Nolo’s Bankruptcy & Foreclosure Blog

According to RealtyTrac, foreclosures in the first three months of 2011 are trending down as compared to 2010. Foreclosures in January, Februrary, and March of 2011 are down by 27% as compared to foreclosures in the same months of 2010.

Unfortunately, most experts agree that this trend is not due to a healthier economy and housing market, but instead to bank backlogs in the foreclosure process. In 2010/2011 the media called attention to banks' shoddy foreclosure practices (for more on this see Nolo's article False Affidavits in Foreclosures: What the Robo-Signing Mess Means for Homeowners). Courts slapped banks for taking shortcuts on foreclosure paperwork and bypassing procedures meant to protect mortgage holders. Because some banks can no longer ram through foreclosures, a backlog has built, slowing the foreclosure rate.

By: Guest Blogger Kathleen Michon

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