The Latest Fairy Tale: the Return of the Land Grant
With the ever worsening foreclosure crisis in California, confidence artists have invoked an age-old government program—the land grant—to swindle victims out of their homes. In this article, the Los Angeles Times reported that California and federal authorities recently shut down a San Diego-based company that was allegedly convincing homeowners to pay thousands of dollars to obtain foreclosure protection via the use of a land grant. Allegedly, the victims were told that by transferring their land to the federal government it would be protected from foreclosure and would later be returned to them free and clear. Thus by using the land grant program, they could stave off the foreclosure and wipe out hundreds of thousands of dollars in debt.
If only life were so easy.
The strange thing about this latest confidence scheme is that it essentially advocates the use of a reverse land grant. Historically, a land grant is a program used by governments to reward service and encourage development in remote territories. In the United States, the government started using land grants after the American Revolutionary War to reward veterans for their service. Later, the United States used land grants to encourage the development of the transcontinental railroads. By congressional acts of 1862 and 1890, the federal government also made land grants to states to establish colleges and universities. Many well-know universities such as Rutgers University (which is the oldest land grant university) and Michigan State University (which claims to be the pioneer land grant university) were established through the land grant program.
It is hard to imagine how a land grant program would be applicable to saving an overextended homeowner from foreclosure. While the congress is debating various legislative remedies to the foreclosure crisis, none has involved the concept of the government taking back an owner’s property through a reverse land grant. As California Attorney General Jerry Brown indicated, “there hasn’t been a legitimate use of the land grant since the conclusion of the Mexican-American War”. Nevertheless, the organization was able to convince hundreds of homeowners to participate and pay fees as high as $10,000 for the privilege. As this article illustrates, seniors are often especially vulnerable to foreclosure abuse.
In 1979, California established special restrictions on so-called “foreclosure consultants” finding among other things that homeowners in foreclosure are “subject to fraud, deception, harassment, and unfair dealing ….” There are also special legal restrictions on an attorney purchasing his client’s property. Generally, these laws provide that contracts that fail to adequately protect homeowners can be voided at the victim’s election. Any homeowner facing a foreclosure would be wise to obtain objective independent advice before making any major financial decision. While these foreclosure laws can provide helpful protection, often they come too late for a homeowner who has lost his or her home to a swindler in a confidence scheme.
If only life were so easy.
The strange thing about this latest confidence scheme is that it essentially advocates the use of a reverse land grant. Historically, a land grant is a program used by governments to reward service and encourage development in remote territories. In the United States, the government started using land grants after the American Revolutionary War to reward veterans for their service. Later, the United States used land grants to encourage the development of the transcontinental railroads. By congressional acts of 1862 and 1890, the federal government also made land grants to states to establish colleges and universities. Many well-know universities such as Rutgers University (which is the oldest land grant university) and Michigan State University (which claims to be the pioneer land grant university) were established through the land grant program.
It is hard to imagine how a land grant program would be applicable to saving an overextended homeowner from foreclosure. While the congress is debating various legislative remedies to the foreclosure crisis, none has involved the concept of the government taking back an owner’s property through a reverse land grant. As California Attorney General Jerry Brown indicated, “there hasn’t been a legitimate use of the land grant since the conclusion of the Mexican-American War”. Nevertheless, the organization was able to convince hundreds of homeowners to participate and pay fees as high as $10,000 for the privilege. As this article illustrates, seniors are often especially vulnerable to foreclosure abuse.
In 1979, California established special restrictions on so-called “foreclosure consultants” finding among other things that homeowners in foreclosure are “subject to fraud, deception, harassment, and unfair dealing ….” There are also special legal restrictions on an attorney purchasing his client’s property. Generally, these laws provide that contracts that fail to adequately protect homeowners can be voided at the victim’s election. Any homeowner facing a foreclosure would be wise to obtain objective independent advice before making any major financial decision. While these foreclosure laws can provide helpful protection, often they come too late for a homeowner who has lost his or her home to a swindler in a confidence scheme.
New Legislation Seeks to Protect Elders from Pseudo Professional Designations
One challenge facing most consumers is finding trustworthy professionals to help manage their retirement finances. In the last few years, dozens of professional designations have been created, some of which purport to offer special expertise designed specifically for seniors. As described in a recent article, often these new designations are nothing more than a marketing device intended to give seniors a false sense of security.
One such example was the designation “Certified Elder Planning Specialist, a designation that was awarded after completing approximately 100 hours through a self-study course provided by the Institute of Elder Planning. In September 2002, the Massachusetts Securities Division filed a complaint against the Institute’s founder alleging, among other things, that the respondents created “specious titles such as ‘Certified Elder Planning Specialists’ to mislead the elderly and disguise the fact that the associates were insurance salesman.” According to Massachusetts securities officials, the organization has closed its doors and the designation is not long in use. Unfortunately, these kind of deceptive practices negatively impact the entire investment advisory industry.
The Senior Investor Protection Act of 2008 would, among other things, provide additional resources that will monitor the credentials of people claiming to be funding to states to monitor these credentials and prosecute advisors who use fraudulent or misleading professional designations. This legislation has been supported by non-profit organizations such as the Torrance based KEEP-SAFE coalition.
The reality is that seniors hold a vast portion of the wealth in this country and will continue to present fertile fields for the unscrupulous. When in need of professional assistance, it is always best to conduct your own research and obtain recommendations. Never be afraid to ask for a second opinion or independent advice.
One such example was the designation “Certified Elder Planning Specialist, a designation that was awarded after completing approximately 100 hours through a self-study course provided by the Institute of Elder Planning. In September 2002, the Massachusetts Securities Division filed a complaint against the Institute’s founder alleging, among other things, that the respondents created “specious titles such as ‘Certified Elder Planning Specialists’ to mislead the elderly and disguise the fact that the associates were insurance salesman.” According to Massachusetts securities officials, the organization has closed its doors and the designation is not long in use. Unfortunately, these kind of deceptive practices negatively impact the entire investment advisory industry.
The Senior Investor Protection Act of 2008 would, among other things, provide additional resources that will monitor the credentials of people claiming to be funding to states to monitor these credentials and prosecute advisors who use fraudulent or misleading professional designations. This legislation has been supported by non-profit organizations such as the Torrance based KEEP-SAFE coalition.
The reality is that seniors hold a vast portion of the wealth in this country and will continue to present fertile fields for the unscrupulous. When in need of professional assistance, it is always best to conduct your own research and obtain recommendations. Never be afraid to ask for a second opinion or independent advice.
