Multi-Agency Coalition Formed To Fight Foreclosure Rescue Scams

ama administration has announced a new coordinated effort across the federal and state governments and the private sector to target mortgage loan modification fraud and foreclosure rescue scams. The new effort initiative aligns responses from federal law enforcement agencies, state investigators and prosecutors, civil enforcement authorities and the private sector to protect homeowners who are seeking assistance under the administration's Making Home Affordable program from being scammed. The U.S. Department of the Treasury, the U.S. Department of Justice, the Department of Housing and Urban Development, the Federal Trade Commission (FTC) and Illinois Attorney General Lisa Madigan have discussed ways to coordinate information and resources across agencies to maximize targeting and efficiency in fraud investigations, alert financial institutions to emerging schemes, step up enforcement actions and educate consumers, the Treasury says. The FTC recently surveyed online and print advertising for mortgage foreclosure rescue operations nationwide and identified approximately 71 distinct companies running suspicious ads. The Treasury's Financial Crimes Enforcement Network (FinCEN) also conducted recent studies on mortgage fraud that found that between July 2002 and June 2008, depository institutions filed nearly 180,000 mortgage fraud suspicious activity reports (SARs) with those involved in mortgage fraud often involved in other types of crime as well. ‘The administration's Making Home Affordable program is a critical piece of our efforts to stabilize the financial system and ensure that it works with our efforts to grow the economy,’ says Treasury Secretary Tim Geithner. ‘American homeowners desperately need the relief this program offers, but the very last thing they need is to be taken advantage of as they try to hold onto their homes. This administration is deeply committed not just to providing at-risk homeowners with assistance but also to cracking down on anyone who seeks to defraud them.’ To this end, the Treasury and FinCEN announced an advanced targeting effort already under way to combat fraudulent loan modification schemes and coordinate ongoing efforts across agencies to investigate fraud and assist with enforcement and prosecutions. In less than a week, FinCEN's new targeting effort has produced leads that have helped various agencies to halt the illegal practices of those offering loan modification or foreclosure scams. In undertaking this effort, FinCEN will marshal information about possible fraudulent actors, drawing upon a variety of data available to law enforcement, regulatory agencies and the consumer protection community, for the purpose of identifying and proactively referring potential criminal targets to participating law enforcement authorities. Through FinCEN, the Treasury is also issuing an advisory alerting financial institutions to the risks of emerging schemes related to loan modifications. The advisory identifies certain red flags that may indicate a loan modification or foreclosure rescue scam and warrant the filing of a SAR by a financial institution. Examples of possible signs of fraudulent activity, such as requiring that fees be paid before services are provided, are listed in the advisory. In addition, the advisory requests that financial institutions include the term ‘foreclosure rescue scam’ in the narrative sections of all relevant SARs. ‘The Department of Justice's message is simple: If you discriminate against borrowers or prey on vulnerable homeowners with fraudulent mortgage schemes, we will find you, and we will punish you,’ says U.S. Attorney General Eric Holder. On the civil enforcement side, the FTC has filed five new cases to halt the illegal practices of individuals and companies offering loan modification or foreclosure scams – including one company that spent $9 million on TV and radio ads in less than one year. The FTC is also joining forces with a wide array of government, nonprofit and mortgage industry members to launch a new consumer education campaign to help those in financial trouble avoid becoming the victims of a loan modification or foreclosure rescue scam. ‘Today, the FTC announced five law enforcement actions and sent 71 warning letters to operations using deceptive tactics to market their mortgage loan modification and home foreclosure relief services,’ says Jon Leibowitz, chairman of the FTC. ‘We're enforcing the law against these scam artists who are deceiving consumers while they're down; we're putting others on notice that unless they change their ways, they're next; and we're working with other government agencies, nonprofits and mortgage servicers to reach out to our neighbors in distress with the details of how and where to get help.’ Under the new campaign, several private-sector national loan servicers, including Chase Home Finance, Suntrust Mortgage, GMAC Mortgage and American Home Mortgage Servicing, are distributing FTC consumer alerts that provide consumers with tips for avoiding mortgage relief scams and direct them to free, legitimate counseling services for at-risk homeowners. The servicers will distribute the materials in monthly statements, in correspondence to delinquent borrowers, in counseling sessions and on their Web sites. SOURCE: T


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