WASHINGTON — The Consumer Financial Protection Bureau is teaming up with the Treasury Department and the Special Inspector General for the Troubled Asset Relief Program to combat mortgage modification scams.
The agencies announced the creation of a joint task force Thursday to investigate and shut down scams targeted specifically at homeowners seeking relief under the Home Affordable Modification Program, or Hamp. The task force also issued a consumer fraud alert Thursday, which will be distributed directly to homeowners eligible for Hamp, with tips for avoiding scams.
Christy Romero, the deputy special inspector general for SIGTARP, said in a press release that the goal is to educate consumers and help them recognize modification schemes, such as companies charging struggling homeowners a fee in exchange for false promises of lowering the homeowner's mortgage debt or payments.
"Mortgage scams harm not only homeowners but legitimate businesses and the market as a whole," Richard Cordray, the CFPB's enforcement chief and the nominee to be its first director, said in the release. "By joining forces with SIGTARP and Treasury, the CFPB hopes to protect Americans and the integrity of one of the largest consumer financial markets in the U.S."
Tim Massad, Treasury's assistant secretary for financial stability, said the creation of the task force builds on work that Treasury has done with SIGTARP, as well as other collaborative government efforts, to educate homeowners about mortgage scams, including those that represent themselves as government programs.
The task force fraud alert reminds homeowners where and how they can apply for Hamp, and that only their mortgage servicer can approve a loan modification. The alert also warns borrowers to beware of anyone that asks for payment up front for mortgage modification services, offers money back guarantees or advises the borrower to stop making mortgage payments or stop contacting their servicer.
Paying a third party to assist with a Hamp application does not improve a borrower's likelihood of receiving a mortgage modification, the task force said. Borrowers should also beware of companies claiming to be Hamp "experts" or touting success rates.
If a company or individual claims to be affiliated with Hamp or displays a government logo or seal on any correspondence or its website, borrowers can check them out on the Homeowners HOPE hotline (1-888-995-HOPE) or on the Hamp website (http://www.makinghomeaffordable.gov/).