New Washington State Law Targets Foreclosure "Surplus-Snatching" Scams; Caps "Overage-Chaser/Scavenger" Fees At 5% In Tax Sales

In Olympia, Washington, LegalNewsline reports:

• Washington residents who lose their home because of back property taxes could get a little extra money in the end thanks to a bill championed by state Attorney General Rob McKenna that was signed into law Friday. Signed by Democratic Gov. Chris Gregoire, the new law places a 5 percent cap on fees charged by firms that contact owners of foreclosed properties offering to obtain money remaining after their land's auction.

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• "As foreclosures have increased, we've seen an uptick in get-rich-quick schemes that prey on those who have lost their homes," McKenna said. "This new law is part of our ongoing efforts to help financially-strapped families keep the little money they have left."

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• The group's legislative chair, Lewis County Treasurer Rose Bowman, said in a statement that firms charging property owners exorbitant fees was a growing problem. "We were looking for a way to protect our most vulnerable population - people who, for whatever reason, have lost their property to tax foreclosure - and figure out how we can get their money to them and not to others who are trying to claim it," Bowman said. Bowman added there is no need for residents to even use outside help to get surplus funds returned to them. All that is needed is a notarized from, and a notary at the county will provide the service for no charge, she said.(1)(2)

For the story, see Washington AG gets finder-fee cap in foreclosure cases.

For the Washington State Attorney General press release, see New law protects families in foreclosure.

(1) According to the state AG's press release, individuals who provided such services previously kept as much as 50-70 percent of the former homeowner’s money; Bowman added that many of the “finders” use shady tactics, including hounding the original homeowner to sign a paper or trying to convince county officials that they are a relative of the original homeowner, and therefore entitled to the money. “It’s amazing the lengths they go to try to intercept these funds,” she reportedly said.

(2) In May, 2009, the Washington Attorney General's office won a civil jury verdict which hammered a foreclosure rescue operator whose activities allegedly included the snatching of foreclosure surplus funds due to homeowners after they lost their homes in tax sales. The jury found that the business practices engaged in by the operator violated the state Consumer Protection Act. See Washington AG Scores Big Win In Bogus Equity Stripping, Land Trust/Sale Leasebacks & Surplus Ripoffs; Foreclosure Rescue Operator Tagged For $4.2M.