Law would target foreclosure scammers

As president of a mortgage company, Pava Leyrer sees the victims of foreclosure help scams.

"We see the customer coming in who is taken advantage of, the one who thought they were going to get the deal to save their home -- and didn't save their home," she told 24 Hour News 8.

So Leyrer, president of Heritage National Mortgage Corporation in Grandville, is interested in a proposed state law that would target people promising to pull homeowners from the brink of foreclosure but don't deliver.

"I think it'll help," Leyrer said. "You're dealing with a market or an area that is, right now, for the most part, unregulated."

Among the most common scams she sees: People offering to buy a home from someone about to go into foreclosure with the promise that the homeowner will be able to lease it back and then repurchase the home. (It and other common scams are listed in a pamphlet from the Federal Deposit Insurance Corporation ).

The proposal from state Sen. Gretchen Whitmer, D-East Lansing, regulates contracts between homeowners and those who say they will keep the homeowners out of foreclosure.

It would allow a homeowner a "recission period" -- giving them time to think over a contract and cancel it if desired. The law would protect against a home's ownership being transferred fraudulently. And it would require full disclosure of the services and costs in a foreclosure help contract.

"It's going to put some teeth behind what they can actually prosecute someone on," Leyrer said.

She said see sees positives in what is proposed but is waiting for details on, among other things, how long homeowners will have to back out of foreclosure help contracts.

The proposed bill would be part of a package of laws, including one forcing disclosure of loan modification standards. Another in the package, sponsored by state Sen. Glenn Anderson, D-Westland, would require homeowners to be notified when their mortgage is sold. The remaining proposal would exempt already-regulated financial institutions and recognized nonprofits from the new regulations.

Fraud, of course, already is illegal. And Michigan Attorney General Mike Cox recently prosecuted mortgage scammers under the Michigan Credit Services Protection Act.

Leyrer sees evidence that more help is needed to combat the problem.

"Those people that are in the middle, scamming that middle amount of money literally seem to get away with it," she said.

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