Scams increase along with foreclosures

From the Times Trenton:

Foreclosure opening the door for scam artists

As the number of foreclosed homes in New Jersey keeps rising, so does the list of people looking to defraud those who have lost their properties, state consumer affairs officials are warning.

One scam being seen more and more involves taking advantage of residents once their homes have been sold at a sheriff’s auction. In some instances, properties are sold for more than what is owed on a mortgage — meaning the surplus funds may be available to the former homeowner.

But not many people are aware of surplus funds, and authorities say unscrupulous companies or individuals have been contacting former homeowners and charging them exorbitant fees to recover the money.

“It is definitely going to be a major concern for us,” said Lorraine Rak, a deputy attorney general and chief of the consumer fraud prosecution section in the Division of Consumer Affairs.

“It’s when consumers are most vulnerable that companies take advantage of them,” she said.

Earlier this month, Rak’s section filed a civil complaint against a Glouster County man, alleging he collected tens of thousands of dollars from homeowners for retrieving surplus funds after a sheriff’s sale. Samuel E. Goodwin III, a licensed real estate agent, was accused of charging people between 15 percent and 65 percent of the surplus funds.

Goodwin allegedly convinced consumers the process was complicated and needed his expertise, but state officials said applying for surplus funds from the Superior Court Trust Fund is a simple process that requires less than $100 in fees.

Rak said the state is investigating other suspected post-foreclosure frauds. The lawsuit against Goodwin marked the first official action under the state’s Consumer Fraud Act involving deceptive actions related to surplus funds.

The increase in complaints coincides with an increase in the number of actual foreclosures in New Jersey. Mortgage lenders took possession of 215 homes in the state in July, a 25 percent increase from June and a 65 percent increase from July 2006, according to the latest figures from RealtyTrac, a California firm that tracks real estate data.

At least one county has started alerting people whose homes have been foreclosed on and sold at a sheriff’s sale about surplus funds. Since early last year, the Ocean County Sheriff’s Department has been sending letters to former homeowners, said Undersheriff Wayne Rupert.

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