As we all know, California’s current real estate market is ripe with foreclosures. Many people are unable to afford their mortgages…or are upside down on their homes…and simply stop making payments to the bank. Most homeowners realize that doing so will likely result in them losing their homes, as well as their credit. As a result, desperate homeowners are vulnerable to scams, as they are willing to do whatever it takes to keep their homes. California’s rent skimming laws play a role in helping to discourage the fraudulent practices that adversely affect these individuals.
An individual violates California’s rent skimming laws when he convinces a homeowner…a homeowner who is facing foreclosure…to transfer ownership of the property through a trust to the individual offering to help. He explains that by doing so, he will save the homeowner’s credit and allow the homeowner to remain in the home and pay rent to the “rescuer”.
That individual, who now owns the house, collects rent as long as he can stall the foreclosure. He makes no payments to the bank, “pockets” the rent, and walks away when the bank finally forecloses. The original owner is then evicted from the property and has no credit to speak of.
If you are facing foreclosure, contact an attorney for help. There are ways to modify your home loan so that you can legitimately work with your lender to avoid foreclosure. If someone approaches you, it should raise a red flag. Be wary of rent skimming and do not sign any papers before discussing the situation with a trusted attorney or real estate advisor.