The foreclosure crisis that has spread across the US is creating another epidemic — mortgage modification scams that cost borrowers thousands of dollars.
“There are devastating consequences to this fraud,” noted Christy Romero, Deputy Special Inspector General who oversees potential fraud in the Troubled Asset Relief Programme (TARP).
Applying for mortgage modifications under the US Home Affordable Modification Programme (HAMP) is free. However, scammers are convincing struggling homeowners to pay a fee in return for false promises of reducing their mortgage payments or debt.
Figures released by RealtyTrac for the first 11 months of 2011 showed that around 756,407 borrowers in the US received default notices and 742,649 homes had been repossessed.
Jamele Hage, an assistant in Wayne County, a corporation counsel which runs the Mortgage Foreclosure Prevention Programme, noted that one scam artist used “Wayne County” as his company’s name to make it sound official.
In one instance, Hage said the scam artist persuaded a woman to turn over the deed to her home. She added that the scammer stopped paying her mortgage debts and the home went into foreclosure.
Meanwhile, Romero said homeowners should familiarise themselves with these scams.
“HAMP is a free programme, so homeowners need to be wary of anyone who charges them for their work on a HAMP application,” she noted. “Homeowners also need to be wary of anyone who guarantees them they will get a successful modification through HAMP.”
Related Stories:
SOR rate in S’pore continues to rise
UK mortgage approvals up in November
Big lenders still dominate Aussie mortgage market