Pheffer Warns Homeowners On Equity Theft
Assemblywoman Audrey I. Pheffer wants area homeowners to be on the lookout for home equity theft scams in the area.
"We have all seen signs posted on telephone poles proclaiming 'We Buy Homes,' 'Save Your Home Now,' or 'Having Problems Paying Your Mortgage? Let us Help You!' These solicitations are aimed at homeowners in default on their mortgages, or those who are facing possible foreclosure. Unfortunately, many of these offers are actually scams designed to trick homeowners into transferring ownership of their property to another person or entering into high-cost home equity loans that they cannot afford," said Pheffer.
These "foreclosure rescue" or "deed theft" scams, which often target low-income individuals and the elderly, strip equity from homeowners and, in some cases, can even result in the eviction of the affected homeowner.
These unfortunate outcomes were confirmed last year at a public hearing held by the Committee on Consumer Affairs and Protection to examine the home equity theft issue and explore ways to protect New Yorkers from this increasingly common financial scam. The committee received testimony from the New York State Banking Department, housing and consumer advocates, legal services organizations and affected homeowners. One homeowner testified about how an unscrupulous financier sold their house out from under them. In another instance recalled at the hearing, a mother and her two children were evicted after signing over their house to a deed-theft scammer. Other witnesses described how scammers intentionally mislead homeowners with oral and written misrepresentations, deceit, intimidation and other abusive practices.
This year the Legislature responded by unanimously passing a new law that will protect homeowners and the home equity they have worked so hard to attain. The Home Equity Theft Prevention Act (A.10057-B), which was recently signed by the Governor, will require written disclosure to homeowners regarding the terms of any title transfer and provides a right to cancel the deal for five days after signing a contract. It will also require all contracts between the equity purchaser and the equity seller to be in writing in the primary language of the seller, prohibit misleading statements and pressure tactics, and establish civil and criminal penalties for violating the law. This important new law becomes effective on February 1, 2007.
Homeowners facing foreclosure or having trouble paying their mortgage should consider the following tips to avoid falling into a home equity theft trap. Be wary of any individual or entity calling itself a "foreclosure service" or "mortgage consultant," or anyone who solicits door-to-door offering similar services. Never sign a contract requiring you to make your home mortgage payments directly to an individual or entity other that the bank or lender that financed your mortgage.
"It is also important to remember that there are many ways to prevent the loss of your home, or at the very worst, to sell your home on the market and retain all of your home equity. Don't be afraid to seek help from qualified credit counselors. In many cases, a non-profit loan counselor can work out a payment plan with the lender, or assist you in obtaining alternative financing," said Pheffer.
For a listing of non-profit groups in the New York City area offering foreclosure prevention counseling, loan remediation and credit counseling plans, visit the New Yorkers for Responsible Lending Coalition website at: http://www.nedap.org/programs/nyrl.html . You may also call the Coalition at (212) 680-5100. For more information on avoiding home equity theft scams, please visit the Federal Trade Commission's (FTC) website at www.ftc.gov , or contact the FTC by calling their toll-free number at 1-877-FTC-HELP (1-877-382-4357) or for TTY, 1-866-653-4261.