Apr 12, 2011

Watch Out For the Newest Foreclosure Scam in California

Scams involving purported mortgage modifications and foreclosure assistance have abounded since the California foreclosure crisis in 2009. The California Department of Real Estate recently warned consumers about the newest version of these scams. (To learn more about foreclosure, check out Nolo's Real Estate & Rental Property area.)

In this scam, a "lawyer" invites homeowners to join a mass joinder or class action against a bank or mortgage company. The "lawyer" promises results such as stopping foreclosures, lowering mortgage payments, lowering principal balances, or eliminating mortgages altogether. "Clients" must pay a nonrefundable fee, often between $3,000 and $9,000 to join the litigation. The litigation is a sham, and the clients receive nothing.

Scammers often solicit victims by mass mail or advertise the "litigation" on the Internet. The solicitations often sound legitimate, and require clients to sign lengthy retainer agreements.

To learn more about this scam, and how to protect yourself, check out the California Department of Real Estate's consumer alert.

by Guest Blogger Kathleen Michon