Foreclosure Rescue Fraud Prevention Act to strengthen penalties for scams
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Foreclosure Rescue Fraud Prevention Act to strengthen penalties for scams


AUSTIN, TX – December 10, 2008 – (RealEstateRama) – Texas Attorney General Greg Abbott and state Sen. Craig Estes (Wichita Falls) announced a legislative initiative that will help protect Texas homeowners from foreclosure rescue scams. If enacted, the proposal would enhance the Attorney General’s enforcement authority, provide new protections for homeowners, and place new restrictions on foreclosure prevention consultants.

“At a time when regulators, policy makers and stakeholders are working to help struggling families, unscrupulous operators are scheming to profiteer at homeowners’ expense,” Attorney General Abbott said. “Too many scam artists attempt to target homeowners with large fees and the false promise that they could help Texans avoid foreclosure on their homes. The legislation that Senator Estes and I encourage the Legislature to pass would give the Office of the Attorney General increased authority to crack down on these unlawful foreclosure rescue scams.”

The Foreclosure Rescue Fraud Prevention Act would require foreclosure prevention consultants to provide customers a written, plain language contract memorializing their services agreement. It would also require that these consultants obtain their customers’ written consent, in the form of a signature, before beginning any services or accepting any fees. An additional requirement mandates a written disclosure statement instructing homeowners to contact an attorney or a housing counselor before signing mortgage rescue agreements.

“While most homeowners may never feel the threat of home foreclosure, it is an issue that can impact all of us when it strikes our neighbors, friends, and family,” Sen. Estes said. “This morning I filed the Foreclosure Rescue Fraud Prevention Act, which was drafted in coordination with the Attorney General’s office. This issue has impacted constituents in my district and across the state, we are here today to send a very clear signal that these actions by unscrupulous mortgage foreclosure consultants will not be tolerated.”

The written agreements mandated by the proposed law would apply to both foreclosure prevention consulting and equity purchase contracts. Both types of agreements would have to include plain language cancellation procedures.

In addition to new disclosure requirements, the proposal would place new limits on equity purchase agreements. To protect Texans’ interest in their homes, the law would require equity purchase agreement buyers to pay at least 82 percent of the property’s fair market value.

The Foreclosure Rescue Fraud Prevention Act would give the OAG expanded authority to crack down on mortgage rescue fraud scams under the Texas Deceptive Trade Practices Act.

Foreclosure rescue scams prey upon people who have fallen behind on their mortgages and face foreclosure. Using notices that mortgage lenders publish before foreclosing on homes, the scam identifies potential victims who are promised help avoiding foreclosure. These scams are often marketed as “foreclosure consultants” or “mortgage consultants,” and their businesses as a “foreclosure service” or “foreclosure rescue agency.” But, instead of providing the services promised, the scams take homeowners’ money, ruin their credit record, and wipe out the hard-earned equity victims built up in their homes.

When announcing today’s legislative proposal, Attorney General Abbott revealed the results of a recent enforcement action against a mortgage rescue fraud scheme.

Arizona-based Abell Mediation, Inc., and its president and vice-president, Elizabeth Cory and Michael Cory, respectively, were charged with fraudulently claiming that their company could save homeowners from imminent foreclosure. Homeowners who were delinquent on mortgage payments responded to the defendants’ solicitation cards and Web site. The defendants’ cards claimed that “Abell Mediation, Inc. has saved over 7,000 homes from foreclosure,” boasted about a “staff of highly trained loss mitigation specialists” with established relationships with mortgage lenders and banks nationwide and promised to “achieve results that no one else can.”

Under an agreement secured by the Attorney General, the defendants are permanently enjoined from conducting a foreclosure mitigation business in the future. The defendant is also required to pay a total of $1.55 million in fines, restitution and attorneys’ fees.

Texas homeowners who believe they have been targeted by a mortgage-related scam should contact the Office of the Attorney General at (800) 252-8011 or file a complaint online at


Attorney General Greg Abbott was reelected as the 50th Attorney General of Texas on November 7, 2006. Prior to his election as attorney general, Greg Abbott served as a Justice on the Texas Supreme Court and as a State District Judge in Harris County.


Office of the Attorney General
300 W. 15th Street
Austin, TX 78701
Phone: (512) 463-2100
Toll free: (800) 252-8011

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