Foreclosure Fraud

Many homeowners hire foreclosure consultants to delay or stop the foreclosure process in the face of foreclosure. The homeowners pay the consultants a fee for their services. A foreclosure consultant can face foreclosure fraud charges for acting dishonestly when interacting with a homeowner concerning payments, services, and chances of success. If you face foreclosure fraud charges in Las Vegas, our experienced attorneys at The Law Offices Of Martin Hart can help you fight the charges.

Understanding Foreclosure Fraud

Like with other professions, several laws govern foreclosure consulting. Foreclosure consultants commonly violate the law without even realizing it. As a foreclosure consultant, you could face criminal charges if you do any of the following:

  • Receive fees or consultation, or charge fees or compensation outside the terms and conditions of your contract with a homeowner
  • Receive as compensation a lien, homeowner's wage assignment, homeowner's equity assignment, or any other interest in the residence or other securities
  • Receive money or property from a third party for services rendered to a homeowner unless you disclose the transaction to the homeowner.
  • Take a homeowner's power of attorney for purposes other than inspecting documents within the provisions of the law.
  • Misrepresent any detail of the covered service offered by foreclosure consultants.
  • Claim the performance or benefits of the foreclosure consultants' services unless the consultants have reliable and competent evidence to support the claims.
  • Request for compensation before completing the contracted work
  • Induce a homeowner into a contract that does not conform to the law
  • Agree to help a homeowner arrange access to the surplus funds after the completion of the trustee's sale

Foreclosure fraud charges can result if a homeowner acts in a dishonest manner when discussing their services, compensation, or chances of success with the homeowner. Consider this example of foreclosure fraud: A foreclosure consultant approaches a struggling homeowner and offers their services. The homeowner does not have enough money to pay for the consultant's services. The consultant promises to delay the foreclosure process. As payment for this service, the consultant takes a lien on the homeowner's home. In this case, the foreclosure consultant can face foreclosure fraud charges.

It is crucial to note that it does not matter whether the foreclosure consultant is successful in delaying the foreclosure process. It does not also matter whether the homeowner eventually gathers enough money to pay the consultant to release the lien on the home. Taking a lien as payment for the foreclosure consulting services is fraud under Nevada law.

Another common form of foreclosure fraud is when a consultant does not do any work. A fraud perpetrator can search the records for people with houses pending closure. The perpetrator then contacts the homeowners, claiming to be a foreclosure consultant, and promises to stop or delay the foreclosure process. After requesting an upfront payment, the consultant does not do anything to prevent the foreclosure process. This can lead to foreclosure fraud charges.

A common question is whether a foreclosure consultant must successfully prevent foreclosure. The law only requires a consultant to do what they can to honor the terms of the contract. Many foreclosure consultants are vulnerable to prosecution merely for failing to deliver the results they promise homeowners. If you face foreclosure fraud charges, you should contact an attorney immediately.

A Rise In Foreclosure Fraud

Going through foreclosure can be a trying and challenging period for homeowners and their loved ones. In recent years, there has been an increase in the number of people claiming to be foreclosure consultants. These experts promise to stop the foreclosure process after receiving compensation. Under Nevada law, it is a crime to represent or solicit a homeowner by making them believe it is possible to delay or stop a foreclosure in exchange for compensation. In most cases, self-proclaimed foreclosure consultants cannot provide meaningful assistance to homeowners, and the homes end up foreclosed.

It is crucial to note that it is not illegal to work as a foreclosure consultant, provided you do not request upfront fees, and comply with statutory requirements. To prove foreclosure fraud, the victim must show that the defendant acted with fraudulent intent. If the consultant had honest intentions and took meaningful steps to assist the victim, foreclosure fraud charges cannot apply.

Who Is A Foreclosure Consultant?

Nevada foreclosure fraud laws seek to prevent people from acting as foreclosure consultants to take advantage of vulnerable or distressed homeowners. The foreclosure fraud laws only apply to people acting as foreclosure consultants. A foreclosure consultant is a person who promises to do any of the following for a fee:

  • Postpone or stop a foreclosure sale
  • Obtain a forbearance from a mortgagee or beneficiary
  • Help homeowners exercise their right to reinstatement
  • Seek an extension of the reinstatement period
  • Seek a waiver of any acceleration clause contained in a promissory note or a contract secured by a deed of trust
  • Help a homeowner obtain an advance of funds or a loan
  • Ameliorate or avoid the impairment of a homeowner's credit due to the recording of default or foreclosure sale
  • Save a homeowner's residence from foreclosure
  • Help a homeowner obtain the outstanding proceeds from a foreclosure sale of a homeowner's residence from a mortgagee, beneficiary, counsel from a beneficiary, or trustee.

The definition of a foreclosure consultant applies to those who provide legitimate services and those who offer their services on a fraudulent basis. A foreclosure consultant can only become entangled in a criminal case if he/she fails to follow the procedures for engaging in business.

