Scam artists are being brought to book as foreclosures mount

Posted on July 27, 2009
Filed Under Foreclosure Homes | Leave a Comment

The US economy is going through one of its toughest periods. As the recession deepens and people lose jobs, mortgage defaults have become very common. Banks are taking over properties and foreclosures have become very common. People are ready to go to any length to save their homes from foreclosure filings. Taking advantage of this, certain unscrupulous men are asking for upfront payment from homeowners in return for mortgage modification.

The Federal government has also conducted awareness campaigns about such frauds. Criminals are also being brought to book. Recently the government has filed legal actions against 189 firms who duped desperate homeowners. These residents in a bid to make mortgage payment affordable had paid fees to the agencies.

The Federal Trade Commission Chairman Jon Leibowitz and California Attorney General Edmund G. Brown conducted sweeping raids against the sham agencies. Leibowitz says that he has warned homeowners to protect themselves from such conmen. Consultants who promise to modify loans are nothing but scammers. They are criminals, says Leibowitz.

One of the agencies, the Lucas Law Center, has even persuaded homeowners to stop paying mortgage and pay the firm’s fees of $3,995. Case suits have also been filed against several other scam agencies including U.S. Foreclosure Relief Corporation and Loss Mitigation Services. Brown says that the situation is indeed very bad and it will take some time for the fraudulent practices to be stomped out.

However, there are some sham agencies that feel the Federal Government is not being able to bring the real culprits to book. Dean Schafer, CEO, Loss Mitigation Services, for instance, says that it is unfortunate that his company was picked up by the Federal government when there are so many scam companies around.

The US Homeowners Assistance, for instance, has collected about $3,500 from scores of people who are at risk of losing homes to foreclosures. One agency had even forged the signatures of homeowners and provided false information to the distressed person’s lenders. Now the case has come up for hearing in the court.

Leibowitz says the Federal government will come up with a new law that will prohibit a mortgage modification program from accepting payment. The regulation is supposed to come into effect next year.

Till such time, officials have asked people not to pay fees to agencies that demand money for loan modification. Homeowners should be wary of agencies that promise to pass on payments to lenders.

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