Senior Foreclosure Rescue Scams

It should be no surprise that senior citizens are the target of the latest financial scam – foreclosure rescue scams. At a hearing yesterday of the Senate Special Committee on Aging, Chairman Herb Kohl said seniors are three times more likely to have sub-prime mortgage loans than younger borrowers and these loans have driven the large increase in foreclosures.

“Senior homeowners are particularly vulnerable to rescue scams because many of them are on fixed incomes and rely on the equity in their homes as their primary financial asset. They are also particularly attractive to financial predators because they tend to have a larger amount of equity in their homes,” Kohl said.

Across the nation, foreclosure filings have increased by 95 percent in the past year. The hearing reviewed how rescue scams work, who they impact, and what the government can do to eliminate the scams.

Foreclosure rescue scams target low-income and senior homeowners already facing a financial difficulty. Often these financial predators will claim that they can help “save” the home of a senior experiencing foreclosure, when in fact they plan to walk away with both the title and equity of the home.

“The mortgage foreclosure crisis is real. Most communities across the country are experiencing both the primary and secondary effects,” said Chairman Kohl. “We need to determine how federal and state governments can best protect seniors and other targeted populations from these ruthless financial predators.”

Because foreclosure filings are public information, scammers target the already troubled homeowners, contacting them by phone or mail repeatedly with claims that they can “save” the home and help the homeowner remain in their residence.

Often these financial predators lead the homeowner to believe that there are no other options and advise them not to contact their lender or seek legal advice. In the end, these predators walk away with both the title and equity of the home.

Chairman Kohl says he will soon introduce legislation to help homeowners across the country avoid these foreclosure rescue scams, especially in states where no law exists to prohibit or regulate these practices.

Kohl also acknowledged the plan recently announced jointly by the mortgage industry and administration to help seriously delinquent borrowers stay in their homes. “While this is a step in the right direction,” Kohl said, “there are concerns that this help will not reach as many troubled homeowners as possible.”

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