Mortgage fraud has become one of the fastest growing financial crimes in U.S. history, thanks to an epic housing downturn and skyrocketing foreclosures. On Monday, the federal government announced an unprecedented joint effort between federal and state authorities to crackdown on mortgage and foreclosure rescue scams.
Eileen Harrington, actiging director of the Bureau for Consumer Protection at the Federal Trade Commission, told Carmen that the FTC announced five new enforcement actions and sent out over 70 warning letters to dubious businesses that could be engaged in fraud. In addition, the feds have partnered with top mortgage lenders to put together information about the scams for borrowers.
Bob Sullivan, fraud expert of MSNBC.com, recommends borrowers act skeptical toward any company promising to help in exchange for an upfront fee. That’s a “huge red flag,” Sullivan says.
If you find yourself in dire need of mortgage assistance, you should always call your bank – a piece of advice echoed at Tuesday’s press conference with Treasury Secretary Tim Geithner – but as any homeowner knows, the bank isn't always quick to answer. Sullivan says people should be persistent in getting the help they need, even if it means waiting on hold for hours or seeking assistance with free HUD counselors (find one here). Stay away from fee-based companies or services and be wary of companies that tell you to stop paying your mortgage altogether.