Consumer protection and civil rights activists have been tracking mortgage modification scams for many years, since an uptick in that type of crime started with the wave of foreclosures after the recession. A database compiled by one of the leading civil rights groups working on this issue documented 26,000 complaints since 2010, which reported losses of $63 million.
Now, in addition to the hard work by these nonprofits and legal associations, federal officials have started to crack down on the loan modification scams and are issuing both civil fines and criminal charges in some cases.
“For some of these folks, the fines might be the cost of doing business,” said the senior counsel in the Fair Housing and Lending Project at the lawyers’ group. “So the risk of jail time is important in all the efforts going on to stop this.”
Distressed homeowners who are in a difficult financial situation are particularly vulnerable to these types of scams. The scams can become appealing and easy to believe in when families are looking for a miracle to help them save their home, and someone comes along with a deal that is much better than any other one they’ve been offered so far. However, as we can see in this case, these deals are often too good to be true and can have disastrous results for the victims.
This is just one of many reasons why it is so important to consult with a trusted advisor who has experience with loan modifications to help sort through the legitimate options and protect assets from fraudsters.
Source: LA Times, “Mortgage modification scam watchdog cheers federal crackdown,” Jim Puzzanghera, Oct. 10, 2012.