As the economy begins the slow crawl to recovery, there are still remnants of the white-hot housing market. During the height of the foreclosure boom of 2008 and 2009, speculators had a field day at home auctions taking advantage of those who were in the midst of bankruptcy or other financial challenges. Now many speculators are facing legal trouble as federal prosecutors crackdown on these money-making schemes.
In Kansas and other states, the federal government is taking a hard line in the prosecution of those who participated in rigging home auctions. The conspirators would get together and choose a bidder that would win the home during the official auction. After securing a win, this bidder would then hold a private auction with the other parties to the auction scheme. In the end, the difference between the official sale and the private auction would be divided between all co-conspirators.
Over the past three years, federal prosecutors have charged over 50 people and two separate companies in three different states with auction fraud. Those found guilty generally face prison time and some form of restitution to repay the money lost by the their bad behavior.
The foreclosure crisis has seemingly passed with foreclosure sales dropping from 30,000 a month to 5,000 a month in states like California, which once held the title as the nations foreclosure capital. This decrease is in part due new federal regulations aimed at curbing this activity. This is done by making it more difficult for banks to begin foreclosure proceedings.
Though national foreclosure rates may have slowed, there are still some who are facing the potential loss of their homes. Chapter 13 bankruptcy may be an answer to their problem. In some cases, filing for bankruptcy can stop foreclosure. A bankruptcy professional can help determine an individual’s options while also educating them on their situation.
Source: www.huffingtonpost.com, “Foreclosure Auction Scams Face Federal Crackdown,” Paul Elias, June 1, 2013