[Congressional Record Volume 155, Number 1 (Tuesday, January 6, 2009)]
[Senate]
[Page S89]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KOHL (for himself, Ms. Collins, Mrs. Lincoln, Mrs. Boxer, 
        and Ms. Mikulski):
  S. 117. A bill to protect the property and security of homeowners who 
are subject to foreclosure proceedings, and for other purposes; to the 
Committee on Banking, Housing, and Urban Affairs.
  Mr. KOHL. Mr. President, I am introducing the Foreclosure Rescue 
Fraud Act of 2009 with my colleagues Senators Collins and Lincoln. This 
legislation, which we introduced last Congress, will make it more 
difficult for financial predators to take advantage of homeowners in 
foreclosure.
  Foreclosure rescue scams are another consequence of the housing 
crisis that is plaguing the country. Foreclosure filings have been 
climbing across the country for the past two years and in Wisconsin, 
filings have risen 22 percent over the past year. Additionally, the 
Federal Reserve estimates that 2.5 million Americans will be facing 
foreclosure in 2009. As default rates and foreclosure filings have 
steadily increased, so have financial scams which prey on homeowners. 
The Better Business Bureau listed foreclosure rescue scams as one of 
the top ten financial scams in 2008.
  For most people, their home is their greatest asset. When a homeowner 
falls behind in their payments, it can cause a great deal of emotional 
stress on the family. Scam artists prey on owner's desperation and give 
them a false sense of security, claiming they can help ``save their 
home.'' The types of scams vary, but the end result is that the 
homeowner is left in a more desperate situation than before.
  The Foreclosure Rescue Fraud Act aims to prevent these cruel abuses 
by increasing disclosure and creating strict requirements for a person 
or entity offering foreclosure-rescue services. The legislation 
prohibits a ``foreclosure consultant'' from collecting any fee or 
compensation before completing contracted services, and from obtaining 
power of attorney from a homeowner. It also requires full disclosure of 
third-party consideration in the property and creates a 3-day right to 
cancel the foreclosure-rescue contract. Finally, the legislation 
creates a federal ``floor'' of protection and allows states without 
rescue-fraud laws to use these provisions as a way to help scam 
victims. The Foreclosure Rescue Fraud Act will make it easier for 
states and the Federal Government to combat these schemes and protect 
people who are already financially distressed from being made worse 
off.
  The past year has exposed the irregularities and inadequacies of our 
banking regulations. As Congress continues to work on proposals to 
restore confidence in our financial industry, it is imperative that we 
put in place new rules and regulations that better protect consumers in 
order to avoid further economic strain.
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