AMERICAN HOUSING RESCUE AND FORECLOSURE PREVENTION ACT OF 2008 -- (Senate - June 19, 2008)
BREAK IN TRANSCRIPT
Mr. KOHL. Madam President, today I rise to briefly discuss my amendment No. 4988, which is cosponsored by Senators Collins, Lincoln and Mikulski.
In February, I held a revealing hearing in the Aging Committee that uncovered the ways scam artists prey on homeowners in financial and emotional distress. These scams are a consequence of the mortgage crisis that is plaguing our country--and my amendment attacks this growing problem.
For most people, their home is their greatest asset. When a homeowner falls behind in their mortgage payments, it is a great emotional strain. Scam artists prey on an owner's desperation and give them a false sense of security, claiming they can help ``save their home.'' The types of scams vary, but the end result is that the homeowner is left in a more desperate situation than before.
There are three types of prevalent scams. The first is ``phantom help,'' where the ``rescuer'' claims that they will call the homeowner's lender and renegotiate the loan for a fee. Often the homeowner will pay the fee--but the ``rescuer'' will abandon the homeowner without any intervention. The second is a ``rent-to-own'' scheme which is set up to fail. A homeowner will sign over the title of the house and make monthly payments to the scammer in order to help rebuild their credit. However, the monthly payments are extremely high and often result in the homeowner violating the contract and being evicted. Finally, a homeowner may be tricked into unknowingly signing over the title of their house and power of attorney to the scammer and the scammer will then sell the house to a third party. The scam artist might give the homeowner a small amount of money, but often only a fraction of the actual selling price.
As you can see, these scams are well crafted and extremely complicated. Catie Doyle, the chief attorney for Legal Aid Society of Milwaukee, testified before the Special Committee on Aging, describing the difficulties and problems lawyers are facing when trying to help victims of these scams. One major problem she pointed out was that lawyers have to piece together both State and Federal laws to untangle these scams.
The amendment I am offering will remedy Ms. Doyle's concerns. While there are some States that have foreclosure rescue scam laws or are in the process of enacting them, many homeowners still go unprotected from these predators. This legislation will require that all contracts between a foreclosure consultant and a homeowner be in writing and fully disclose the nature of the services and the exact cost. Additionally, the bill prohibits upfront fees from being collected and prohibits a ``consultant'' from obtaining the power of attorney from a homeowner.
I have a letter of support from a variety of consumer groups including the Center of Responsible Lending, Consumer Federation of America, National Community Reinvestment Coalition, the National Fair Housing Council, National Consumer Law Center and the National Council of La Raza.
The foreclosure crisis is devastating homeowners and communities across the country. Most communities across the country are experiencing both the primary and secondary effects. It is important that we address fraud at the front end of the lending process, as well as for those who face foreclosure. I hope that we can work together to move this amendment forward.
I yield the floor.
BREAK IN TRANSCRIPT