A new task force formed by several government agencies, including the Consumer Financial Protection Bureau (CFPB), will work to combat scams aimed at homeowners seeking to apply for the Home Affordable Modification Program (HAMP).
Cases of mortgage modification and fraud-related scams have jumped in recent years since the advent of the economic downturn in early 2008, according to regulators.
CFPB, along with the U.S. Department of Treasury and the Office of the Special Inspector General for the
Troubled Asset Relief Program (SIGTARP), are seeking to protect taxpayers by shutting down fraudulent illegal operations. The agencies also issued a fraud alert warning consumers of such operations.
Below are some excerpts of the alert:
* 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.
* If you are struggling to pay your mortgage and are seeking a mortgage modification, keep the following tips in mind:
• You can apply to HAMP on your own or with free help from a housing counselor approved by the U.S. Department of Housing and Urban Development (HUD). Applying to the program is always FREE.
• Only your mortgage servicer has discretion to grant a loan modification. Therefore, no third party can guarantee or pre-approve your HAMP mortgage modification application.
• 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.
• Paying a third party to assist with your HAMP application does not improve your likelihood of receiving a mortgage modification.
Financially troubled homeowners can avoid scams by working with a HUD-approved housing counselor to understand their options and to apply for help.
“The goal of our consumer fraud alert is to empower homeowners with the knowledge of how to recognize and avoid these scams,” says Christy Romero, deputy special inspector general for SIGTARP.
“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."
“Mortgage scams harm not only homeowners but legitimate businesses and the market as a whole,” said Richard Cordray, chief of enforcement for the CFPB.
