WHEN Eddie Baker Jr. retired in 2000, he found himself struggling to make the $1,100 monthly payments on his three-bedroom Los Angeles home and eventually fell behind on the $205,000 mortgage.
Facing foreclosure, Baker, a devout Christian, prayed for assistance. And in June 2005, his prayers seemingly were answered in the form of an offer to help save him from foreclosure and credit ruin.
But that offer turned into a nightmare instead. In May of this year, attorneys for Baker, 69, filed a civil suit in Los Angeles Superior Court against several co-defendants, alleging fraud related to the retired photo technician losing title to his home.
Baker's story is a familiar one to Benjamin Diehl, deputy attorney general in the consumer law section of the California attorney general's office. As Southland foreclosure rates continue to rise, the number of people who will lose a home to a rescue scam will increase significantly within the next two years, Diehl said.
Maritza Gutierrez, a supervising investigator for the Los Angeles County Department of Consumer Affairs' real estate fraud unit, said that from April to June, her section recorded about 50 cases involving alleged foreclosure scams.
But with 4,000 notices of default being recorded in L.A. County each month and the sub-prime fallout still gaining speed, Gutierrez said that number will probably triple for the same period in 2008.
Cynthia Reed, Baker's attorney, said Public Counsel has about a dozen cases of alleged foreclosure fraud pending. "Two years ago, maybe we had one," she added. The pro bono group provides free legal services to residents who can't afford private representation.
Foreclosure rescue schemes are not new. In February, Downey resident Martha Rodriguez pleaded guilty to federal fraud and money laundering charges for her role in a $12-million rescue scam. According to the U.S. attorney's office for the Central District of California, Rodriguez promised to help homeowners refinance but submitted applications for larger loans in the names of "straw buyers" (people who sell the use of their personal information), paid off the loans in default and pocketed the excess. And sometimes, the defendants simply stole the information from the unsuspecting.
Thom Mrozek, a spokesman for the U.S. attorney's office in L.A., said these types of crimes often have two victims: "The original homeowner who loses title to the home, and the bank who loaned money to the straw borrower, because the straw borrower does not repay the loan, and the bank had funded a loan for an inflated purchase price."
