Learn More About Mortgage Fraud
A REPORT ON MORTGAGE FRAUD ISSUES; HIGH-LIGHT ON A FEW NEW LAWS THAT MAY IMPACT YOU AND YOUR BUSINESS.
With foreclosures on the rise, foreclosure fraud is a very real threat HUD has- conservatively-projected an additional two million foreclosures during the 2008-2009 time period. If history is any indicator, California is going to suffer a disproportionate amount of those foreclosures. According to Realty Track, Inc., California had 39,992 foreclosure filings in November of 2007, the most in the nation.
Understanding and raising awareness of fraudulent schemes that can victimize homeowners who are in financial trouble is a start in preventing such schemes. One such scheme is a “Foreclosure Rescue Scheme” where a scammer preys on homeowners who have equity in their homes but have fallen behind in their payments. Homeowners who have fallen behind on their mortgage payments are approached by someone who offers to pay off their delinquent mortgage and allow them to stay in the home as a renter with the option to purchase the home back when their financial situation improves. But what really happens is the scammer pulls out any equity in left in the home and then disappears.
A typical scam includes the following:
- As part of the proposed “rescue,” the homeowner is be required to deed the property to a new borrower who is often “investing” in a rental property but who is really part of the scam
- The proceeds of the sale pay off the delinquent loan, and the new borrower removes all the equity from the house, never to be seen again
- The homeowner is now merely a tenant or renter in a home he/she no longer owns, unaware that the “investor” has failed to make payments on the new loan
- When the new borrower defaults on the loan, the homeowner is evicted and loses the house and all of the equity is gone.
Homeowners in dire straits must be encouraged to work with their lender to negotiate a workout. There are a variety of options available to them to get information and assistance to avoid losing their home. A valuable website designed to inform and assist distressed homeowners can be found at http://www.yourhome.ca.gov/mortgage-help.shtml.
To Help Prevent Foreclosure Fraud, Be Aware of These Warning Signs:
- Being asked to sign a legal document with blanks or false statements
- Being approached by a stranger with an unsolicited “rescue” offer
- Being encouraged NOT to seek outside assistance or a second opinion and being assured that the transaction is too complicated and that it would not be understood anyway.
2. NEW LAWS
Homeowner Association Meetings
The Common Interest Development Open Meeting Act (codified at California Civil Code §1365.05) now requires that an agenda must be included in the notice of the homeowners’ association meeting. Unless it is declared an emergency situation by a majority of the board, owners must be given at least four days’ notice of the time and place of any meeting. The notice must include the agenda, and the board may not discuss or take action on items not included in the agenda.
Driving and Hands Free Cell Phone Use; Smoking While Driving
July 2008 is the effective date of the California law that prohibits drivers from using cell phones while on the road unless the equipment frees the drivers’ hands-use of headsets, speaker phones, and Bluetooth, for example, will need to be utilized. The fine for violating this new law is $20 for an initial infraction and $50 for a repeat offense. Aside from the fine, the bigger risk is that violators who cause an accident will be presumed to be liable for any resulting injuries or damages. In addition, if the driver is using a phone provided by or required by his/her employer as part of his or her job, the employer may also be vicariously liable for damages and injuries. A California court has already held an employer responsible for an accident while the employee was driving home because the employer reimbursed the employee for travel time. Other courts are reaching similar decisions. Therefore, employers seriously should consider providing or requiring hands-free cell phone and establish safety policies for their use. For drivers under the age of 18, the prohibition extends even to hands-free use of cell phones.
Effective January 1st, lighting up behind the wheel will become an expensive habit in California if there are kids in the car. Motorists could be hit with fines of up to $100 for smoking in a vehicle containing a child.
The smoking ban is the latest attempt by California to shield people from the health risks created by breathing secondhand smoke. Current law already prohibits smoking in enclosed workplaces, including taverns and restaurants, and within 25 feet of a playground.
Preventing Sexual Harassment
The first deadline for California’s mandatory sexual harassment prevention training law went into effect more than two years ago; supervisors who were trained before the end of 2005 are now due to be re-trained. High profile sexual harassment cases continue to be reported by the news media, and employers continue to defend against claims of harassment. The California Department of Fair Employment and Housing report only a 17% decrease in cases filed in 1999 before enacting the training requirement and filing in 2005. One survey reports that harassment costs average Fortune 500 companies $6.7 million per year in indirect costs alone.
Prevention is the best remedy. Employers should adopt a strong “no-tolerance” policy, with frequent communication of the company’s policy and enforcement of it. Employers should train all workers-not just those subject to the mandatory training law-to behave professionally at work and respect their co-workers.
Courts could require the parents or guardians of gang members to attend parenting classes under legislation that attempts to prevent first-time juvenile offenders from committing additional crimes.
Legislation by Assemblyman Charles Calderon, D-Whittier, prevents cities and counties from requiring landlords to serve as surrogate border patrol agents by obtaining and reporting the immigration status of their tenants. The measure also prohibits ordinances preventing landlords from renting to illegal immigrants.
The state’s two giant public pension funds, the California Public Employees’ Retirement System and the California State Teachers’ Retirement System, will be prohibited from investing in companies that have defense- or nuclear energy-related business with Iran
A law attempts to ensure that music fans who buy tickets to oldies concerts are not victims of deceptive advertising. The legislation requires performing groups to meet at least one of several standards to be able to legally use the name from the groups’ recording days. An example: the group must include at least one member who has the legal right to use the name. Bands also can avoid lawsuits by acknowledging they are a salute or tribute to the original recording group and had a name that did not confuse ticket buyers.
This new law, allows shoppers to cash in gift certificates that have less than $10 left in value. Consumer advocates say that will prevent stores from benefiting from an “undeserved bonanza” generated by unexhausted gift certificates that stores have refused to trade for cash.