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.