The housing crisis that resulted from The Great Recession created a whole new industry in foreclosure assistance. Lawyers, real estate agents, and other licensed professionals came to the aid of struggling homeowners, working to create legal defenses, modify mortgage terms, and sell homes in short sales. Many of these professionals work hard to help their clients and achieve the results they promised.
Unfortunately, foreclosure fraud also became rampant in California. Because foreclosure proceedings are of public record, marketers can easily create lists of homeowners in foreclosure. They then advertise services to help these often desperate households. Many services are legitimate; however, certain operators charged fees to homeowners while providing no service.
The State of California recognized that this fraudulent conduct hurt homeowners who were already in dire straits. Law enforcement began aggressive operations to arrest and prosecute individuals and businesses that violate California Civil Codes 2945 2945.4, which prohibit a bevy of practices related to providing foreclosure assistance in exchange for money.
Those accused of foreclosure fraud face dire consequences, including felony criminal records, fines, revocation of professional licenses, and jail time. Not everyone accused of foreclosure fraud committed a crime. Many individuals face accusations after providing legitimate services.
These individuals may face a black mark on their records for life. Our firm specializes in foreclosure fraud defense. Our attorneys understand this specific law and get bad foreclosure fraud cases dismissed. We can also defend against professional license revocations and fight to protect our client’s good names.
Foreclosure Fraud Defined
California prohibits specific actions on the part of foreclosure consultants. The law defines a foreclosure consultant as a person who represents themselves as being in the business of stopping or postponing foreclosures on behalf of distressed homeowners. Such individuals and the entities they work for are prohibited from engaging in the following conduct:
1. Foreclosure consultants are prohibited from charging a client/homeowner for a service before providing it. This prohibition applies to each distinct service provided to a particular client.
2. Foreclosure consultants are prohibited from collecting excessive fees from clients.
3. The law prohibits foreclosure consultants from taking a lien in a client’s property, requiring a client to provide collateral, and taking an interest in a client’s property.
4. The law specifically prohibits taking a power of attorney from a client.
5. Inducing a foreclosure-assistance client to sign an illegal contract constitutes foreclosure fraud.
6. Foreclosure consultants must register with the State of California and post a $100,000 bond. Failure to comply can lead to criminal and civil penalties. The bond is provided to compensate foreclosure fraud victims.
Examples of Common Foreclosure Fraud Cases
Collecting fees upfront and then providing no legitimate service is the most common form of foreclosure fraud. In these cases, the foreclosure consultant promises things he or she knows are false. For example, mortgage consultants commit foreclosure fraud when they tell clients that they can save their homes when, in reality, the have no such ability. Based on the consultants sales pitch, the defrauded homeowner pays upfront fees to the consultant. The consultant then provides no service. In many such cases, the homeowner loses the money they paid the consultant and gets foreclosed.
The law provides many affirmative defenses against a charge of foreclosure fraud. In many cases, the defendant(s) operated legitimate services and are acquitted. In cases where there is strong evidence of real fraud, our attorneys obtain the best possible plea bargains.
Good intentions raise a strong legal defense to this charge. Provided the defendant was trying to work on the client’s behalf, he or she should be acquitted of foreclosure fraud. Failing to actually prevent the foreclosure constitutes no criminal conduct. A foreclosure consultant works on the client’s behalf, but the consultant does not control the client’s financial situation, the bank’s policies and actions, or California’s foreclosure statutes.
Foreclosure Fraud is a Wobbler
Wobblers are cases that can be pursued as misdemeanors or felonies, depending on the circumstances. When charged as a felony, defendants face up to three years in prison and a $10,000 fine. Misdemeanor foreclosure fraud convictions can result in the same fine and up to a year in prison.
Foreclosure fraud convictions result in serious consequences. With an experienced defense attorney, bad foreclosure fraud cases disappear. If you or your loved one are facing a foreclosure fraud case, contact our office for immediate representation.