Scam me once, shame on you! Scam me twice, shame on me?
Some homeowners in Queens who fell victim to predatory lending practices and signed off on subprime mortgages have again become casualties of scams, but this time by the rescue brokers and speculators that claim they can help them.
And, in an ironic twist of fate, a New York State program that protected owners of residential property in certain areas of Queens from unwanted solicitations from real estates brokers expired on August 1.
“I believe that the ‘cease and desist’ program has worked well but is still needed throughout Queens,” wrote Borough President Helen Marshall in a letter addressed to Secretary of State Lorraine Cortes Vazquez. “In a depressed real estate market, however, I worry that some brokers will be tempted to engage in increasingly aggressive marketing and sales techniques, many of which run afoul of the state’s ‘cease and desist’ rules.”
Under section 442-h(3)(a) of the real property laws of the state, no broker or other person regularly engaged in buying or selling property shall call, mail, or make direct personal contact with homeowners on a cease and desist list.
But, according to Herman DeJesus, senior program associate at the Neighborhood Economic Development Advocacy Project, because of the astronomical foreclosure rates in Queens tons of unscrupulous real estate brokers and speculators send the most affected communities a barrage of solicitations for two things: first to sell their property for them for a fee and/or to help them negotiate with their lenders for a fee.
“We hear that they charge high upfront fees and do nothing, or dupe people into selling at a high discount and sometimes the unscrupulous brokers and speculators are in it together,” said DeJesus.
This might not sound so bad for homeowners saddled with mortgage debt who would like to unload their properties.
However attorney Karen Gargamelli, who works with the non-for-profit organization Common Law that provides free legal services to organizers and activists – in this case Gargamelli works with an organization called Changer that works to end abusive mortgage lending practices in low and moderate income communities throughout New York City – desperate homeowners fall for the absolute promises these brokers and speculators make.
“From our experience, the homeowners come to us already victims of rescue scammers who use very exclamatory language and hyperbole,” said Gargamelli, referring to language like “money back guarantee” and “100 percent satisfaction” to convince anxious homeowners.
“People pay money that could otherwise go towards paying their mortgage, they throw away time negotiating with the bank and the fact that you went to an unscrupulous buyer does not protect you in court,” she said.
At the end of the day, the homeowners in foreclosure get scammed again and then do not know who to trust while her non-for-profit’s solicitation for free legal services competes with 50 solicitations offering immediate assistance.
“When the fire starts, rescue scammers with a bucket of water want you to pay for the bucket of water, but the bucket of water won’t help,” said Gargamelli, who added that at least half of her 240 clients have paid scam artists. “In this case, the right kind of help is the fire department, a legitimate free rescue but it’s hard to hell who’s legitimate in this case.”
Homeowners who get excessive solicitations can contact the Secretary of State to try and get on a cease and desist list, but they have to prove that the solicitation is “intense and repeated.”
“The ‘intense and repeated’ standard is not defined by statute or regulation,” said Joel Barkin, a spokesperson for the Department of State (DOS). “The department reviews testimony from the public hearings, evidence and documentation submitted and formal complaints filed with the department regarding cease and desist violations. After all material has been compiled, the department examines the record and makes a determination based upon the totality of the evidence.”
Brokers who do not comply with the cease and desist regulations can be subject to large fines or suspension of their licenses.
The DOS conducted public hearings on May 28 in Ozone Park and May 29 in Bellerose and determined that evidence showed that those communities did get excessive solicitations. However, DOS “did not obtain such evidence for all areas of Queens County that were covered under the now expired cease and desist rule,” said a letter sent to Borough President Marshall.
By request from numerous public officials, DOS has extended the deadline for public comment until October 31, 2009 and asks that homeowners who feel they receive intense and repeated solicitations send a statement and any evidence to Aqil Qureshi at NYS Department of State, 123 Williams Street, 19 Floor, New York, NY 10038.
