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Woman, 87, who lost home to scam gets $116,972

Minnesota victim of foreclosure fraud says 'I just have to start over again.'

By Teresa Mears Dec 18, 2009 2:40PM

An 87-year-old woman who lost her home of 50 years to a foreclosure rescue scam has won a victory, of sorts: The state of Minnesota has agreed to give Telsche Paulson $116,972 from a state fund designed to compensate victims of unscrupulous real estate professionals.


But Paulson will never get back the duplex she and her late husband bought in 1958 and which she lost to scammers in 2008.


"At my age, I just have to start over again," she told The Minneapolis Star-Tribune. She now lives with her son in a rented house far from her old neighborhood.  "This house isn't like mine,'' Paulson said. "It's different."


Her story is much like many sad mortgage fraud stories:

In 2004, she began having trouble making payments on her mortgage after she lost the tenant in the other half of the duplex, which she had refinanced several times.

She got a letter in the mail promising “rescue” from foreclosure.


According to a story about the lawyers who worked for free to help her, Paulson was duped into selling her home to a person she never met in exchange for a contract for deed, and placing all her equity into an “escrow” fund under the control of a shell corporation.


In 2006, the scam artists sold Paulson’s home again, without her knowledge, extracting the rest of her equity through an exorbitant real estate commission. At the same time, Paulson continued to make payments on the mortgage she thought she had.


The scammers ended up taking about $160,000 in equity plus $12,100 in fraudulent mortgage payments. Paulson didn’t realize she’d been the victim of a scam until 2007, and by then it was too late to save her home.


Unfortunately, this type of foreclosure rescue fraud is all too common, and it often victimizes families who have owned their homes for years. As the number of foreclosures has risen, so has the number of scams.


The Federal Trade Commission, in its advice on how to keep from becoming a victim of a foreclosure rescue scam, advises that you avoid any company or individual that:

  • Guarantees to stop the foreclosure process -- no matter what your circumstances.
  • Advises you not to contact your lender, lawyer, or credit or housing counselor.
  • Collects a fee before providing any services.
  • Accepts payment only by cashier’s check or wire transfer.
  • Encourages you to lease your home so you can buy it back over time.
  • Tells you to make your mortgage payments directly to it, rather than to your lender.
  • Advises you to transfer your property deed or title to it.
  • Offers to buy your house for cash at a fixed price that is not set by the housing market at the time of sale.
  • Offers to fill out paperwork for you.
  • Pressures you to sign papers you haven’t had a chance to read thoroughly or that you don’t understand.

If you run into trouble, the FTC advises, seek out a nonprofit housing counseling agency, which will not charge for its services. You can find a counseling agency through the Homeownership Preservation Foundation, (888) 995-HOPE. You can also find help through the HOPE NOW Alliance of mortgage servicers, mortgage market participants and counselors at


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