DLLR Secretary Tom Perez testified before the United States Senate Special Committee on Aging, at a hearing on the foreclosure aftermath: Preying on Senior homeowners, February 8, 2008


Secretary Perez addressed Foreclosure Rescue Scams as part of his testimony.

Investigators in the Division of Financial Regulation have seen an increase in the incidence of fraud both at the front end of the lending process, as well as when borrowers face foreclosure. The enforcement arm of the Division investigates cases that range from charging illegal fees to scamming homeowners out of hundreds of thousands of dollars worth of equity. Older Americans are particularly vulnerable to the latter type of fraud, known as foreclosure rescue scams, as they frequently have more equity to be stripped.

The reconveyance, the most common type of rescue scam, involves a foreclosure consultant arranging the conveyance of a property that is at risk of foreclosure to a third party, often via quit claim deed, with the expectation that at a certain point in the future, often 12 months, the property will be reconveyed to the homeowner. The homeowner often believes that they are refinancing, or that they will be able to repair their credit, get on firm footing and “buy back” the property as part of a “program” arranged by the foreclosure consultant. The reality is that the homeowner relinquishes title, the property is refinanced to strip out substantial equity and often the third party purchaser, either knowingly or unknowingly, defaults on the refinanced note and the original homeowner is evicted as a tenant. The homeowners are left, when they can access representation, to assert their legal rights through a theory of equitable mortgage. Reconveyance clouds title, has shown to serve no legitimate purpose and has resulted in substantial losses of equity for homeowners in Maryland.

It is very easy for a homeowner to fall victim to one of these schemes when the homeowner’s only goal is to keep their home. It is not uncommon for even a sophisticated person to lack understanding of what is really happening in one of these transactions. Our victims have been white collar office workers, blue collar laborers, government employees, homeowners with advanced degrees and senior citizens.


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Department of Labor, Licensing and Regulation Press Release

The Homeownership Preservation Task Force Report (PDF document, 1MB, download Adobe Acrobat for free)