BLOG VIEW: Servicers Join The Fight

omnia can be both a terrible and a wonderful thing. Now, technically [/b]speaking, no licensed medical-care practitioner has ever actually told me I'm an insomniac. Nonetheless, I've recently taken on vampire-like sleep habits, which I blame on caffeine. This trend is terrible, because 6 a.m., when my alarm sounds, feels earlier and earlier each day. This trend is also wonderful, because it allows me to catch infomercials that I'd otherwise miss. One such advertisement I saw the other night touted a service that will help troubled homeowners sidestep foreclosure! At first, I was equal parts overjoyed and amazed. For apparently – flying beneath the radars of most mortgage servicers, housing agencies and bank regulators – a single company with an advertising budget just large enough to run a 3 a.m. TV spot had found the magic foreclosure prevention recipe. Then, the hook: The company's services could only be obtained after a "small" up-front fee was produced. And with that, my joy and amazement vanished. I felt cheated. I felt angry. But I probably didn't feel nearly as cheated or angry as the poor homeowners who don't have my keen sense for smelling scam artists. Luckily, it turns out, the government has a solution. Early this week, several federal and state agencies, along with private-sector partners, [u][link=http://www.mortgageorb.com/e107_plugins/content/content_lt.php?content.3312]announced the formation[/link][/u] of an anti-fraud super group that hopes to tackle the very serious issue of loan modification scams. The writing's been on the wall for a while, with state attorneys general left and right filing lawsuit against individuals looking to exploit vulnerable homeowners. Even a privately owned investigation firm – MFI-Mod Squad – has popped up in recent months, with a goal of making public those companies that deceive borrowers in need of genuine help. According to the Treasury's press statement about the new alliance, the Federal Trade Commission has filed cases against five illegal operations – including one that had spent $9 million on advertisements in less than a year. Maybe those 3 a.m. spots aren't that cheap after all â�¦ One of the best pieces of this anti-fraud unit is the private sector's participation. Servicing heavyweights Chase, Suntrust, GMAC and American Home Mortgage Servicing have already signed on, agreeing to distribute consumer alerts and legit counseling information in monthly statements and borrower correspondence. Other servicers should follow suit. The reasons are many. Foreclosure prevention scams distract borrowers from true avenues of aid (i.e., their servicer). The scams also drain borrowers' accounts, meaning their ability to make financial commitments toward new loan terms are inhibited. And without educating borrowers on how to distinguish legitimate operations from illegitimate ones, some troubled homeowners may become reluctant to trust anyone who offers them a way out of foreclosure. Now, if there was only a way to make sure borrowers open their mailâ�¦ On a different note, MortgageOrb has moved into the Twitter neighborhood. To follow the latest updates on all things mortgage related, check out [u][link=http://www.twitter.com/mortgageorb]twitter.com/MortgageOrb[/link][/u]. – John Clapp, editor, [b][i]Servicing Management[/i][/b] [i] (Please address all comments regarding this opinion column to clappj@sm-online.co

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