California's Newest Foreclosure Scam

Scams involving purported mortgage modifications and foreclosure assistance have abounded since the California foreclosure crisis in 2009. The California Department of Real Estate recently warned consumers about the newest version of these scams.

In this scam, a "lawyer" invites homeowners to join a mass joinder, or class action lawsuit, against a bank or mortgage company. The "lawyer" promises results such as stopping foreclosures, lowering mortgage payments, lowering principal balances, or eliminating mortgages altogether. "Clients" must pay a nonrefundable fee -- often between $3,000 and $9,000 -- to join the litigation. The litigation is a sham, and the clients receive nothing. Scammers often solicit victims by mass mail or advertise the "litigation" on the Internet. The solicitations often sound legitimate, and require clients to sign lengthy retainer agreements.

To learn more about this scam, and how to protect yourself, check out the consumer alert on the California Department of Real Estate website at

To learn more about foreclosure and foreclosure scams in general , check out Nolo's Foreclosure area.