Cash-Strapped Homeowners Face New Threat

Watch Out for the Mortgage Vultures: Cash-Strapped Homeowners Face New Threat

By Matthew Palevsky, Huffington Post. Posted April 29, 2009.

Fraudulent schemes that prey on people who risk losing their homes are on the rise.

Capitalizing on the collapse of the housing market, a Fair Oaks, Calif., company claimed to provide loan-modification services while siphoning money from clients on the brink of losing their homes, say several former clients and employees.

Superior Properties, formerly 2nd Chance Negotiations, operates by soliciting an up-front-fee from homeowners facing foreclosure in return for legal counsel, a lower principal on their mortgage, and a "100 percent money-back guarantee." It's the type of promise that the Federal Trade Commission says is typical of mortgage scams that are the subject of a recently announcednationwide crackdown by the federal government.

2nd Chance Negotiations attracted over 1,000 customers before the California's Department of Corporations (DOC) and Department of Real Estate (DRE) issued separate desist-and-refrain orders on March 24. The joint investigation that led to the desist orders stated that the business was "not licensed and/or legally authorized" to perform its promised services, nor to collect fees in advance -- fees that ran as high as $6,000.