The community efforts demonstrated throughout the Siouxland 
Community during the last week has been astounding. Hundreds of volunteers have stepped forth for families affected by the Missouri River Flooding. Some are helping friends and family while others are helping complete strangers. To see a community come together in such a crisis truly is amazing. It is then hard to believe that some might also try to take advantage of these flood victims. The best approach to prevent falling victim to fraudulent efforts is to be educated and aware. I will try and post some of the fraudulent practices to be aware of that have been attempted in past disasters much like the Missouri River flooding.
Home Repair/Lien Contract Schemes – After a disaster, a homeowner frequently needs major repairs for serious damage. The cost of these repairs is most likely greater than the insurance coverage and the ability of the homeowner to cover the cost. The homeowner may feel trapped between the high cost of the repairs and the limited funding for repairs. The predator convinces the homeowner to sign a lien-contract secured by the home. The loan repayment amounts are higher than what the consumer can afford to pay on a fixed income. The lien-contract, however, functions like a promissory note. If the homeowner misses only one payment the creditor may foreclose and sell the home without ever going to court. The common result is that the homeowner not only fails to have necessary repair work done, but loses his/her home through foreclosure.
Refinancing Schemes – Because of the increased costs of confronting an emergency, consumers frequently fall behind in their credit payments or overextend themselves to the point that they must choose whether to pay creditors or obtain basic necessities such as food. The homeowner often cannot pay both the refinancing costs and the cost of hiring a contractor, resulting in a situation far worse than before the refinancing. A few tips for consumers include:
- Beware of lenders who claim that they are the only hope for a loan or ask borrowers to sign a contract/loan agreement with missing information. Beware when lenders say refinancing your home can solve credit or money problems.
• Always interview and research several contractors and lenders. Check with friends or family for recommendations. Try to deal with an established, reputable, local contractor and lender. Check references. Ask the Attorney General’s Office if it has received complaints (515-281-5926 or 888-777-4590) or the Better Business Bureau.
- Get it in writing. Get several written estimates for the job, and get a written contract detailing work to be done, responsibility for permits, costs, and any other promises.
• Never make false statements on a loan application. Any lender who allows this is fraudulent. Do not let anyone convince you to borrow more money than you know you can afford.
- Don’t pay large sums in advance. Predators may just “take the money and run.” If you have to make a partial advance payment for materials, make your check out to the supplier and the contractor. If you suspect a scam, report it to the Attorney General Office or local authorities.
Foreclosure Consultants/Equity Purchasers – Some financial predators prey on persons during the foreclosure process. They claim to be foreclosure experts who offer to assist homeowners after they receive a notice of default. They take advantage of the homeowner’s distress and offer to purchase the home for below market value through misrepresentations on the value of the home. They represent to the homeowners that they may stay in the property for the rest of their lives. In fact, after they obtain the property, they sell it and the new owner serves the tenants with eviction papers.
Caretaker/Befriender/Relative Scams – Isolated homeowners who need assistance to maintain their homes frequently are victimized by friends, relatives or caretakers. They assist the homeowner with household chores, including shopping or taking them on medical visits. Children of elderly parents sometimes seek control of their parents’ property for their own uses. These persons can use scare tactics to convince the elderly, disabled or limited English or non-English speaking person to transfer title of the property to them. Sometimes they obtain a power of attorney when a person is very sick. Unbeknownst to the homeowner, the power of attorney holder may convey or encumber the property and keep the proceeds for him/herself.
Price Gouging – Iowa has a rule against price-gouging that goes into effect in counties with a disaster declaration. Price-gouging is charging very high prices that are not justified, and taking unfair advantage of disaster victims.
Beware of on-line schemes and charity scams – Predators may set up websites to make it look like they are legitimate or local contractors; others may ask for donations but may give little of the money to actual flood victims.
Jeana Goosmann
Attorney
Goosmann Law Firm, PLC
The Society for Human Resource Managment (SHRM) will be holding a social and networking opportunity in lieu of their monthly program. The social will be held on Tuesday, July 19th from 5:30 to 8:30 at the new Sioux City Museum. Food and beverages will be provided. Attendees will also have the opportunity to engage in activities showcasing the museum and educating about SHRM benefits as well as to win SHRM-related prizes.
