Government cracking down on mortgage scams - Spokane, North Idaho News & Weather KHQ.com

Government cracking down on mortgage scams

WASHINGTON. - Federal and state officials say they are cracking down on mortgage modification scams that target the Obama administration's efforts to make home loans more affordable.

The Treasury Department says "criminal actors" are seeking to take advantage of the administration's efforts to help modify or refinance 7 to 9 million mortgages and prevent home foreclosures.

Recognize Deceptive Mortgage Ads

To help you recognize an offer that may be less than complete, the FTC wants you to know the buzz words that should trigger follow-up questions:

- A Low "Fixed" Rate

- Very Low Rates

- Very Low Payment Amounts

- Mortgage rates near 30-year lows! Rates as low as 1%! You are paying too much! Who doesn't want to reduce their mortgage payments? Loan amount $300,000 - pay only $900 per month

-
Important Notice From Your Mortgage Company. Open Immediately Important Financial Information Enclosed. Please do not discard - account information enclosed

- You are eligible to take part in an exclusive interest rate reduction program. This financial institution has been licensed to negotiate your existing adjustable mortgage to a new fixed rate mortgage. You must contact us immediately regarding this notice.

                   www.ftc.gov

The department says it is alerting banks to potential frauds, while the Justice Department has convicted several scam artists in recent months.

The Federal Trade Commission, meanwhile, has filed five new civil cases to halt illegal loan modifications:

From the FTC

The FTC has announced five law enforcement actions targeting perpetrators of mortgage-related scams. According to the FTC, these schemes typically operate in the following way. First, they use terms like "guarantee" and "97% success rate" to mislead consumers about the mortgage modification or foreclosure relief services they can provide; they charge up-front fees for these "services" - fees legitimate nonprofit organizations do not charge; and they use copycat names or look-alike Web sites to appear to be a nonprofit or government entity. Often, after collecting the fee, these companies do little or nothing to help consumers. In each case described below, the FTC is seeking, or already obtained, a temporary restraining order to halt the defendants' illegal conduct.

Federal Loan Modification Law Center (FedMod). FedMod markets mortgage loan modification and foreclosure relief services to homeowners who are in financial distress, delinquent on their mortgages, or in danger of losing their homes to foreclosure. According to the FTC's complaint, FedMod charges consumers from $1,000 to $3,000 in fees for these services, much of which must be paid up-front, but fails in numerous instances to obtain the promised loan modifications. In radio advertisements, the FTC alleges, FedMod induces homeowners to call its toll-free number by misrepresenting that it is part of or affiliated with the federal government, although it is not. According to the complaint, FedMod often fails to answer or return consumers' calls or provide updates about the status of their loan modifications, and assures consumers that negotiations with their lenders are proceeding when, in fact, little or no effort has been made to contact the lender.

Bailout.hud-gov.us. According to the FTC's complaint, defendant Thomas Ryan used a foreign Internet registrar to falsely register two sites - bailout.hud-gov.us and bailout.dohgov.us. The sites were used to entice financially strapped consumers to seek mortgage loan modification services under the guise that the services were associated with, or were actually, the U.S. government, including HUD and the Treasury Department. The FTC alleges that the defendant misled consumers nationwide. A federal district court granted the FTC's motion for a temporary restraining order which required the Internet Service Provider (ISP) hosting the sites to immediately remove them from the Internet. The FTC and the defendant stipulated to a preliminary injunction prohibiting him from holding himself out as an agency of any U.S., state, or local government, or as being affiliated with any such agency.

Consumer Tools

- 5 Tips for Avoiding Foreclosure Scams

- Credit Card Repayment Calculator

- Mortgage Foreclosure Resources

- Federal Reserve Consumer Help
Home Assure d/b/a Expert Foreclosure
. In this case, the FTC alleges that the defendants promise consumers facing imminent home foreclosure that they can stop the foreclosure, regardless of the amount the consumer owes his or her lender. The defendants are charged with falsely claiming that they have special relationships with lenders, have helped thousands of consumers avoid foreclosure, and will provide a 100 percent satisfaction money-back guarantee. They typically charge consumers an up-front fee of $1,500 to $2,500 but, the FTC alleges, do little or nothing to help them avoid foreclosure and fail to give refunds when foreclosures are not stopped.

Hope Now Modifications LLC and New Hope Property LLC d/b/a New Hope Modifications LLC. On March 24, the FTC announced two related cases alleging that the defendants misled consumers about their ability to provide mortgage loan modification and foreclosure relief, and misrepresented that they were affiliated with or part of the HOPE NOW Alliance, the non-profit, HUD-endorsed organization that is a broad-based coalition of credit and home ownership counselors, lenders, and other mortgage market participants. In each case, the court issued a temporary restraining order with an asset freeze and set dates for a preliminary injunction hearing. The New Jersey Attorney General also filed state court actions against both sets of defendants, and those cases are in litigation. MORE...
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