MEDIA RELEASE: Bill Will Eliminate Protections Against Real-Estate Scams

 House Bill Will Eliminate Protections Against Real-Estate Scams
Rolling back safeguards for consumers threatens economy, risks increasing homelessness 

RALEIGH (June 9, 2011) – A bill that passed the NC House last week will eliminate critical protections against real-estate scams, increasing abuse of consumers and threatening more homelessness.
House Bill 564 will eliminate protections in three existing laws designed to stop different real-estate scams. Just last year, legislation known as the Homeowner and Homebuyer Protection Act created protections that help protect homeowners and buyers from abusive practices often seen in these transactions.
Ironically, HB 654 bears the same title as last year’s legislation.
“This is a terrible bill and will eliminate protections that are badly needed to protect homeowners and homebuyers in the marketplace,” said Al Ripley of the North Carolina Justice Center “We are in the worst housing market in decades, with rampant foreclosures, and the last thing we need is for homeowners and homebuyers to be made vulnerable to these scams.”
North Carolina is now among at least 21 other states that have adopted legislation that prohibits or effectively regulates these abusive practices, known as lease-option agreements, contracts-for-deed and foreclosure rescue scams. But if this legislation passes, the state will be taking a huge step backwards, Ripley said.
In 2010, there were over 67,000 foreclosure filings in North Carolina. This has lead to an increase in scam artists that approach homeowners at risk of foreclosure with the promise of enabling the homeowner to keep the home.
Foreclosure rescue scams promise false hope to homeowners facing foreclosure and are really designed to rob homeowners of any equity remaining in the home and transfer ownership of the home to the scam artist. This can result in homelessness.
Another abusive practice is to target would be home buyers with “lease option” contracts and “contract for deed” purchase agreements. In lease option agreements homeowners lease the property and pay for the option to buy the property at a later date. While these transactions can sometimes be legitimate, too often the “seller” knows the buyer will never qualify to buy the home and the seller is just milking the buyer for the payment of the option.
“The ‘contract for deed’ transactions can be very abusive, making a down payment and monthly payments for years with the promise of a deed to the property after 30 years,” said Ripley.  “Too often the deed is never delivered after the buyer has paid thousands of dollars that they never get back.”  While current law provides valuable safeguards to homeowners and homebuyers, Ripley said, the new legislation would allow scams to flourish.
“Preserving reasonable standards and protections helps protect the people of North Carolina, who are investing in our common future by trying to secure the American Dream of homeownership,” he said.
The legislation is now in the Senate Commerce Committee.
FOR MORE INFORMATION, CONTACT: Jeff Shaw, Director of Communications, NC Justice Center, 919.863.2402 (office) (503) 551-3615 (mobile); Al Ripley, NC Justice Center, (919) 274-8245.