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Report: mortgage foreclosure scams surge 60 percent in 2012

With each new government assistance program that seeks to help distressed homeowners, various scams attach themselves to the program name and frequently defraud homeowners out of fees and payments.

Dangerous increase in foreclosure scams

According to a new report from the Homeownership Preservation Foundation (HPF)1, mortgage foreclosure scams have increased nearly 60 percent this year, which HPF says is due to the plethora of federal programs recently launched that has caused vulnerability in the market as no homeowner can be expected to fully know each program or the validity of an offer for counseling.

“Regretfully, every new government initiative spawns a slew of foreclosure avoidance scams, often from the same cast of characters doing business under various names to avoid easy detection and identification,” said Colleen Hernandez, CEO of HPF. “Most of these scams involve individuals supposedly offering mortgage foreclosure avoidance assistance that trained HPF counselors provide at no cost. Sadly, with most scams, no meaningful services are ever provided.”

Scam warnings

“HPF’s trained counselors can provide distressed homeowners with all the assistance they need to understand their options, prepare the necessary paperwork, and negotiate with their mortgage servicers,” said Hernandez, adding that distressed homeowners should never pay upfront fees for these services.

Hernandez also warned that some scam organizations are making unauthorized use of HPF’s logo and brand in their promotional materials, creating the impression that they are affiliated with the organization. The various government programs that have been launched or revised this year and that are likely responsible for this increase in calls reporting scams include the National Mortgage Settlement, expanded Home Affordable Modification Program (HAMP) and Home Affordable Refinace Program (HARP), and OCC Independent Foreclosure Review.

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In addition to its free counseling to help avoid foreclosure, HPF also operates a national hotline for troubled homeowners to report instances where they believe they have been defrauded. While not all reported instances are necessarily fraud, HPF refers the information to a national database accessed by appropriate regulators and law enforcement agencies. About half of the reported scams involve attorneys or individuals claiming to offer specialized “legal services.”

1HPF report

Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

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