Idaho Homeowner Victimized By Foreclosure Rescue Operator

(orig. post 6-21-07; revised 6-23-07)
The Idaho Statesman today is reporting the story of a financially strapped homeowner who, in an attempt to save her home from foreclosure, unwittingly signed away her home in a sale -leaseback (with an option to buy back the home) deal to foreclosure rescue operator Highland Financial LLC, a Post Falls-based company with offices in the Treasure Valley, Oregon and Washington. She ultimately lost her home this month in a foreclosure sale. For more, see Idaho warns homeowners about loan-assist scams (Idaho woman said she lost her home when company misrepresented how it could help with payments).

See also, Foreclosure 'rescue' gets state's attention (The Coeur d'Alene Press).

Editor's Note:

For those of you who practice law in Idaho, what may be the leading court case on the equitable mortgage doctrine in the state of Idaho is Dickens v. Heston, 53 Idaho 91; 21 P.2d 905; (Id. 1933).

Among other things, the Idaho Supreme Court made the following observation in connection with a financially strapped homeowner who signs away the deed to his/her property in exchange for inadequate consideration where the homeowner is allowed to retain possession of the home and given a right to buy back the home in the future:

• "If the grantor was severely pressed for money at the time of the transfer, so as not to be able to exercise a perfectly free choice as to the disposition of his property, and raised the sum needed by conveying his property in fee with a right of repurchase, his necessitous condition, especially in connection with the inadequacy of the price, will go far to show that a mortgage was intended."

Fortunately for foreclosure rescue operators in Idaho, the Idaho State Attorney General's office (like the state Attorneys General in most states) are either unaware of the equitable mortgage doctrine (after all, it is a legal doctrine found in real estate law, not consumer protection law), or are unwilling to assert it because the cases may be too tough for them to make. What the foreclosure rescue operators have to watch out for, however, are the private attorneys who are familiar with this doctrine who are increasingly taking on these cases throughout the country on behalf of victimized homeowners, and who are making the case that these foreclosure rescue sale-leaseback deals are nothing more than disguised loans where the homeowner is still treated as the true owner of the home, notwithstanding a deed transfer to the contrary (and may be subject to Federal Truth In Lending Act requirements and, in states that have usury laws, these deals are subject to usury restrictions).

For more on Dickens v. Heston, see Equitable Mortgage Defense In Homeowner-Tenant Evictions - Part 7. equitable mortgage yak