Business

Mortgage modification firms targeted

WASHINGTON — Federal and state officials are cracking down on mortgage modification scams, accusing "criminal actors" of preying on desperate borrowers caught up in the nation's housing crisis.

Government officials said Monday that scammers seek to take advantage of borrowers in danger of default by charging them upfront fees of $1,000 to $3,000 for help with loan modifications that rarely, if ever, pay off.

The frauds often involve companies with official-sounding names designed to make borrowers think they are using the Obama administration's efforts to help modify or refinance 7 million to 9 million mortgages.

"If you are struggling to make your mortgage payment, or if you are facing foreclosure, stay away from anyone who says that they will save your home for money upfront," Illinois Attorney General Lisa Madigan said.

Officials say that such operations almost always are fraudulent, and that help is available for free from government-approved housing counselors.

"We will shut down fraudulent companies more quickly than before," Treasury Secretary Timothy Geithner said.

The Federal Trade Commission has sent warning letters to 71 companies that it says were running suspicious advertisements. The agency also said it filed three new complaints against California-based companies Federal Loan Modification Law Center LLP and www.bailout.hud-gov.us, and Florida-based Home Assure LLC.

Bill Anz, founding partner of Federal Loan Modification Law Center, defended his operation, saying he will offer a refund to anyone who doesn't get a modification. About 20 percent of the 5,000 customers have received a modification so far, he said, with more in the works.

Thomas Ryan, the operator of Bailout.hud-gov.us, has agreed to take down the Web site. Ryan said he operates another site — which he would not name — that generates leads for foreclosure rescue operations. "They're providing a legitimate service," he said.

Homeowners do not have to pay to participate in the Obama administration's Making Home Affordable program, which seeks to prevent foreclosures by making mortgages affordable through refinancing or modified terms.

Homeowners can locate free housing counselors at www.makinghomeaffordable.gov.

  Comments