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Officials Meet to Discuss Foreclosure Scams

by devteam September 18th, 2009 | Share

Federal and state representatives met inrnWashington on Thursday to discuss cracking down on mortgage foreclosure rescuernand loan modification scams.  At the samerntime, the Federal Trade Commission (FTC) announced is had filed charges againstrntwo companies alleged to have defrauded homeowners through such schemes. 

The FTC announced the legal action at arnconference convened by the U.S. Departments of Treasury and Housing and UrbanrnDevelopment (HUD), Financial Crimes Enforcement Network (FinCen) and the FTC andrnattended by attorneys general from 12 states.   

The joint conference was called torndiscuss emerging trends and proactive strategies to combat fraud againstrnconsumers in the housing market and how state and federal agencies can bestrnimprove coordination to fight it.  Thernconference was a follow-up to an announcement by the Obama Administration severalrnmonths ago of a multi-agency crackdown on attempts to prey on distressed homeowners.

Treasury Secretary Tim Geithner said 'Arnclear lesson of this financial crisis is that American consumers need betterrnprotection against fraud.  And while wernwill prosecute anyone who violated the law, going forward we will not wait forrnproblems to peak before we respond.”

Connecticut Attorney General RichardrnBlumenthal called mortgage rescue schemes “an epidemic – preying on familiesrnfacing foreclosure in exploding numbers. rnThese…scams raise false hopes and then cruelly exploit them.”

Attendees discussed the types andrnpatterns of predatory practices they called “rampant” in the wake of therncurrent financial crisis and specifically mentioned “many fraudulent televisionrnads that run on prominent networks promising simple solutions to complexrnfinancial problems”

A particular focus of the meeting was upfrontrnfees that are charged by predators in order to assist homeowners to stoprnforeclosure. 

The agency heads also said they were warning lending institutions which arernoften at the forefront of both loan modification and foreclosure efforts to bernalert to such schemes.

With concerns about scams growing, FTC Chairman Jon Leibowitz said hisrnagency would consider stricter rules to cover all aspects of the “mortgagernlife cycle” from fees and advertising to appraisals and servicing.  Under consideration, he said, was a federalrnban on upfront fees for mortgage modifications services.  Several states already have banned such fees.

Illinois Attorney General Lisa Madigan said 'If you're asked to pay anrnupfront fee, that's a sure sign you're dealing with a scavenger whose only goalrnis to con you out of money you can't afford to lose, and who will ultimatelyrnrob you of any opportunity to save your home with the help of legitimate organizations.”

Leibowitz also announced that the FTC hadrnfiled complaints in the U.S. District Court for the District of Columbia onrnWednesday against Federal Housing Modification Department, Inc., doing businessrnas both Nations Housing Modification Center and Loan Modification ReformrnAssociation; and Infinity Group Services. rnThese complaints mark the 21st and 22nd actionsrnbrought by FTC against similar companies.

In the complaints the FTC alleged thatrnthe defendants falsely claimed that they would obtain a mortgage modificationrnin “virtually all cases.”  After chargingrnhomeowners large up-front fees -$3,000 in at least one case – the defendantsrndid little or nothing to assist the homeowners in saving their homes fromrnforeclosure.  In some cases therndefendants demanded additional fees, as much as $15,000, once they had beenrnhired by the homeowners.

Leibowitz said that, in addition to rule making proceedings, the agency hasrnalso launched new initiatives to educate consumers on avoiding these scams.

States represented by attorneys general either in person or by phone werernConnecticut, Illinois, Iowa, Maryland, Missouri, Nevada, North Carolina, Arkansas,rnArizona, Rhode Island, Ohio and Washington.

All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of MortgageNewsDaily.com is prohibited.

About the Author

devteam

Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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