Penalties Of Foreclosure Fraud Under Nevada Law

The prosecution for foreclosure fraud under Nevada law is similar to mortgage fraud. Foreclosure fraud is a class C felony. The penalties for the offense include:

  • Imprisonment of 1 to 10 years in a state prison
  • Fines of up to $10,000

You could face harsher penalties if the prosecutor believes that you committed a pattern or series of foreclosure fraud. In this case, the offense will be a category B felony. The potential penalties for the offense include:

  • An imprisonment of between 3 and 20 years in a state prison
  • Fines of up to $50,000

In addition to the criminal penalties, people convicted of foreclosure fraud could face other consequences. They could face additional punishment from the state and professional associations.

  • The Nevada Commissioner of Mortgage Lending can impose a fine of up to $25,000. You have a right to attend an administrative hearing to challenge this fine.
  • The homeowner or victim of foreclosure fraud can file a civil lawsuit against you to recover the damages incurred due to your fraudulent acts. The court can also award the victim reasonable attorney fees, costs, and punitive damages.
  • You can also lose your mortgage or real estate broker license.
  • The court can order you to pay restitution to the victim – restitution can include monetary losses and emotional anguish or pain and suffering that you cause the victim. Depending on the facts of your case, restitution payments can be quite significant. The restitution does not prevent the complainant from filing a civil lawsuit against you to seek further compensation.

Therefore, it is crucial to seek immediate legal representation if you face foreclosure fraud charges. Your attorney can resolve your case before the issue gets out of hand and save your professional standing in the community.

Fighting Foreclosure Fraud Charges

There is little precedent for how prosecutors handle foreclosure fraud charges, given that Nevada's foreclosure frauds were enacted in late 2011. However, this can work to your advantage because it allows your attorney to use their creativity when crafting a suitable defense. Here are some ways of fighting foreclosure fraud charges:

Insufficient Evidence

The prosecutor must prove beyond a reasonable doubt that you are guilty of foreclosure charges before the judge convicts you. If your attorney can prove that the prosecutor's evidence is insufficient, the judge can reduce or even drop your criminal charges. You can only be convicted if the prosecutor's evidence is reliable and consistent enough to sustain a guilty verdict of foreclosure fraud.

You Did Not Commit Fraud

Failure to delay or stop a foreclosure process does not mean you have committed foreclosure fraud. You will not be criminally liable if your defense attorney shows that you abided by the law and were honest in your interactions with the homeowner.

You can point out that you acted in good faith. This means that you made reasonable efforts to deliver the services you promised. Just because your good faith efforts were unsuccessful does not mean you should face criminal charges. The prosecutor should not focus on the fact that you failed in your efforts to stop or delay the foreclosure process, provided you did your part.

The Police Subjected You To Illegal Search And Seizure

The law allows law enforcement officers to conduct searches and seizures, provided they act within the Constitutional bounds. If the police engage in an illegal search and seizure, your attorney can file a motion to suppress evidence. This motion will suppress evidence obtained through illegal search and seizure. If the judge grants this motion, the court will disregard any evidence obtained through the faulty search. The prosecutor will remain with little evidence and can choose to drop the charges against you.

You Had No Criminal Intent

You should not face foreclosure fraud charges if you did not intend to deceive the client in any way. If you are a professional with a good track record of helping clients with foreclosure settlement, failing to succeed in one case should not lead to foreclosure charges. Perhaps you gave your clients a set of guidelines to follow, which would eventually halt or delay the foreclosure process, but your client did not adhere to them. You can allege that you had no intention of deceiving the client to follow bad advice. The prosecutor must provide sufficient evidence that you intended to deceive the client and did not deliver on your promise.

Phantom Help Schemes

Phantom help refers to the assistance or services companies or individuals offer to distressed homeowners. These individuals or entities pose as foreclosure consultants. They claim they can re-negotiate a homeowner's mortgage to save their home from foreclosure. However, in most cases, the fraudsters request exorbitant compensation for minimal work or seek compensation and do nothing.

The Common Types Of Phantom Schemes

Phantom schemes take many forms within the real estate industry. Some of the common forms include:

Foreclosure Rescue Scams

These phantom scams target homeowners in the face of foreclosure. A phantom helper promises to take certain steps on behalf of the homeowner to prevent or delay a bank foreclosure. The helpers charge high fees upfront but do little to help the homeowner.

Loan Modification Scams

A scammer can pose as a loan modification expert and claim to provide loan modification services at a fee. The purpose of the alleged modification is to lower the monthly installments, making the mortgage affordable for the homeowner. Scammers convince homeowners to remit payments directly to them instead of the lender since the helper is negotiating for them. However, the scammer receives the money and does not pay the lender, so the foreclosure goes as planned.

Rent-To-Own Scams Or Phony Deed

This is a scam that mainly targets unsuspecting homeowners with no experience in buying a home. Scammers market homes under foreclosure to unsuspecting buyers and collect down payments. The scammers present phony deeds to the house and collect rent from the victim, claiming it is a rent-to-own arrangement. However, in reality, the home in question is undergoing foreclosure. At some point, the legitimate homeowners show up, and the victims are forced to leave despite having made significant payments.

Find an Experienced Criminal Defense Attorney Near Me

If you face foreclosure fraud charges, you need an experienced and aggressive attorney. Contact the criminal defense attorneys at The Law Offices Of Martin Hart for reliable legal representation in Las Vegas. Our attorneys have decades of experience defending people facing fraud charges and can help you, too. We understand how best to fight foreclosure fraud charges. Call 702-380-4278 to speak to one of our attorneys.