EDITORIAL: Bill would stop those who prey

It's bad enough that subprime-lending schemes forced millions of homeowners into foreclosure. Now there's a new breed of predators snapping at their heels.

Desperate to keep their homes from foreclosure, many have fallen victim to scam artists who falsely promise to help them avoid foreclosure, according to Jim Sullivan, a Democrat from Wauwatosa. He's proposing a bill that would offer at least some protection for those facing foreclosure.

Foreclosure rescue involves the homeowner giving up their property to an investor in exchange for the right to continue to live in the home. The investor pays off the amount owed and charges the former owner rent to remain in the home.

But many homeowners wind up getting evicted because they can't afford the new rent amount, which often is higher than the mortgage payment.

Sullivan's bill would require all so-called foreclosure rescues to be made in written contracts, which homeowners would be able to cancel within five days of signing.

The ''rescuer'' also would have to verify that the homeowner could afford the transaction's fees.

If a homeowner is evicted, he or she would be entitled to least 82 percent of their home's market value.

The bill also allows victims to sue for fraud and requires courts to put evictions on hold for at least 90 days if homeowners file suit.

While these home rescues can work, it takes an informed homeowner to avoid the scams.

With foreclosures on the rise, locally, across Wisconsin and the nation, the potential for scam artists to find victims is high.

Sullivan's measure is before a state Senate committee and has bipartisan support. Financial institutions are also behind the protection this bill could offer.

Unfortunately, no piece of legislation can force someone to read the fine print or learn about his or her rights and options.

The best advice for someone facing foreclosure is to work with their lender to see if there is a way to either get current on the loan, refinance the mortgage or sell the house.

But for those who choose the foreclosure rescue, Sullivan's bill should better spell out the process and give homeowners greater protection from the greedy and unscrupulous.

-- The Sheboygan Press