"Mortgage Rescue" Scams Draw Law Enforcement Attention
This is a sad commentary on just how often people who are on the verge of losing their homes becomes victims a second time.
A recently released Federal Trade Commission report details the dramatic increase in “mortgage rescue” scams.
According to an article from CNN – “the sudden leap in consumer complaints is in part attributable to hundreds of “rescue” companies that launched last year after the Obama administration created a government-subsidized loan modification program.
Logistical problems have plagued the administration’s Home Affordable Modification Program, which has produced only 116,000 permanent mortgage modifications. In turn, many homeowners have turned to fly-by-night companies for help, analysts say.
“Fundamentally they’re a product of a broken system,” said Ira Rheingold, executive director of the National Association of Consumer Advocates. “As long as people are desperate to save their homes, and don’t have a good alternative, these guys are going to find a way to cheat them.”
Although some businesses offer legitimate loan modification services, the FTC has proposed a new rule that would prohibit companies from charging consumers up-front fees, a move that will probably “drive a lot of these scammers out of this business,” Vladeck said. The agency, which can bring civil but not criminal court cases, has identified about 500 companies that currently charge advance fees.
Through its “Operation Loan Lies,” the agency has sued about 30 companies accused of operating bogus loan modification or foreclosure rescue businesses.
Ultimately, Vladeck hopes these cases will encourage the Justice Department to pursue criminal charges against mortgage schemers.”
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