by Broderick Perkins
(12/7/2011) - If G-men were as tough on predatory loans as they now are on mortgage modification fraud, the nation still could be enjoying good times.
Those toxic NINJA, no-doc, interest-only, 125 percent loan-to-value, Alt-A, piggy-back, subprime time-bombs have been shoving homeowners underwater for at least a half decade, contributed to sinking the economy and continue to help keep it submerged.
Distressed homeowners, grasping for a mortgage modification as the life preserver of choice, too often become vulnerable homeowners targeted by organized crime-like modification scams designed to fit them with cement shoes and finish them off.
Recent federal efforts should help keep more homeowners afloat and away from scams and the deep end.
On Dec. 1, the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), the Consumer Financial Protection Bureau (CFPB), and the U.S. Department of the Treasury, announced the creation of a joint task force to combat scams targeted at homeowners seeking to apply for the federal Home Affordable Modification Program (HAMP).
The partnership is designed to protect taxpayers by investigating and shutting down modification scams and by educating vulnerable homeowners, especially those eligible for HAMP.
"These scams prey upon the most vulnerable homeowners as they desperately hold out hope of saving their homes. SIGTARP, the CFPB, and Treasury want to make sure that homeowners know a scam when they see one and know where to turn for help," said Christy Romero, Deputy Special Inspector General for SIGTARP.
A mortgage modification occurs when the lender reworks the terms of an existing home loan, typically to lower payments and make the home more affordable, according to a helpful and inexpensive resource, Silver Spring, MD-based mortgage expert Peter Miller's "The Quick & Dirty Guide To Successful Mortgage Modifications" (Silver Spring Press, $2.99).
To get the payment down, mortgage modification lenders lower the interest rate, extend the loan term, reduce the principal or use any combination of those approaches. The modification industry has been targeted by scam operators because so many struggling homeowners use modifications as an alternative to foreclosure.
Online scams shut down, regulations protect consumers
• In addition to the task force working to stem the tide of fraud, SIGTARP last month shut down 85 alleged online mortgage modification scams that prey on vulnerable homeowners through Web banners and other Web advertisements.
Google, in cooperation with SIGTARP, suspended advertising relationships with more than 500 Internet advertisers and agents associated with the 85 alleged online mortgage fraud schemes and related deceptive advertising.
• Also last month, SIGTARP shut down 40 similar alleged mortgage modification scams advertising on the Yahoo! and Bing web sites.
Microsoft, which founded Bing and whose technology powers Yahoo! Search, in cooperation with an ongoing criminal SIGTARP investigation of these scams, joined Google in suspending advertising relationships associated with the scams identified by SIGTARP.
Microsoft suspended advertising relationships with more than 400 Internet advertisers and agents associated with the alleged online mortgage fraud schemes and related deceptive advertising and has blocked all future advertising associated with the 125 scams identified by SIGTARP.
• Other federal efforts to stop modification fraud include the "Loan Modification Scam Prevention Network" led by Fannie Mae, Freddie Mac, the Lawyers' Committee for Civil Rights Under Law, NeighborWorks America and a host of other agencies Federal agencies.
The group offers public education, complaint reporting services and coordination with local, state, and federal enforcement agencies to thwart scammers and come-ons that prey on homeowners struggling with mortgages.
• Growing modification fraud has also spawned federal regulations, the "Mortgage Assistance Relief Services (MARS)" rule, which protects homeowners from fraud by forcing mortgage assistance relief services to disclose information about their services, while mandating certain business practices.
Task force consumer fraud alert
Along with creating the joint task force this month, federal officials issued a consumer fraud alert to arm homeowners in their fight against mortgage modification fraud.
"The goal of our consumer fraud alert is to empower homeowners with the knowledge of how to recognize and avoid these scams," said Romero
Homeowners struggling to make their mortgage payments should beware of con artists and scams that promise to save their homes and lower their mortgage debt or payments.
• You can apply to the free federal Home Affordable Modification Program (HAMP) on your own or with free help from a housing counselor approved by the U.S. Department of Housing and Urban Development (HUD). Call the Homeowner's HOPE Hotline at 1-888-995-4673) or visit Making Home Affordable
• Only your mortgage servicer has discretion to grant a loan modification. Third parties cannot guarantee or pre-approve HAMP mortgage modification applications.
• Beware of anyone seeking to charge you in advance for mortgage modification services. In most cases, charging fees in advance for a mortgage modification is illegal, thanks to the MARS rule.
• Paying a third party to assist with your HAMP application does not improve your likelihood of receiving a mortgage modification. Beware of individuals or companies asking for payment and touting success rates or claiming to be HAMP "experts."
• If an individual or company claims to be affiliated with HAMP or displays a seal or logo representing the U.S. government in correspondence or on the Web, you should check the connection by calling the Homeowner's HOPE Hotline.
• Beware of individuals or companies that offer money-back guarantees.
• Beware of individuals or companies that advise you as a homeowner to stop making your mortgage payments or to not contact your mortgage servicer.