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NEWARK
– Some homeowners facing foreclosure
are being subjected to scams that ultimately
could cost them tens of thousands of dollars,
Attorney General Stuart Rabner and Acting
Consumer Affairs Director Stephen B. Nolan
announced.
As foreclosure filing rates are increasing
nationally, scams targeting homeowners facing
foreclosure are rising as well. These scams
typically target “surplus funds”
to which homeowners may be entitled if their
homes are sold at a sheriff’s sale.
“Homeowners
facing the loss of their homes are understandably
concerned, and con artists seize on their
fears to perpetrate scams,” Attorney
General Rabner noted. “These offers
of help and money may seem like a godsend,
but it is the con artist who ultimately
benefits.”
Surplus funds are the monies remaining after
the sheriff’s foreclosure sale takes
place and mortgage and tax obligations have
been paid. Neither the homeowner’s
mortgage lender nor the sheriff’s
office are required to notify the homeowner
if surplus funds exist.
The Division of Consumer Affairs is alerting
the public to two surplus fund scams.
In the first scam, the con artist offers
to accept the property deed and, in exchange,
pay the homeowner a minimal amount of money,
typically no more than a few thousand dollars.
By transferring the deed, the homeowner
signs away ownership of his or her house
and any equity that has built up.
The
homeowner may be told he/she can buy the
deed back if certain conditions are met.
Many times, however, these conditions are
almost impossible to satisfy or the scammer
never intends to honor his promise. Instead,
the house is sold through a sheriff’s
foreclosure sale and the con artist keeps
the surplus funds that result.
In the second scam, the con artist offers
to assist the homeowner in obtaining surplus
funds that may be available after the house
is sold via a sheriff’s foreclosure
sale. The homeowner often times is told
that he/she cannot apply for surplus fund
on his/her own, or that the process is very
complicated or costly.
The con artist scams the homeowner by:
-
charging an exorbitant fee that can range
up to 75% of the total surplus fund;
-
writing a fee in the contract with the
homeowner that is higher than the fee
verbally promised;
-
pressuring the homeowner to sign away
his/rights to the surplus funds through
a quit claim deed; and
-
forging the homeowner’s name on
a surplus funds application and then keeping
the surplus funds.
In reality, homeowners can obtain the surplus
funds by filing a simple form and paying
less than $100. More information is available
from the N.J. Superior Court Trust Fund
Unit at 609-292-3937.
“These
scams have the same goal: to enrich the
con artist by taking money from a homeowner
in trouble,” Acting Director Nolan
said. “It is unconscionable that con
artists take advantage of good people who
have fallen on hard times. We are working
to educate and protect those facing foreclosure
from these scams.”
Consumer Affairs has produced two new Consumers
Briefs about the foreclosure process and
surplus funds scams for the public. The
briefs are being distributed to sheriffs’
offices and are posted on the Consumer Affairs’
web site:
Foreclosure
filings rose 42% last year compared to 2005,
to 1.2 million filings nationally, according
to the firm RealtyTrac, Inc.. More than
40,000 foreclosure filings occurred in New
Jersey.
Consumers can report foreclosure and surplus
fund scams to Consumer Affairs by calling
1-800-242-5846 (from within N.J.)
or 973-504-6200.
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