KOHL UNVEILS FORECLOSURE RESCUE SCAM BILL
Bipartisan Measure Would Protect Financially Distressed Homeowners From Being Targeted
Today, Senators Herb Kohl (D-WI), Susan Collins (R-ME) and Blanche Lincoln (D-AR) unveiled bipartisan legislation to protect financially distressed homeowners -- often elderly -- from unscrupulous financial predators. The Foreclosure Rescue Fraud Act of 2008 would help end the dramatic increase of mortgage schemes that have risen nationally by 800 percent in the last five years, with an estimated 60,000 cases expected this year.
"More and more Americans already facing the financial trauma of foreclosure are also falling victim to scam artists who trick them with a false message of hope," Kohl said. "The time is now for Congress to attack this growing problem, which is a direct consequence of the mortgage crisis plaguing this country. I urge my colleagues in the Senate to support our bipartisan legislation that would end these cruel acts of fraud against struggling homeowners."
"It is tragic that many senior citizens have been led into loans that are triggering foreclosures, and it is shameful that criminals should add to their distress with fraudulent offers of aid," Collins said. "Our legislation would help ensure that we are taking appropriate steps to prevent heartless fraud against elderly Americans."
"Senior citizens are one of our nation's most vulnerable populations, and it is disheartening to see them being taken advantage of by financial predators," said Lincoln. "With this legislation, we can protect seniors and others at financial risk by creating a basic national legal standard to assist states and federal agencies in the regulation and oversight of foreclosure rescue services. I'm proud to be a co-sponsor of this effort, and I hope we can help many Americans get their financial future back on track."
Foreclosure rescue scams prey on homeowners in the process of foreclosing their homes and especially vulnerable to deceptive practices that seem to offer hope. Instead, these scams often leave the victims facing a far worse financial predicament, sometimes ruining their credit rating entirely and stripping away their equity, making it almost impossible for them to recover financially.
The Foreclosure Rescue Fraud Act aims to prevent homeowners from falling pretty to these cruel abuses by increasing disclosure and creating strict requirements for a person or entity offering foreclosure rescue services. Specifically, once enacted, the legislation would:
Prohibit "a foreclosure consultant" from collecting any fee or compensation before completing contracted services, and from obtaining power of attorney from a homeowner;
Require full disclosure of third-party consideration in the property;
Allow homeowners three days to cancel the foreclosure rescue contract; and
Create a federal floor of protection; and
Allow states without rescue-fraud laws to use these provisions as a way to help scam victims.
In addition, this legislation would help states and federal agencies combat these schemes and protect people already in financial distress from becoming worse off. The legislation builds on the recent steps taken by Congress to improve safeguards at the beginning of the lending process by directly helping those facing foreclosure.