CONSUMER ALERTS AND WARNINGS
WARNING AND CONSUMER INFORMATION
GROUPS TAKING ADVANTAGE OF PEOPLE IN FORECLOSED HOMES WITH MISLEADING OFFERS AND PROMISES
How to spot signs of a foreclosure scam (published by the San Diego Union Tribune 2/10/12)
With every crisis, there are those who attempt to profit from the victims. It happened with earthquakes, floods, fires and any other disasters where victims can be preyed upon. It is happening with the foreclosure crisis. Some have taken to direct mail to solicit services to tenants and former owners offering misleading services and making unrealistic promises. They are clearly trying to take advantage of the fear and confusion of those caught in the foreclosure crisis. They charge hefty fees for providing potentially dangerous services that can actually mislead and do much more harm than good. Often, they are unlicensed and unqualified to practice law or give any legal advice about Foreclosure and evictions.
Currently, we have seen solicitations mailed to foreclosure affected people promptly after seeing foreclosures in the public records. They are not attorneys and not licensed to practice law. We have heard of high pressure sales tactics to get your money for their "paralegal" OR "mediation" services form preparation. No legal advice of any benefit by an attorney, just promises of unrealistic benefits and filling out forms that can actually cause more harm than good. We have seen solicitations made to look like official documents.
We do NOT advise retaining the services of a non-attorney soliciting to do important legal work. Beware of the house call visit and pressure sales tactics. Beware of service offered by someone without an office where you are asked to deposit their "fees" directly into a bank account. We recommend you to disregard any such solicitation and do not let them come to your home. If you are renting a home or if you are an owner who is facing a foreclosure situation and want to know your legal rights and options, seek legal advice and services only from a licensed attorney experienced in these matters or your local legal aid office. Once a foreclosure occurs you need not file any legal papers like an "answer" like the solicitations recommend. That is because, there is nothing to "answer" to unless you first get an Unlawful Detainer from the court. That may not happen for days or even months so do not be scared into acting too soon with services that are not even needed yet. Ask important questions before hiring someone or a group to assist you.
CASH FOR KEYS NOT ALWAYS WHAT IT SEEMS
Banks (and investor buyers) are taking advantage of tenants and former owners who are occupying a home that was foreclosed on. They may offer what they call "Relocation Assistance" (See a sample offer) This is, of course, not relocation assistance but merely a cash payoff to move out. They are doing this because the law may allow the tenant/former owner much more time in the property or that they make certain claims for compensation. Compensation? Wait, why are we talking about compensation claims? That is because when you think you will be getting money to simply move, they demand you sign a FULL RELEASE AND WAIVER of all your rights. (See a sample release some say you "must sign" to get any money) That means it is NOT cash for keys, it is cash for all your rights which may be worth many times their offer. Further, they sometimes do not even make the payment claiming some property damage or other excuse and the tenant/former owner loses since they committed to the move but did not get the payment.
SECURITY DEPOSIT "BONDS"
ARE NOT WHAT THEY SEEM
Tenants are being offered Security Deposit Bonds. These are pretty bad deals. It appears like it is insurance and you will be covered up to the bond amount for any claim after you vacate the rental. WRONG. It is not insurance and you are not covered for any loss. You pay the security deposit bond fee which is nonrefundable for a limited bond amount (usually $500.00 to 1,000.00) If the landlord claims damages or rent owing, they collect from the bond company AND THEN you must repay that bond company as well as perhaps an amount in excess of the bond if you owe extra money for damages or rent. Therefore, you lost the fee and the bond amount plus you may be getting an additional claim since the 'bond" is limited. Essentially, you are paying a fee to finance a limited security deposit, with no insurance coverage or protection, at a high interest rate. We have heard of tenants paying fees ranging from $150.00 to $300.00 which could be like financing the deposit at an effective annual interest rate of 15% to 30% while remaining liable to the landlord for the entire security deposit and excess claims.
BEWARE OF PHONY "LEGAL AID" SCAMS
Beware of offices calling themselves "Legal Aid" who are not the official non profit public legal assistance office. They attempt to confuse the public into thinking they are an official office there to help you. They are in fact scams who charge hefty fees for incompetent services usually by an untrained non licensed person. They may also offer legal services by a non attorney illegally practicing law without a a license. The true Legal Aid offices do not solicit and do not charge such fees. California law forbids such practices by these imposters. If you need legal assistance and qualify for free legal help, contact the true and official Legal Aid in San Diego or in your area.
Business and Professions Code section 6159.52.
"It is unlawful for any person or organization to use the term "legal aid," "legal aide," or any confusingly similar name in any firm name, trade name, fictitious business name, or any other
designation, or on any advertisement, letterhead, business card, or sign, unless the person or organization is a legal aid organization subject to fair use principles for nominative, descriptive,
or noncommercial use."
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California law for San Diego is applied in these pages. Such laws may or may not be applicable in other jurisdictions. The information provided herein is of a general nature and is not intended to be taken as specific legal advice. For legal advice in a particular situation, promptly consult with an appropriate attorney. The advice and recommendations regarding any other legal or nonlegal services offered to the public are based on the opinion of the Tenants Legal Center with the intent of providing important information of general and specific public interest.