In our last couple of posts, we talked about ways that we get ourselves into financial trouble. We talked a little about ways to get out of the hole, too. This week we came across a story about a man who took advantage of people trying to resolve their financial problems, and it reminded us how important it is to be wary of people and businesses that make promises to help with credit or mortgage issues for an upfront fee.
In this case, the 44-year-old man held himself out to be a financial adviser. From January 2010 to March 2012, he told consumers he could help them obtain mortgage refinancing. He took money upfront as a "deposit" that he said would be put toward down payments or appraisal costs.
According to court documents, he took a total of $335,650 from his victims and used none of it for down payments or appraisal costs. Instead, he used the money to pay his own mortgage and save his home from foreclosure. When that was taken care of, he spent the money on travel and other personal expenses.
His clients suffered some serious consequences as a result. Not only did they receive no services from their so-called adviser, but some had to declare bankruptcy. His delaying tactics and the sizeable "deposits" he demanded made his clients' financial positions even more precarious than they had been.
Court documents show that his victims came from all over the country. He was apparently linked to a network of brokers that somehow gained access to information about borrowers looking for help with loan refinancing.
We'll describe one victim's experience in our next post.
Source: St. Louis Post-Dispatch, "St. Louis County man who preyed on struggling borrowers is sentenced," Robert Patrick, July 1, 2014