Loan Modification Scam Prevention Resources

Did you know that there are millions of American homeowners who’ve been targeted by scammers? Worse, the thieves hone in on the most vulnerable of homeowners: those who are in fear of losing their homes and are willing to try anything to avoid it. Many companies pose as “loan modification specialists”, but instead are ready and willing to to put their most successful tactics in play to fool those homeowners, only to abandon ship when their actions begin catching up with them.

Mobile Criminals

Law enforcement on every level have worked to identify and stop these thieves to varying degrees. Now, though, there are others who’ve joined the effort. Both federal and state along with legal aid programs, consumer advocates and non profit organizations acknowledge it’s a growing problem and the fact that so many of these scammers are mobile isn’t helping matters. Further, even when they are caught, prosecution has proven to be challenging as well.

A national campaign, however, could serve as a turning point that will help level the playing field. The Loan Modification Scam Prevention Network (LMSPN) was created recently with the goal of identifying these scammers while also empowering law enforcement and other agencies in their efforts. It’s a group of organizations that include, among many:

  • Fannie Mae
  • Freddie Mac
  • Lawyers’ Committee for Civil Rights Under Law
  • Homeownership Preservation Foundation

And the representatives are impressive as they’re stepping up to the plate from the Federal Trade Commission, the Department of Housing, Department of Justice and the Treasury Department. Not only that, but the FBI and Attorneys General Office will be playing a significant role as well.

Defining Policies

As the efforts were being made to determine the best policy guidelines, it was determined a two prong approach would best serve those needs. NeighborWords, which is a media-driven outreach campaign, has been working to better educate homeowners and other consumers on what to look for. Many consumers have been misdirected on many levels. A scammer might try to convince a consumer that his credit card debt could lead to massive problems with the bank that holds the mortgage, so those consumers find themselves with not only the wrong information, but odds are, they’ve been goaded into paying money or worse – signing over their homes – in order to keep lawsuits and bankruptcy proceedings from touching their homes. Of course, many found themselves in foreclosure anyway.

The second prong of the new program is being powered by the Lawyers’ Committee in order to better report and ultimately prosecute those scammers, whether it’s on the state or federal levels. It is a large-scale mobilization of resources in a very well constructed campaign. Ideally, these efforts will not only bring awareness and enhance the tools that are already available, but will also provide support for those current efforts. Reporting and educating is key and will include, in part, the following efforts.

Streamlined Efforts

By encouraging consumers to report problems and to file complaints, there can be a more streamlined effort. These complaints against scammers will help the Network develop educational material while also identifying trends so that law enforcement can better support capture and enforcement. These complaints can be submitted via a simple online form. There’s been a database developed that will handle the complaints while providing a “comprehensive picture of the loan modification scam crisis nationwide.”

Further, efforts are being made to ensure law enforcement agencies and other consumer groups are better linked with the most current and relevant information. By sharing information and providing access on a national level, it can only enhance the efforts of those trying to capture them. By enforcing the law, it’s believed prosecutors and other regulatory agencies are better equipped to assist victims. The database is crucial. Because federal, state and local government agencies rarely share this kind of information, it’s served as an advantage for scammers who rely on this lack of communication. By making the database available for every law enforcement agency on ever level, those concerns are eliminated. Further, complaints are also forwarded to the the Federal Trade Commission’s Sentinel Database, which is available to federal, state and local law enforcement agencies. Because scammers don’t recognize state lines, by having a national database, it allows agencies to work together in a more seamless effort. Further, the Network and its partners are then better prepared to study those trends in order to increase the odds of capturing the criminals.

Many banks, as we know, were ordered to work with homeowners to come up with better alternatives than foreclosure. This was due to the massive robo-signing scandal a few years ago. Unfortunately, the scammers have beat the banks to those consumers and have been able to steer them away from real help that their banks might could have offered. These new guidelines will ideally remedy that problem.

High Impact Litigation

It is anticipated that law enforcement and local legal organizations representing victims of scams to file high impact litigation where appropriate will increase and in the meantime, trained volunteers will contact homeowners who have reported scams to conduct a more in depth investigation with the goal of gathering detailed information about their experiences and how the scammers operated during their illegal efforts. This information will be passed along to law enforcement on the appropriate levels.

Education is key. Because of that, a carefully crafted and strategic public education effort has been put in place. Those efforts, as mentioned above, include both online and offline opportunities for consumers and homeowners to use to their benefit. By better informing those consumers, the less chance there is that a scammer will be successful in his efforts.

It’s believed these efforts will encourage homeowners and consumers with other financial complaints to step forward. The easy intake interview processes are available to HUD counselors, legal aid lawyers and other hotlines that handle these problems. The complaints are being handled right there onsite and the homeowners are left feeling empowered. And the best part? It’s all free.

Is this something you could benefit from? Share your thoughts with us.

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