Feds, State Officials Target 'Advance Fee' Mortgage Scams

Jon LeibowitzFederal and state officials made their announcement in foreclosure-ridden Nevada, but scam artists touting so-called mortgage modifications are preying on homeowners across the country.
The upfront fees being taken from homeowners range from $1,500 to $7,000.
Officials said they have taken action in 118 such cases, thus far, involving 26 federal and state agencies.
In Nevada, where one in every 23 homes is in the foreclosure process, Federal Trade Commission Chairman Jon Leibowitz gathered with 25 state attorneys general to warn homeowners not to fall for any service offered at the expense of a large advance fee.
“These operators targeted consumers who were on the brink of financial disaster, and instead of holding them back, they pushed them over,” Leibowitz said. “If you’re worried about keeping your home, avoid any company that asks for a large fee in advance, guarantees that they’ll stop a foreclosure or modify a loan, or tells you to stop paying your mortgage company and to pay them instead.”
In most of the cases cited by officials, the scam artists falsely claimed that they would obtain mortgage modifications to lower a homeowner’s monthly payment substantially. After collecting large up-front fees, they “did little or nothing to help homeowners renegotiate their mortgages,” the FTC said.
Many scammers are falsely claiming to represent the government, or say they are affiliated with legitimate mortgage lenders, when in fact they are not, the FTC said.
In a case with the highest advance fees, First Universal Lending, out of South Florida, allegedly said they would re-negotiate mortgages and reduce  homeowners’ monthly mortgage payments, the FTC said.
The FTC complaint alleges that they charged consumers up-front fees as high as $7,000, and told clients if they stopped paying their mortgages, it would help them in negotiations with lenders.
Click here for more details from the Federal Trade Commission on actions taken by the federal-state task force.
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2 thoughts on “Feds, State Officials Target 'Advance Fee' Mortgage Scams

  • November 25, 2009 at 7:28 pm
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    Sure good job on the mortgage rescue scammers. Yes, they took me for $3,000. But what about my home. Haven’t seen much on the lenders and Wallstreet.

  • November 27, 2009 at 8:50 pm
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    Ther are many legitimate companies that DO help homeowners, with low cost legal assistance, who operate completely within the law and help anxious homeowners who face foreclosure, navigate the enormous process under HAMP guidlines….for this service they ARE entitled to a reasonable fee, as with any other legal assistance.

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