The nationwide jump in foreclosures and mortgage defaults has triggered a corresponding rise in the number of predatory scams targeting financially-strapped homeowners. The federal government is announcing a crackdown on loan modification and foreclosure rescue scams. Learn more about the crackdown and things to be on the lookout for.
The Problem: Promises of "Foreclosure Relief Now!" and "Save Your Home!" are skyrocketing along with national foreclosure figures, with the FBI currently targeting more than 2,000 companies allegedly scamming troubled homeowners with "rescue" offers -- up 400% from five years ago, according to the Los Angeles Times. And a recent Federal Trade Commission (FTC) investigation of nationwide online and print ads offering mortgage foreclosure rescue assistance found about 70 separate companies running questionable ads.
The Crackdown: A coordinated effort by federal agencies (including the U.S. Departments of the Treasury, the Department of Justice, and HUD) announced today is aimed at boosting mortgage-related fraud investigations, alerting financial institutions to new schemes, and educating financially distressed homeowners to avoid falling victim to loan modification or foreclosure rescue scams. Learn more about the Foreclosure Rescue Scam Crackdown (from the U.S. Department of the Treasury).
Protect Yourself: If you are having trouble making your mortgage payments, or have been threatened with foreclosure, you need to take time to separate legitimate channels of assistance from predatory offers. Things to watch out for include companies that offer to pay off your mortgage or temporarily take it over, and scammers that demand high up-front fees to renegotiate your mortgage obligations down to unbelievably (read: impossibly) low monthly payments. Learn more: Watch out for Foreclosure Scams. And find free and low-cost Foreclosure Assistance Counseling from HUD.gov.