New Foreclosure Rescue Scam

HOCMN August 16, 2010

Helping to keep struggling homeowners safe from scam artists and fraudsters is a lot like the carnival game “whack-a-mole”.  Now that there are tough federal and state law enforcement actions that have begun to crack down on “foreclosure rescue” and “loan modification” scams, the vultures/moles have “popped up” with a new fraud: “Forensic Loan Audits.” According to a recent “Consumer […]

Helping to keep struggling homeowners safe from scam artists and fraudsters is a lot like the carnival game “whack-a-mole”.  Now that there are tough federal and state law enforcement actions that have begun to crack down on “foreclosure rescue” and “loan modification” scams, the vultures/moles have “popped up” with a new fraud: “Forensic Loan Audits.”

According to a recent “Consumer Alert” from the Federal Trade Commission, this latest fraud follows this pattern: In exchange for an upfront fee (ranging from a few hundred to a few thousand dollars), so-called ‘forensic loan auditors’ offer to review the homeowner’s mortgage loan documents to determine whether the lender complied with state and federal mortgage lending laws. If a violation is found, the “auditors” say their findings can be used to avoid foreclosure, accelerate the loan modification process, reduce the loan principal, or even cancel the loan.

NOT TRUE!  The FTC says that EVEN if these auditors find something wrong… it won’t help with a loan modification or to avoid foreclosure.  Here’s the information from their press release:

  • there is no evidence that forensic loan audits will help you get a loan modification or any other foreclosure relief, even if they’re conducted by a licensed, legitimate and trained auditor, mortgage professional or lawyer.
  • some federal laws allow you to sue your lender based on errors in your loan documents. But even if you sue and win, your lender is not required to modify your loan simply to make your payments more affordable.
  • if you cancel your loan, you will have to return the borrowed money, which may result in you losing your home.

The Minnesota Home Ownership Center is working with dozens of national, state and local partners through its “Look Before You Leap” campaign to help struggling homeowners to spot loan modification scams, find trusted help and report illegal activity to authorities.  DON’T FALL FOR A “LOAN AUDIT” SCAM!  You can learn more about the “Look Before You Leap” campaign on our Facebook Page and our website.
 
If you, or someone you know is struggling with mortgage payments… BE CAREFUL and don’t wait until it’s too late. To find your local non-profit, FREE Foreclosure Counselor, click here. For additional information about preventing foreclosure in Minnesota, click here.

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