Foreclosure Rescue Sales Voided; Return Of Homes Ordered

A recent article in The Kansas City Star warns against those looking to capitalize on the current problems with home foreclosures throughout the country. Included in the report is a note on Miami, Florida economic crimes prosecutor William Kostrzewski, who reportedly personally goes out and takes down all those homemade signs on the side of the road advertising foreclosure help, "we buy houses", etc. He is quoted as saying, "If there's no sign, there's no victim, there's no investigation, there's no money lost and there's no prosecution. I like it that way." (That's sounds like a pretty good way for him to cut down on his caseload.)

Also in the report is the story of a victimized 75 year old Miami woman who had lived in her home for more than 25 years when an operator named Hencile Dorsey showed up at her home in 2003 offering help with her unpaid $3,000 property tax bill. It wasn't until she tried to get a mortgage on the home some time thereafter that she learned that she had unwittingly conveyed her title to Dorsey and had been making payments on a home that was no longer in her name. She has subsequently developed health problems that it is believed attributable to the ordeal.

In January, 2006, the homeowner, through her attorney, filed a lawsuit to void the title transfer. In February of this year, a judge voided the transfer, returned the property to the victimized homeowner and voided the mortgages that used her home as collateral. Attorney Carolina A. Lombardi, of Legal Services of Greater Miami, represented the victimized homeowner.

A similar story of a case in Bellevue, Washington is also recounted, where the homeowner ultimately fought back, sued the foreclosure rescue operators, and according to the article, the operators:

• "[w]ere found to have committed fraud and violated the state consumer-protection act by engaging in unfair or deceptive business practices. They were ordered to transfer title of the home back to [the victim], reimburse her for the estimated $35,000 she paid in rent and pay her the rent that other tenants had paid on the property since she'd been evicted."

The case is currently being appealed. Attorney Melissa Huelsman of Seattle, Washington, who successfully sued to get the home back on behalf of the victim, said that more than half of her practice now involves defending foreclosure rescue victims.

To read more, see As foreclosures rise, scam artists flourish.

(Editor's Note: To attorneys - Prevailing on allegations that the foreclosure rescue operator violated state consumer protection laws as in this case is one way to open the door to court ordered attorney fee awards to be imposed on the operator, since those statutes typically provide for an attorney fee award to a prevailing plaintiff; and if your state allows for it, a fee enhancement by applying a contingency fee risk multiplier to the base fee calculated by the court).
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