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Distressed Homeowner Initiative

Don’t Let Mortgage Fraud Happen to You

http://www.fbi.gov/news/stories/2012/october/dont-let-mortgage-fraud-happen-to-you  

10/09/12

Talk  about going from bad to worse—more than 4,000 financially strapped  homeowners recently lost at least $7 million to a California business  that allegedly operated a loan modification scam. Last month, 11  representatives of that company were federally indicted, but by that time, many of the victims had already lost their homes.

Today,  to help protect distressed homeowners around the country from a rising  tide of fraud schemes—and to raise awareness about them—the FBI joined  the Department of Justice, the Department of Housing and Urban  Development, and the Federal Trade Commission (FTC) in announcing the  results of the Distressed Homeowner Initiative. This initiative was  launched by the Bureau—co-chair of the Financial Fraud Enforcement Task  Force’s Mortgage Fraud Working Group—in October 2011. 

This  initiative combines the resources of federal, state, and local law  enforcement agencies and the efforts of regulatory agencies to target  perpetrators both criminally and civilly. Over 200 companies have been  shut down, and criminal charges were filed against 530 defendants. These  cases involved losses of more than $1 billion from more than 73,000  victims across the country.

Said  Associate Deputy Director Kevin Perkins, “In contrast with previous  initiatives, where the fraud victims primarily were lenders, the focus  here is on individual homeowners, many times at their most vulnerable  point.”

Based on intelligence from multiple sources, schemes targeting distressed  homeowners have emerged throughout the country, and while the majority  of FBI mortgage fraud cases involve loan origination fraud, we’ve had a  300 percent increase over the past three years in cases involving  distressed homeowner fraud. 

And with current mortgage data showing that 22.3 percent of residential properties with mortgages are “underwater”  —when borrowers owe more than their homes are worth—we believe that  fraudsters will certainly continue to target distressed homeowners.

We’ve  also noticed a disturbing trend among these cases—an increasing number  of lawyers playing primary or secondary roles in the fraud. In 2010, the FTC issued a rule  that prohibited companies that offer loan modification or other types  of mortgage assistance services from asking for fees in advance (some  states have similar regulations), but with an exemption in some  instances for lawyers performing legal work. Criminals targeting  distressed homeowners try to circumvent the rules by using  attorneys—which by itself adds an air of legitimacy to their fraudulent  schemes—and calling their upfront fees “legal retainers.”

The FBI’s Financial Intelligence Center played  a critical role at the outset of the initiative by reviewing and  analyzing thousands of consumer complaints referred to us by our  partners at the FTC, which helped identify where high-priority offenders  were operating and allowed us to strategically deploy our investigative  resources. The analysis of information from our partner agencies and  from our own investigations will continue to be a vital part of our  efforts to protect homeowners. The FBI also remains committed to  targeting the most egregious criminal offenders with sophisticated  investigative techniques—like undercover operations and court-authorized  electronic surveillance—and through joint efforts with our law  enforcement and regulatory partners.

If you have been victimized by those who claimed they could get you some kind of mortgage relief but didn’t, please submit a tip to us online or contact your local FBI office. This is a long form text area designed for your content that you can fill up with as many words as your heart desires. You can write articles, long mission statements, company policies, executive profiles, company awards/distinctions, office locations, shareholder reports, whitepapers, media mentions and other pieces of content that don’t fit into a shorter, more succinct space.

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