Federal and state officials on Monday announced a coordinated campaign to combat a rising tide of con artists who use mortgage-relief scams to bilk struggling homeowners facing foreclosure.
As the housing crisis and the recession have combined to push more Americans to the precipice of foreclosure, fraudulent mortgage-relief services have surged, U.S. Atty. Gen. Eric Holder said. The FBI is investigating 2,100 mortgage-fraud cases, five times the number five years ago.
“The unscrupulous actions of individuals and companies to exploit the misfortune of others is despicable, it’s immoral, and it’s also illegal,” said Holder, who announced the campaign with other officials, including Treasury Secretary Timothy Geithner and Federal Trade Commission Chairman Jon Leibowitz.
One scam tipoff is a request that homeowners pay upfront fees, officials said. They stressed that none of the programs announced by the Obama administration in recent weeks requires such fees.
As part of the effort, the U.S. Treasury Department’s Financial Crimes Enforcement Network has sent out an advisory to financial institutions asking for reports of financial activity that raises a “red flag” suggesting a possible mortgage scam, Geithner said.
In many cases, federal officials said, mortgage scams have masqueraded as affiliates of a $75 billion program Obama announced in February to help up to 9 million homeowners avoid foreclosure.
Leibowitz also announced that the FTC has filed civil lawsuits against five companies that allegedly ran mortgage fraud schemes, noting four of them were charged with using copycat names and logos to trick homeowners into believing the companies were working with the government or with the Hope Now alliance, a non-profit group that offers free assistance.
Illinois Atty. Gen. Lisa Madigan, a potential gubernatorial or U.S. Senate candidate who has waged a high-profile campaign against mortgage scams, also flew to Washington to announce civil lawsuits against two Chicago-area companies that have been advertising on local Spanish-language radio stations.
Madigan filed lawsuits against Chicago-based Centurion Loss Mitigation Group and its owner, Carlos A. Gomez, and Melrose Park-based Cash VIP and owner Fernando Rios. The lawsuits allege that Centurion charged a $1,500 upfront fee and CASH VIP a $625 upfront fee but did not negotiate or perform any other services for homeowners.