15 states filed lawsuits on mortgage scam operations in coordination with the joint federal-state sweep by the Consumer Financial Protection Bureau and the Federal Trade Commission. The lawsuits target scam operations that prey on delinquent homeowners or those facing foreclosure.
15 states filed lawsuits on mortgage scam operations in coordination with the joint federal-state sweep by the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC). The lawsuits target scam operations that prey on delinquent homeowners or those facing foreclosure. Consumers are urged to be aware of mortgage rescue fraud schemes that are rampant across the country.
Homeowners should be wary of businesses that show the following warning signs:
• Offer guarantees to get a loan modification or stop a foreclosure in any circumstance;
• Ask for an upfront fee when it is not an attorney with a reliable reputation;
• Accept payments only by cashier’s check or wire transfer;
• Ask that mortgage payments be paid to the company and not the lender;
• Ask for the property deed or title;
• Tell the homeowner not to contact their mortgage lender;
• Claim that almost all customers receive loan modifications or mortgage relief;
• Apply high-pressure to sign papers without giving the consumer a chance to thoroughly read the document.
Scammers obtain the names of distressed homeowners through a number of methods, sometimes even checking public foreclosure notices or public files to send personalized messages to homeowners. Typically, the messages will make promises to “stop foreclosure” or “help get a loan modification,” while stating the company has a special relationship with the banks or offering a money-back guarantee. Representatives of the company may also tell homeowners that if they pay a fee, the company will negotiate with the bank, assuring them not to contact their mortgage holders. After the homeowner has paid the fee, the scam artists disappear with the money.
These companies may also offer to perform an audit by having an attorney or other expert review the loan documents to make sure the lender complied with the law. They claim that finding errors may help homeowners avoid foreclosure or guarantee a loan modification. However, this may not be the case. Some fraudulent mortgage relief companies may even trick homeowners into a rent-to-own scheme, in which the homeowners surrender the title to the house and rent the property until they can buy it back. After the scammers obtain the title, they disappear, leaving the consumer on the hook for the mortgage.
Nevada Attorney General Catherine Cortez Masto made the announcement.
While Nevada currently has no actions pending for the sweep, Attorney General Masto wants to educate consumers about what to look for when seeking options to save their homes.
In 2008, General Masto created the Mortgage Fraud Strike Force to prosecute those who perpetuate fraudulent mortgage rescue scams.
“Mortgage rescue scams target struggling Nevadans impacted by the housing crisis,” said Masto. “Consumers should know they can avoid scams all together by contacting Home Again Nevada to see what housing resources may be available to them. All of our counselors are HUD approved and trained on state and federal housing programs to give Nevadans the best information possible. It’s completely free and reliable.”