FTC Cracks Down on Modification Scams
The Federal Trade Commission (FTC) announced the launch of Operation Loan Lies today, a coordinated national law enforcement effort to hunt down mortgage modification scams. FTC Chairman Jon Leibowitz and California Attorney General Jerry Brown introduced the operation that involves 189 actions by 25 federal and state agencies. The actions targeted defendants who marketed deceptive foreclosure rescue and mortgage modification services to homeowners on the verge of default. Some defendants even promised to give refunds if they failed to rescue the borrower, according to the announcement. “These con artists see the high foreclosure rates as an opportunity to prey on people in distress,” Leibowitz said in the announcement. “They promise to rescue homeowners in troubled financial waters, but after they take their money they throw them an anchor instead of a lifeline.” Leibowitz also offered advice to desperate borrowers walking the tightrope between foreclosure and loan modification. “People facing foreclosure should avoid any company or individual that requires a fee in advance, guarantees to stop a foreclosure or modify a loan, or advises the homeowner to stop paying the mortgage company,” Leibowitz said. Since April, the FTC brought 14 lawsuits to mortgage foreclosure rescue and loan modification scams. Write to Jon Prior.