With the release of President Obama’s Making Home Affordable plan and recent media coverage on low mortgage rates, many new loan modification and foreclosure prevention scams have started to surface. So much so that HUD (Department of Housing) issued a press release and sent an e-mail to all HUD partners warning of the potential destruction of these foreclosure scams.

The biggest key point in HUD’s warning lies here: as a homeowner, you will never have to pay to participate in the President’s Making Home Affordable plan. Also, mortgage consultations and counseling should never cost you money.

April is National Fair Housing month, so we’d like to include an excerpt from HUD’s foreclosure scam warning in today’s mortgage news to keep all Quicken Loans clients educated. You can find the press release in its entirety on HUD’s website.

Treasury is issuing an advisory alerting financial institutions to the risks of emerging schemes related to loan modifications. The advisory identifies certain “red flags” that may indicate a loan modification or foreclosure rescue scam and warrant the filing of a SAR (Suspicious Activity Report) by a financial institution. Examples of possible signs of fraudulent activity, such as requiring that fees be paid before services are provided, are listed in the advisory.

As part of the multi-agency effort, Attorney General Eric Holder outlined ways in which Department of Justice has been cracking down on mortgage fraud schemes, including several successful convictions of scam artists in recent months. He also emphasized the Justice Department’s commitment to working with federal and state law enforcement and regulatory partners to ensure a coordinated and comprehensive response to the problem, describing the department’s work with the FTC and state attorneys general to reinvigorate the Executive Working Group, which allows partners to coordinate and exchange intelligence on competition and consumer fraud issues. The Attorney General also discussed DOJ’s focus on investigating and prosecuting lenders who discriminate against borrowers based on race, national origin, or other prohibited factors.

“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.”

On the civil enforcement side, the FTC has filed five new cases to halt the illegal practices of individuals and companies offering loan modification or foreclosure scams – including one company that spent 9 million dollars on TV and radio ads in less than one year. The FTC is also joining forces with a wide array of government, non-profit, and mortgage industry members to launch a new consumer education campaign to help those in financial trouble avoid becoming the victims of a loan modification or foreclosure rescue scam.

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