In the second quarter of 2007, about 10,017 fresh foreclosure filings were made in Colorado, an increase of 6 percent over the first quarter.
          In 2006, there were 28,435 foreclosure listings -- and officials at the Colorado Department of Housing estimate that number will reach 36,000 by the end of 2007.
          As the credit markets continue to flounder, many homeowners facing foreclosure seek ways to avoid losing their homes. One foreclosure rescue company proclaims, "The rescue process is a simple one. Unlike conventional lending institutions that check multiple things such as credit, tax returns, assets, and income, our loans are based upon the value of the real estate or collateral securing the loan."
          Statements like that set the stage for one of the most heavily promoted methods of avoiding foreclosure -- the "sale and leaseback" of the property. Businesses have used this method to raise cash by selling assets. But in this distressed personal mortgage market, as the method is used to enable people to stay in their homes and avoid foreclosure, some are losing their homes because of unscrupulous financial vultures.
          The owner of the home sells the property to an investor, and then enters into what amounts to a rent-to-own agreement.
          Theoretically, the investor pays off the mortgage that was in default and steps in as the new lender/owner/lessor. As soon as that happens, the homeowners find themselves in the dangerous jungle of rent-to-own swindles, also called the "foreclosure rescue racket."
          While statistics on these schemes are hard to come by, law enforcement authorities confirm that foreclosure scams are rising sharply. A number of states have enacted new laws to combat this.
          Colorado enacted related legislation in 1991. The 2008 legislative session will consider proposed bills that address predatory lending.
          Even so, according to MSNBC, the Better Business Bureau has received complaints from across the country about foreclosure rescue companies. A majority are located in Colorado, Georgia and Florida -- states with the highest foreclosure rates.
          For anyone considering entering into a rent-to-own agreement, whether as a first-time buyer or in response to foreclosure, Title 5, "The Consumer Credit Code" of the Colorado Revised Statutes, is a must-read.
          In particular, Title 5 Article 10, Part 5 sets forth that a Rental Purchase Agreement shall not require any of the following:
          Assignment of earnings. No lessor shall accept an assignment of earnings from the lessee for payment. However, a lessee may voluntarily authorize deductions from his earnings.
          Confess judgment. To "confess judgment" means abandoning your rights to due process ahead of time, and consenting to immediate execution of a judgment.
          Waivers. No lessor may require a lessee to waive service of process or to waive any defense, counterclaim or right of action against the lessor. In other words, "hang on to your rights."
          Breach of the peace. The lessor cannot unlawfully enter the lessee's premises or commit any breach of the peace while repossessing the property.
          Garnishment of wages. No lessor may require a lessee to authorize a prejudgment garnishment of the lessee's wages.
          Balloon payments. A lessee shall not be required to make a payment in addition to regular lease payments in order to acquire ownership of the lease property.
          Finding any of these provisions in a rent-to-own agreement is a reason not just to abandon the transaction, but possibly call the attorney general as well.
          On the other hand, there are legitimate companies whose focus is ethical foreclosure prevention. They will be members of the National Association of Foreclosure Prevention Professionals.
          According to the association, its goal is to provide "a quick and reliable way for distressed homeowners to find resources and solutions to help stop their foreclosure now and find ethical foreclosure prevention professionals in their area."
          Membership requirements include attending training seminars, participating in monthly conference calls for updates on foreclosure techniques and law, and undergoing criminal background checks before admittance into the association.
          Visit its Web site at www.nafpp.org for additional details. At the moment, Colorado has only two member organizations.
          Even with laws and a national association, the Better Business Bureau of Southern Colorado now offers an online educational resource at www.bbb.org/tips/clearpoint.
Topics include:
          Reasons behind the current rise in mortgage foreclosures.
          Advice for homeowners on assessing their personal situation.
          Steps to take if you can't make your monthly mortgage payment.
          Seeking assistance from a nonprofit housing counselor.
          Avoiding foreclosure "rescue" scams.
          Harvard Law School professor and bankruptcy expert Elizabeth Warren calls what foreclosure rescue purveyors offer "the cement life jacket." With a little caution and research, maybe fewer people will drown in this flood of foreclosures.