Distressed Homeowner Initiative
Don’t Let Mortgage Fraud Happen to You
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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Excerpts of instruction letter from a distressed homeowner fraud perpetrator to a new employee:
“Never use your real last name.”
“Make an effort to not meet with customers. I built a huge business without ever meeting a single customer because I explained everything over the phone and e-mailed or faxed everything.”
“Pay cash for everything or purchase [prepaid] gift cards.”
“Purchase a prepaid phone and then go online and create an account with an alias name and address.”
“Purchase an inexpensive laptop and set up a fictitious e-mail account.”
“Purchase software that hides your IP address.”
“Do not use your home Internet. I heard that [company name] is offering wireless cards for laptops and you don’t need your real name or address to get it. You can also find out who has free Wi-Fi in your area.”
“The bottom line is that I want you to become invisible…Be available but invisible…I don’t want your customers hunting you down in case we can’t stop their sales.”
Neighborhood Assistance Corporation of America (NACA)
Neighborhood Housing Services of Chicago (NHS)
The Sentinel Newsletter of the Utah Division of Securities January 2007
FBI 2006 Mortgage Fraud Report
Mortgage Fraud Blog
Contact Elected Officials
U.S. Department of Housing and Urban Development
Home of Felix Daniel of RYM Technology
and Penny Properties
Felix Daniel lived on a GOLF Course in Michigan
Department of Justice: More than 400 defendents charged for roles in mortgage fraud schemes. June 18, 2008