San Diego Phantom Help Lawyer | Attorney

California Phantom Help Schemes

Explained by a San Diego Criminal Defense Lawyer

Civil Code 2945.4 - California Foreclosure Law

Penal Code 487 - Grand Theft


Definition and Examples of Phantom Help Scams:



Phantom Help is defined by two statutes:

* Civil Code 2945.4 - California Foreclosure Law

* Penal Code 487 - Grand Theft



There are 3 basic types of phantom help scams: 

(1) Mortgage Modification Specialist - These businesses or individuals target homeowners and charge between $500 and $5,000 to modify your mortgage.  It is a process that the individual can do themselves, for free, and often times victims do not see results. 


(2) Unrecorded Deed - An individual markets a home that is pending foreclosure to an unsophisticated buyer who does not understand how the title insurance or escrow process works. The purchaser, who is not sophisticated in the real estate process (often a first time buyer looking for a great deal), makes a down payment and receives the unrecorded (often fraudulent deed) and moves in - only to be evicted a short time later by a buyer who purchased the house from the bank. 


(3) Debt Restructuring Agent - An individual or company instructs the homeowner to not communicate with their lender/lawyer/credit counselor, and that they are "taking care of all of the arrangements," and that "this is part of the negotiation process."  In the meantime the consultant convinces the homeowner to make mortgage payments directly to the consultant. 


Legal Defenses to a Phantom Help Criminal Charge:



* CONSENT - You had consent to enter into a transaction with the property.  If you obtained the homeowners consent to prevent, delay or stop the foreclosure process, then you may not be guilty of fraud as long as that consent was not obtained fraudulently. A good faith belief in your ability to help the homeowner can be a defense to this charge.  


* LACK OF INTENT - This particular crime requires specific criminal intent.  If you collected upfront fees, it is more difficult to defend against this charge because collecting upfront fees for work is a direct violation of California's Foreclosure Fraud Laws.  


* IDENTITY - You may have worked for a company that provided phantom help to homeowners, however you did not have any interaction with the homeowner, nor did you make any representations on behalf of the company.  



Penalties, Punishment and Sentencing for a Phantom Help Conviction:


Phantom help is considered a "wobbler," meaning the prosecutor can elect to charge the crime as a misdemeanor or a felony. This election depends substantially on your criminal history and the facts of your case.  


If convicted of a felony phantom help scheme you could face:

* 16, months to three (3) years in prison and/or

* up to a $10,000 fine


If convicted of a misdemeanor the penalty is: 

* Up to one year in county jail

* Up to a $10,000 fine


Additional Penalties

 * Sentencing Enhancement of 1 to 4 years if the homeowner lost more than $65,000

 * An additional 1 to 5 years and up to a $500,000 fine if convicted of two or more related felonies

 * Professional discipline if you hold a professional license (such as a license to practice law or sell real estate). 



Victim of a Phantom Help Scheme?


Call us today for a free consultation.  We can help you explore your options to ensure that the person who defrauded you is prosecuted and what you can do to try and regain what you lost.  



California Civl Code 2945.4 - Text

Prohibited practices.  "It shall be a violation for a foreclosure consultant to:

(a) Claim, demand, charge, collect, or receive any compensation until after the foreclosure consultant has fully performed each and every service the foreclosure consultant contracted to perform or represented that he or she would perform [a violation of which is a type of phantom help scam].

(b) Claim, demand, charge, collect, or receive any fee, interest, or any other compensation for any reason which exceeds 10 percent per annum of the amount of any loan which the foreclosure consultant may make to the owner.

(c) Take any wage assignment, any lien of any type on real or personal property, or other security to secure the payment of compensation. That security shall be void and unenforceable.

(d) Receive any consideration from any third party in connection with services rendered to an owner unless that consideration is fully disclosed to the owner.

(e) Acquire any interest in a residence in foreclosure from an owner with whom the foreclosure consultant has contracted. Any interest acquired in violation of this subdivision shall be voidable, provided that nothing herein shall affect or defeat the title of a bona fide purchaser or encumbrancer for value and without notice of a violation of this article. Knowledge that the property was "residential real property in foreclosure," does not constitute notice of a violation of this article. This subdivision may not be deemed to abrogate any duty of inquiry which exists as to rights or interests of persons in possession of residential real property in foreclosure.

(f) Take any power of attorney from an owner for any purpose.

(g) Induce or attempt to induce any owner to enter into a contract which does not comply in all respects with Sections 2945.2 and 2945.3.

(h) Enter into an agreement at any time to assist the owner in arranging, or arrange for the owner, the release of surplus funds after the trustee's sale is conducted, whether the agreement involves direct payment, assignment, deed, power of attorney, assignment of claim from an owner to the foreclosure consultant or any person designated by the foreclosure consultant, or any other compensation."

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