In 2002, when Catherine Meads was facing foreclosure on her home in Washington, help came knocking. . . literally. A man appeared unannounced at her front door with a packet of information. "It said, 'Money to lend' and 'Save your house,' " says Meads, 65, who had been unable to work and pay her mortgage after breaking both arms in an accident and caring for two dying siblings.
Meads said the man, an agent for a businessman named Vincent Abell, told her he could help her with a loan to stop foreclosure. But after quickly signing the papers the day of her foreclosure, Meads discovered that she had signed away her home and that the $9,203 loan to "reinstate her mortgage" was in fact a payment from Abell to buy her house.
"They gave me no chance to read anything, and they didn't discuss the terms. They just had me sign," Meads says. She now rents her home from Modern Management Corp., a company Abell controls. Abell and company officials deny any wrongdoing.
About the same time, in Hastings, Minn., Kevin Brown, 46, was facing foreclosure on the home he had built himself on his family's farm. A divorce had left him $6,000 in debt, so he turned to Home Funding Corp. to refinance his mortgage. Instead, the company got the house. "It turns out they had forged documents," he says. "They even had my 'signature' on a document that took possession of everything inside the house, including my children's piggy banks."
Brown got his house back only after the state attorney general documented scores of similar schemes by Home Funding. The lawyer for James Hoffman, who runs the company, declined to comment.
One in 25 U.S. homeowners faces foreclosure each year. Tens of thousands are duped by predatory "rescue" lenders who promise 11th-hour help but instead trick their way into taking ownership of the properties.
Older people are often targeted because they tend to have high home equity but heavy debt from medical bills, says Steve Tripoli of the nonprofit National Consumer Law Center in Boston and co-author of a recent report, "Dreams Foreclosed."
So-called rescuers learn of impending foreclosures from newspapers and specialty publications. Scammers get the properties by falsifying papers or tricking harried homeowners into unknowingly signing sale documents.
"If you're facing foreclosure, contact a lawyer immediately," says AARP attorney Jean Constantine-Davis, who represents Meads and others suing Modern Management. (If legal action has not yet begun on your foreclosure, call AARP Foundation Litigation at (202) 434-2121 for information.) Try to arrange a flexible mortgage payment schedule. If a loan becomes necessary, contact your state attorney general to find credible lenders.