answer.
Sam: Based on the cases you've dealt with or the cases you've heard about, do homeowners often stand a chance of getting their money back or is it likely just gone?
Masters: We have not been able to retrieve any money yet. We are hopeful that we will. There are some cases where it is possible. But to date, we have not been able to get any restitution for the victims.
Martin: We have police agencies that are working on cases but a lot of times the complainants or the victims come directly to us, because they are afraid that the police agencies won't understand or they won't be able to prosecute it because they've heard about Andy and me taking in cases and working them from the ground up if you will. So they come directly to us and we currently have over 100 investigations that we have not finished investigating to get to whether or not we're going to indict them. And that's just Andy and me.
Masters: If we stop taking in new cases today, we would have enough work to last us at least two to three years at least. They keep coming and coming
Martin: ...And that's not counting the cases that we've already indicted. In two years, we've indicted 47 cases and those cases have settings at the trial court level. Most of them. Some of them the people have not been arrested yet so we don't have settings for some of them.
Sam: Are you hearing from most of the people, do you think, that have been affected by foreclosure prevention scams or is it the tip of the iceberg?
Martin: We have not heard from even a miniscule amount of these people.
Masters: I'll give you an example. We have one case that we've received a complaint from only two or three people and when we looked into it and started investigating it found out that there were about 300 victims and we'd only received complaints from two. There's a lot of people out there that have been affected by this that have not come forward either because they are afraid for one reason or another or they don't know to come forward.
Sam: But let's say if they are approached by someone who says I can help with your mortgage, what kind of questions should they ask? What should they look for?
Masters: Are they are asking for money upfront? Number one. Most places the legitimate places we've seen they don't ask for money upfront. They offer to help you and then if they get compensation at all, they get it on the backend. Another one is if anybody says that they are affiliated with a government agency. Typically, that may be a red flag. I don't think that's always going to be a suspicious thing but somebody should investigate that and verify with that governmental agency, is this company affiliated with you? More often than not, you'll find they have no affiliation.
Martin: Something else is if they say do not contact your lender. You let me do all the negotiations. Because there will become a breakdown in communication if you stop talking to your lender. Your lender won't know what you want to happen. So always talk to your lender. Don't be afraid of the bank.
Andrew Masters and Stephanie Martin work in the Specialized Crime Division of the Dallas County District Attorney's office.
You can find more information and resources at our website, kera.org/economy.
Support for Kera comes from the Corporation for Public Broadcasting. Facing the Mortgage Crisis is part of CPB's Public Service Media Economic Response Initiative.