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Measure Would Help Protect Distressed Homeowners From Unscrupulous Foreclosure Consultants

Legislation sponsored by Assembly members Gary S. Schaer, John J. Burzichelli, Bonnie Watson Coleman and Wayne P. DeAngelo to protect homeowners in jeopardy of foreclosure from ‘foreclosure rescue’ scams perpetrated by unscrupulous lenders and consultants was approved Monday by the Assembly.

“Faced with the prospect of becoming homeless, many New Jersey homeowners are turning to foreclosure consultants and foreclosure rescue firms in a last-ditch effort to stay in their homes,” said Schaer (D-Passaic/Bergen/Essex). “Unfortunately, some of the firms are nothing more than fronts for elaborate schemes to rob troubled homeowners of their hard-bought equity.”

The measure (A-359), entitled the “Foreclosure Rescue Fraud Prevention Act,” would establish specific practices that foreclosure consultants and other purchasers of distressed property would have to adhere to when contracting with New Jersey homeowners on the brink of foreclosure.

“These are desperate people looking for legitimate help to keep a roof over their heads,” said Burzichelli (D-Gloucester/Cumberland/Salem). “That we have to consider legislation to make sure they are not taken in by individuals looking to profit on the suffering of others is sickening.”

The sponsors said the measure stemmed from 2008 legal action initiated by the state Office of the Attorney General against numerous foreclosure rescue companies, mortgage loan providers, industry employees and lawyers for violating the state’s Consumer Fraud and RICO acts.

“A person’s home is the single biggest purchase they will make and the single biggest investment they have,” said Watson Coleman (D-Mercer). “These scam artists know that and are intent on dangling false hope to homeowners teetering on the brink of financial collapse while taking them for literally everything they’re worth.”

“We want to make it perfectly clear that we are as serious about punishing these scam artists as we are about keeping distressed homeowners in their homes,” said DeAngelo (D-Mercer/Middlesex). “The last thing we need are individuals working to turn the American dream of homeownership into a nightmare.”

The bill would require foreclosure consultants to register annually with the Director of the Division of Consumer Affairs. The registration process requires foreclosure consultants to provide certain information and a registration fee, to be determined by the director. The foreclosure consultants are also subject to criminal background checks.

It also would:

· Provide that the director may refuse to issue or renew, and may revoke, any registration for certain reasons, including failure to comply with the provisions of the bill, and upon proof that the applicant or registrant has been convicted of any crime of moral turpitude or any crime relating adversely to the activity regulated by the bill.

· Prohibit any person from presenting himself to the public as a registered foreclosure consultant or using the designation “foreclosure consultant,” “foreclosure consultant specialist,” or similar designation, without registering as a foreclosure consultant pursuant to the bill’s provisions.

· Provide that the director may examine the books, accounts and records of foreclosure consultants and other persons as necessary to enforce the bill’s provisions, and require that foreclosure consultants have their financial records audited annually.

· Provide that, in addition to the civil and criminal penalties provided for in the bill, if the director determines that there has been any substantial violation of the bill’s provisions by a professional licensed under a licensing board in this State, the director shall provide a written notice describing the violation to the licensing board having jurisdiction over the profession, for such action as the board deems appropriate.

Violators would be guilty of a third degree crime, with penalties of up to $15,000 in fines and five years in jail. Additionally, violators would face civil penalties of $10,000 for a first offense and $20,000 for all subsequent offenses.

The measure was approved by a vote of 78-0 and now heads to the Senate for more consideration.