When homeowners fall behind on their mortgage payments, they’re not just at risk of losing their homes, they become prime targets for scams that can rob them of the equity they’ve spent years building.
Recent headlines from both Arizona and Chicago reveal alarming tactics used by fraudsters to prey on people in crisis. These cases serve as a powerful warning: if you’re in foreclosure, beware of anyone offering too-good-to-be-true help.
Two Cases, One Theme: Predatory Deception
In Arizona, the Attorney General recently filed a lawsuit against individuals and companies accused of orchestrating an equity-stripping scheme.
These scammers targeted homeowners in foreclosure by tracking public notices and dispatching so-called “door knockers” who posed as foreclosure relief specialists or representatives from a fake charity, “Arizona’s Helping Hands.” Their real goal? To deceive homeowners into signing away their property rights, often for far less than market value.
Meanwhile, in Chicago, contractor Mark Diamond was sentenced to over 17 years in federal prison for running a scam with a different approach. Diamond targeted elderly homeowners, promising home repairs through government-funded programs, and that he could get them the money they needed with a Reverse Mortgage, a government sanctioned loan. Based on the scheme, the equity in the property was lost, the people lost their homes and had no place to live and no inheritance to leave their heirs.
Striking Similarities
While the methods varied, both cases shared the same core elements:
- They preyed on vulnerable homeowners—those facing foreclosure in Arizona and elderly residents in Chicago.
- They used deception to gain trust, whether through fake charities, high-pressure sales tactics, or fraudulent repair contracts.
- They exploited the legal system by filing forged or misleading documents, and in some cases, delaying foreclosure auctions to keep control of the property.
- They profited by stripping equity, acquiring homes well below market value and reselling them at a significant gain.
The Illusion of Legitimacy
Both schemes also leaned on a web of professionals—title companies, brokers, and even attorneys—to create a sense of legitimacy.
In Arizona, the Attorney General alleges that some title companies and law firms knowingly processed shady deals, ignoring red flags in exchange for a piece of the profit. In Chicago, notaries and other professionals may have turned a blind eye to the warning signs.
How Homeowners Can Protect Themselves
For homeowners facing foreclosure, it’s essential to stay vigilant. Here are a few red flags to watch for:
- Unsolicited offers of help, especially from individuals claiming to represent a charity or special program.
- High-pressure tactics urging you to act quickly or sign documents without full understanding.
- Promises of a loan modification or foreclosure “rescue” with no clear explanation of terms.
Whether it’s Arizona or Illinois, these cases highlight a harsh truth: scammers thrive on desperation. But with knowledge and support, homeowners can protect themselves and fight back.
The Minchella & Associates Difference
With over 40 years of experience in Illinois real estate law, Erica Minchella has represented thousands of home sellers and buyers, landlords, and commercial and investment property
