Minnesota Foreclosure Rescue Equity Stripping Still Going On

City Pages reports on the story of a husband and wife in Minnesota who were victimized by a foreclosure rescue operator in an equity stripping deal victim. They did business with operator Joshua Schultz and his associates and reportedly ended up getting clipped for $22,250 in consulting and service fees, as well as a few thousand more in other closing costs. Another $31,000 went to the investors. When the couple received their first monthly bill, it was for about $250 more than what was promised. Currently, the homeowners, as well as others, are suing Schultz to get their home back.

Minnesota's anti-equity stripping statute, Section 325N, was passed in 2004 to stop the foreclosure rescue abuses in Minnesota. According to the article, however, the most creative equity strippers appear to have found a loophole that is creating problems for local attorneys representing homeowners in these cases.

In addition, according to one local attorney, some equity strippers just simply ignore the law altogether, confident that their victims will be too embarrassed to ask for help; and she estimates that only one in 20 victims seeks legal assistance.

For more, see Steal This House.

For The Record

The article states that Minnesota was the first state in the country to pass an anti equity stripping statute, passing its law in 2004. In fact, California was the first state in the country to pass their anti-equity stripping statutes, passing its laws a quarter of a century earlier. See California Home Equity Sales Contract Act which regulates foreclosure purchasers and can be found at Section 1695 through Section 1695.17 of the California Civil Code, and California Mortgage Foreclosure Consultants Act, which regulates foreclosure consultants and can be found at Section 2945 through Sction 2945.11 of the California Civil Code.
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