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Multi-Agency Crackdown on Foreclosure Rescue Fraud and Loan Modification Scams

The Federal Trade Commission announced on Tuesday a multi-agency effort to crack down on foreclosure rescue fraud and loan modification scams.

The economic crisis has forced many struggling homeowners to look for a way to make owning their homes more affordable. And most homeowners are aware of a number of packages and programs passed by Washington to help them do just that.

But telling the difference between the real deal and a scam can sometimes be the hard part. The companies that prey on desperate people are very skilled at looking good on the surface - they often have professional-looking websites and names or logos that imply a relationship with the federal government.

These scam companies often make claims, promises, or guarantees before they know your personal situation. Their claims may sound something like, "We can help you keep your home - guaranteed." or "97% Success Rate".

They often require a substantial payment up front, fail to deliver on their promises, and don't refund the customer's money - even after promising a money-back guarantee. The companies may market their "services" on the internet, mailers sent through the postal service, or by general advertisements. They may even call their victims on the phone.

In the joint press conference, Treasury Secretary Timothy Geithner, Attorney General Eric Holder, Department of Housing and Urban Development Secretary Shaun Donovan, and, on behalf of state enforcers, Illinois Attorney General Lisa Madigan, joined FTC Chairman Jon Leibowitz in warning consumers about these types of scams.

"The Administration's Making Home Affordable program is a critical piece of our efforts to stabilize the financial system and ensure that it works with our efforts to grow the economy," said Secretary Geithner. "American homeowners desperately need the relief this program offers, but the very last thing they need is to be taken advantage of as they try to hold on to their homes. This Administration is deeply committed not just to providing at-risk homeowners with assistance but also to cracking down on anyone who seeks to defraud them."

Consumers are encouraged to "seek out free, HUD-approved housing counselors for help with their mortgages."

“Scammers are taking advantage of people in a difficult situation – people who are trying to modify their home mortgages or those who are trying to avoid foreclosure. We’re enforcing the law against these scam artists; we’re putting others on notice that unless they change their ways, they’re next; and we’re working with other government agencies, non-profits, and mortgage companies to reach out to our neighbors in distress with the details of how to get help,” said Chairman Leibowitz.

The FTC has brought law enforcement actions against 11 loan modification and foreclosure rescue operations in the past year, some of which were marketing their services by giving the false impression that they were affiliated with the federal government.

Charges brought by the FTC include one company that went so far as to falsely register two websites to trick consumers into believing that the company actually was the federal government. With site names like bailout.hud-gov.us and bailout.dohgov.us - the trick can be easy for homeowners to fall for.

In addition to the actions taken by the FTC, more than 20 state law enforcers have taken actions against deceptive companies that prey on vulnerable homeowners, including 22 brought by Illinois Attorney General Madigan.

The FTC has also sent out warning letters to 71 companies who may be using deceptive marketing practices for foreclosure rescue or loan modifications. The FTC located these companies by scouring the internet for potentially deceptive claims or promises, and warned them that their ads may violate federal law. State enforcers have sent out their own warning letters, too - including more than 60 warning letters sent by Attorney General Madigan.

“For millions of Americans, the dream of home ownership has become a nightmare because of the unscrupulous actions of individuals and companies who exploit the misfortune of others,” Attorney General Eric Holder said. “The Department of Justice’s message is simple: if you discriminate against borrowers or prey on vulnerable homeowners with fraudulent mortgage schemes, we will find you, and we will punish you.”

The agencies also intend on fighting these unscrupulous crooks by improving consumer awareness. To help educate consumers about these loan modification and foreclosure rescue scams and to inform them how to get help from legitimate organizations, the FTC has joined forces with a wide array of government, non-profit and mortgage industry members.

The HOPE NOW Alliance, the Homeowners Preservation Foundation, and NeighborWorks America - non-profit agencies that help distressed homeowners get free help and counseling - are also joining in the effort with the FTC to fight these scams by educating homeowners on how to get legitimate help.

Several national mortgage companies, including Chase Home Finance, Suntrust Mortgage, and GMAC Mortgage, will join in the effort to inform consumers. They'll use a variety of methods, including sending educational information with the monthly statements, through letters to delinquent borrowers, during loan counseling sessions, and through their websites. Freddie Mac is also sending educational materials to it servicing partners, so they can pass them along to borrowers.

“We have families on the edge of foreclosure that are being offered things that are too good to be true, and we will take every measure we can to educate and protect consumers and homeowners, bring these scams to light, and work to prevent con artists from exploiting the housing crisis,” said HUD Secretary Donovan. “There are legitimate people, places, and agencies that American families can turn to when they are facing foreclosure, starting with www.MakingHomeAffordable.gov and the Homeowner’s HOPE Hotline at 1-888-995-HOPE for free foreclosure counseling assistance.”



Source:
Federal Trade Commission
U.S. Treasury Department
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Monday, 19 August 2019

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