U.S. to Detail Multi-Agency Crackdown on Foreclosure Rescue Scams
It's about time. Treasury Secretary Tim Geithner, U.S. Attorney General Eric Holder and other Obama administration officials will announce on Monday new details of new effort to align responses from federal law enforcement agencies, state investigators and prosecutors, civil enforcement authorities and the private sector to protect homeowners seeking assistance under the Administration's Making Home Affordable program from criminal actors looking to perpetrate predatory schemes. Details on the new plan haven't been leaked heavily to the press as of yet, but it's clear that the number of foreclosure rescue and loan modification scams have been on a parabolic rise as of late -- many firms in this space have taken to positioning themselves as government-approved agencies, with names that sound confusingly similar to federal agencies. One firm even has embarked on a national television campaign to generate leads of troubled borrowers for subsequent sale, despite advertising itself as a consumer counseling service, according to sources that have spoken with HousingWire. It's a burgeoning space, and here at HousingWire we regularly receive press statements from firms that claim to be in the business of helping troubled homeowners. Some firms -- none of whom we will link to in this story -- have been touting the availability "loss mitigation kits" for troubled homeowners for fees ranging from $99 to $1,200. HW readers should know we've not run press for any of these firms, because of the lack of standards in the space, and our feeling that charging up-front fees to troubled homeowners for assistance smacks of a conflicting interest. After all, if we can't tell the genuine players from the bad actors -- as an industry news service centered on mortgage banking -- I'm not sure how homeowners could be expected to do any better. Foreclosure rescue scams have become a big problem at the state and federal level, too. Last week, the Kansas Attorney General's Office became the latest to warn consumers about scammers who offer to modify mortgage loans for a fee. "In this time of economic uncertainty, Kansans facing foreclosure are being targeted," attorney general Steve Six said in a news release late last week. By far, however, the state seeing the most rampant proliferation of "foreclosure help" firms is California, and as a result the state has put a set of laws into place attempting to regulate the growing spate of firms that have looked to profit from the housing mess. We've heard stories of firms claiming to be hired by servicers, and then asking borrowers for a fee; likewise, we've heard stories of a firms claiming to be affiliated with the Obama administration's Homeowner Affordability and Stability Plan, or HASP -- and, of course, then asking borrowers for an up-front fee. The Federal Reserve has gone so far as to begin placing advertisements in movie theatres in some of the nation's hardest hit housing markets, warning consumers of foreclosure aid scams. "The purpose...is to reach out to an audience that the Fed has possibly not reached before, to try and get people's attention about mortgage scams and direct them to our website where we have tips for people to avoid these scams," Sandra Braunstein, director of the Fed's Division of Consumer and Community Affairs, told Reuters. The movie ads will begin their run in mid-April. Full details on the U.S. plan will be provided on HousingWire as the press conference takes place. Write to Paul Jackson at firstname.lastname@example.org.