Wednesday, April 8, 2009

Housing Scams

By: Bovemsa Cheung

Many federal agencies are working together to prevent mortgage and foreclosure scams. The Obama administration program seeks to use $75 billion to rescue 9 million mortgage holders get new or refinanced loans. The groups working together to prevent scams are the Treasury, the Department of Justice, the Federal Trade Commission, the Department of Housing and Urban Development and state attorneys general. The Treasury’s financial crimes investigative unit is sending financial institutions a checklist to help spot suspicious loan activity and foreclosure rescue scams. The Federal Trade Commission looked at online and print advertising for mortgage foreclosure companies nationwide and found many suspicious ads. Many companies are taking advantages of homeowners by charging them upfront fees and sabotaging them. Even though the number of home loans being issued has shrunk, mortgage fraud is rapidly increasing.

The way a foreclosure scam works is that a company will guarantee that they can stop a foreclosure or help a homeowner through a mortgage modification to better interest rates or reduce monthly payment. This company may use a copy cat name or look-alike web site to appear to be government-sponsored or a nonprofit. The victims pay an upfront fee which usually ranges from $1,000 to $3,000. After the company receives the money they don’t really help the homeowner at all.

To push people away from foreclosure scams, the Federal Reserve will be showing a 30-second commercial in the nine states with the highest incidence of home foreclosures which are California, Nevada, Michigan, Ohio, Florida, Arizona, Georgia, Maryland, and Virginia. Hopefully everyone will be able to point out a foreclosure scam.

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