Stealing home - home equity loans

This leaves responsibility for cleaning up the mess with the states, many of which have been less than vigilant about policing the industry. In Massachusetts, for example, second-mortgage companies have generally been permitted to charge whatever interest rate they want, as long as they notify the state attorney general in writing if they intend to charge 20 percent or more. It's a little like saying it's OK to rob a liquor store as long as you've dashed off a note to the cops announcing your intent.

The victims of the new tin men aren't all blameless; often their own errors in judgment have allowed the con artists to take advantage. But most are longtime homeowners who give stability and a sense of community to neighborhoods threatened by unemployment, drugs, and gangs. And they are a population in need of legislative protection every bit as much as middle-class S&L depositors whose losses are covered with taxpayer money. Instead of helping out, government, through deregulation, has left these homeowners as legally powerless as they are politically impotent.

Home cheat home

Before the Rodney King riots, the working-class flatlands of South Central Los Angeles had a check-cashing outlet on corner after corner--Gee Gee Liquor on S. Normandie; Cash Now Inc. on S. Figueroa; Nix Check Cashing on Martin Luther King Jr. Boulevard--133 outlets in South Central alone. These are places that don't take deposits or make loans; they simply cash checks for a fee that ranges from 1 to 21 percent of the check's value. Some check-cashing outlets set up mobile offices at public housing projects on the first and fifteenth of each month to cash tenants' government aid checks.

What you won't find in this neighborhood are a lot of banks or S&Ls. There are only 19 in this slice of southern L.A., an area that's home to more than half a million people. The majority of residents are black or hispanic with low or moderate incomes--not the kind of customers banks like to court. With few mainstream banks to turn to, these residents often are without savings accounts and fail to develop the kind of longterm relationship with a bank that is needed to get a loan. Yet many of these residents have at least one valuable asset--one of the thousands of modest, two-bedroom homes built after World War II when veterans poured in to take jobs in factories and nearby shipyards. In the early sixties, a small house with a picket fence cost around $7,000. Today it might be worth $150,000.

The property-rich but credit-starved homeowners are easy targets for second-mortgage companies. Their salespeople use reverse phone directories (which list residents by address) or canvass door-to-door in targeted zip codes. Attorneys say some salesmen cruise these neighborhoods, spot likely houses, and use their car phones to call their offices, which then tap into real estate databases to see whether the owner is a promising mark. The salesman finds out what product a homeowner wants, such as a satellite dish, then sells it to him on credit, securing the loan with a second mortgage on the house. The dizzying paperwork that accompanies mortgage applications makes it easy to mislead someone who's financially unsophisticated. There's a slogan sometimes used in the business: "Cash out the deal before the customer comes out from under the ether."