Los Angeles County District Attorney’s Office
Responses to Preventing Foreclosures
and Foreclosure Rescue Fraud
1. Types of Foreclosure Rescue Fraud Cases Being Investigated
• Home Equity Sales Contract Fraud: Suspects convince homeowners to grant
title of the property to them and pay them rent. Suspects usually promise to return
property back to the victims in a year or two when their credit is improved.
Suspects either take out loans against the property or sell the property and pocket
• Mortgage Foreclosure Consultant Fraud: Suspect contacts homeowner whose
home is in foreclosure and claims to be able to assist in delaying or preventing
foreclosure by obtaining new financing. Suspect instructs homeowner to transfer
title of property to an individual (suspect or suspect’s accomplice) who can
qualify for new financing. Suspect obtains new loan including all equity. Usually
within months, the homeowner receives a notice of default in the mail and the
suspect has already absconded with sales proceeds.
• Bankruptcy Fraud: Suspects file fraudulent bankruptcy cases using a fictitious
business and/or trust using fractionalized deeds. Homeowners pay a monthly fee
to the suspects while foreclosure is being delayed because of the bankruptcy
proceedings. When a fraudulent bankruptcy case is dismissed, suspects file
another fraudulent bankruptcy case.
• Loan Modification Fraud: Suspects charge an upfront fee and/or monthly fees to
negotiate with lenders on the behalf of the homeowners. Typically, they provide
no service or minimal service and just take the money.
• Forged Reconveyance Fraud: Suspects file a forged reconveyance on a
property, making it appear that the property is owned free and clear. Suspects
encumber the property with a new loan and run off with the new loan proceeds.
• Rent Skimming: Trespassing on vacant property and renting to unsuspecting
2. How Are We Addressing the Crisis
• Cases are investigated where there are a s