Welcome to the Tuesday Slot, today in her article Irene Parker continues to address a very serious problem that of timeshare foreclosure, especially for seniors. Inside Timeshare has been highlighting this problem for some time and we will continue to do so.
Timeshare Foreclosure Explained to Lenders
When and Why Some Timeshare Buyers Have No Choice
The Heartbreak of Senior Timeshare Foreclosure
We had to do a reverse mortgage on our home as a result of these timeshare purchases because our social security income was too low to cover the total charged on both Barclay cards. A reverse mortgage was the only way we saw to deal with the financial distress. My credit score was 817 the day we met with the timeshare sales agent but it has gone down considerably after that purchase.
A former Army Captain, Vietnam
By Irene Parker
December 18, 2018
Over the past year I have received calls from mortgage brokers calling on behalf of former timeshare members trying to buy a house, battling the decline in their credit score due to timeshare foreclosure. When I explain to the lender that consumers are often left with no choice but to foreclose, due to no secondary market and the contract perpetual, the call has always ended with the mortgage broker convinced.
Six grown children, alarmed and astonished at the deceit their parents described at the hands of timeshare sales agents, have connected to bring to light unfair and deceptive timeshare sales practices. Their parents are being driven, or were driven, into timeshare foreclosure. They possessed credit scores over 800 until they were up-sold into insolvency, now trying to understand how our country could leave senior after senior financially devastated. Two of the six families have previously published articles. On Friday we publish an article submitted by a third family, her parents financially and physically devastated because they believed a series of timeshare sales agents. We have received 20 complaints directed against their sales agent. He earned $2.4 million selling timeshare points in 2016 and $2.4 million in 2017. The complaints are similar or identical.
If you buy a house, car, or boat, and there is loan outstanding, you can still sell the asset. Timeshare companies themselves don’t want the timeshare back because, when no longer wanted or needed, a timeshare is a liability. What would happen to the primary housing market if we suddenly learned there was no secondary market? Damages suffered by senior timeshare members, often accumulating points over several purchases, are commonly $100,000 to $300,000 or more, easily the cost of a home. Often the report of deceit happens at the last one or two purchases, because a level of trust developed over the years until they purchased for reasons that did not exist – programs that would relieve them of maintenance fees or allow them to sell points. Members reaching out to us all report that they were told at purchase the timeshare would be easy to sell, it is real estate, an investment.
When the buyer has experienced unfair and deceptive sales practices, the result exacerbates the financial disaster, as has been reported by many of the 626 families that have reached out to us angry, overwhelmed and desperate. Some have learned within 24 hours after the rescission period, what they bought was a far cry from what was described.
Such deceptive practices are known within the industry as “pitching heat” and the answer to complaints are routinely dismissed with, “You signed a contract” or “We are not responsible for what our sales agents say.” In Nevada, all complaints we have received that were submitted to the Nevada Real Estate Division quickly received a “You have no proof” denial. In Florida, the response has been, “Verbal representations are hard to prove.”
Fine, but why not let the consumer know a timeshare sales agent can say anything to make a sale. Let the consumer know they can’t believe a word a timeshare sales agent says. That would at least be transparent. Florida is a two party state, so consumers are not even allowed to record. How is proof even possible?
At the end of this article I list several Attorneys General settlements and lawsuits supporting my claim that the finger needs to be pointed also in-house, instead of solely at timeshare exit companies. The timeshare developer created this timeshare exit scam nightmare. Timeshare companies list in their annual reports that a viable resale market is a risk to their (stock) investors. Not all exit companies are scams, but many are. An FTC report on exit and transfer scams:
I liken million dollar deceptive timeshare producers to a baseball player like Jose Canseco, breaking the performance enhancing drug rules to earn millions, while other teammates earn far less because they did not break the rules. Honest timeshare sales agents are harmed by the actions of the dishonest too.
According to GustonCho Associates, “Many consumers purchased timeshares in the 2000’s when the real estate market was hot.”
- After the 2008 Real Estate And Mortgage Meltdown bankruptcies and foreclosures soared to historical highs
- Among foreclosures were consumers who purchased timeshares and could no longer liquidate the timeshares and had to go through timeshare foreclosures
- I get many calls by home buyers who were told by banks and mortgage lenders that they do not qualify for a FHA Loan because they have a timeshare foreclosure
- Timeshare owners were told that there are mandatory waiting period after timeshare foreclosure to qualify for a FHA Loan
- This is not true and unfortunately, these loan officers who are telling home buyers that there is a waiting period after timeshare foreclosure to qualify for a FHA Loan do not know what they are talking about
- There is no waiting period to qualify for a FHA Loan with a prior timeshare foreclosure
- Timeshares are not considered real estate loans
- Timeshare loans are considered consumer installment loans under HUD FHA Guidelines
We have also received requests for help from the millennial generation. Seniors often tell me that at their age, they don’t care what happens to their credit score, but for the younger buyer, a timeshare foreclosure at a young age can also be financially devastating.
Not one member who has contacted Inside Timeshare realized their contract was perpetual or that there was little to no secondary market.
The Foreclosure process is gruesome. There will be threatening calls and the hit on the credit score. Timeshare today is broken. When sales agents can lie and laugh about it, at the expense of the young and the old, financially devastated by their vacation plan, something is very wrong. Too many families have been financially harmed by an industry run amuck. Rising loan loss provisions are just a number on an annual report to Wall Street and the developers. To us, they are broken families.
Lawmakers, heavily influenced by the industry, don’t seem to care because timeshare buyers don’t typically buy a timeshare in the state they live in. Attorneys General try to protect the public, but the settlements achieved so far have been mere speed bumps in extraordinary revenue streams.
A few of the Attorneys General investigations and settlement and lawsuits:
New York Attorney General reaches $6.5 million Manhattan Club Settlement
Attorneys General on the side of timeshare owners:
Colorado Attorney General Cynthia H. Coffman, as reported by Business Den reporter Amy DiPierro, concerning Highlands Resorts in Colorado and Sedona Pines in Arizona:
Jefferson City, Mo. – Attorney General Chris Koster today announced that Welk Resort Sales, Inc., a California corporation that sells timeshares in Branson, has entered into an agreement to pay $18,000 in restitution to Missouri consumers who purchased timeshares from Welk.
HARRISBURG – The Attorney General’s Bureau of Consumer Protection has reached a settlement with Florida – based BlueGreen Corporation that addresses complaints about the company’s alleged use of deceptive “contests,” misleading sales presentations and improper contracts in the marketing and sale of timeshare vacation packages in Pennsylvania.
Arizona AG issues an $800,000 fine and an Assurance of Discontinuance against Diamond Resorts
Bluegreen stock downgrade August 17, 2018
Self-help support groups we feel are not industry influenced:
Where are you?
Thank you Irene, as usual you have highlighted very well a severe problem and explained it in a very simple manner. In this Friday’s Letter from America, another new contributor Brenda Santos, highlights the “Nightmare on Timeshare Street” of her elderly parents at the hands of an unscrupulous sales agent. We think this will make your blood boil, so join us for our last Letter from America this year.