By Mark Huffman
ConsumerAffairs.com
August 19, 2009
A month ago federal and state agencies joined forces to crack down
on so-called foreclosure rescue and mortgage modification firms. The
coordinated action was designed to drive these scams, many of which
advertised on radio and the Internet, out of business.
Many "rescuers" or mortgage modifiers charge big upfront fees but fail to provide any real help. In their most egregious actions, these companies actually steal a homeowners equity, leaving them in much worse shape than before.
"These con artists see the high foreclosure rates as an opportunity to prey on people in distress," FTC Chairman Jon Leibowitz said.
"They promise to rescue homeowners in troubled financial waters, but after they take their money they throw them an anchor instead of a lifeline. People facing foreclosure should avoid any company or individual that requires a fee in advance, guarantees to stop a foreclosure or modify a loan, or advises the homeowner to stop paying the mortgage company."Since kicking off the effort, both the states and the federal government have reported positive results. California Attorney General Jerry Brown last week ordered 386 mortgage foreclosure consultants to post $100,000 bonds and register with his office. He also ordered more than two dozen companies to justify suspicious loan modification claims made in "slick advertising," online and through the mail.
Indiana is among the states stepping up the pressure on loan modification abuses. Indiana Attorney General Greg Zoeller has formed a Homeowner Protection Unit that has filed eight lawsuits since January charging illegal foreclosure consulting. The latest action came this week against National Foreclosure Consultant Services.
"Considering the economic climate we are in, there is zero time to waste on this issue. We are taking an aggressive stand and we won't wait for more people to be victimized or lose their homes through these illegal practices," Zoeller said. "There are families in Indiana close to foreclosure and hard choices are being made right now. Illegal foreclosure consultants are not the people we want calling on Hoosiers promising they can save their homes when free, certified mortgage counseling is so easily available."
Zoeller said actions against NFCS are also pending in Florida, Minnesota and Illinois.
In Illinois, Attorney General Lisa Madigan is trying to reach homeowners before they turn to illegal modification outfits. This week she set up a tent at the Illinois State to outline a variety of services that her office is offering along with consumer information and resources.
Certified housing counselors will offer visitors to the Attorney General's tent advice on mortgage foreclosure issues including: what to do if a homeowner has fallen behind on mortgage payments; received a foreclosure notice; or is having trouble contacting his or her lender. Homeowners may also receive assistance in applying for a home loan modification.
In addition, if homeowners feel that they have been a victim of mortgage rescue fraud, they may file a formal consumer complaint in the Attorney General's tent.
"Illinoisans are looking for assistance during these tough economic times," Madigan said. "With an average attendance of 735,000 people each year, the State Fair provides a great opportunity for us to talk to people who are visiting from around the State and to arm them with the tools they need to make it through this economic crisis."
