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Authorities: Foreclosure and loan modification scams now an epidemic, P1

News stories of the foreclosure crisis and programs involving loan modifications are somewhat commonplace in today's economy. Unfortunately, news of those two issues has not gone unnoticed by scammers. Sources say that an epidemic of foreclosure and loan modification scams has swept across the country. A government official who monitors fraud under the Troubled Asset Relief Program says loan modification fraud has "devastating consequences" for distressed homeowners.

The federal government has set aside $29.9 billion in funds under TARP. That federal law is the umbrella program that includes the Home Affordable Modification Program, earmarked to reduce foreclosures. The government says that applying for HAMP assistance is free for homeowners. Yet, government officials note that scam artists have crawled out of the woodwork, seeking to tap into homeowner's fears to extract funds based upon empty promises.

A scam artist in one of Ohio's neighboring states put a county name from that state into a company name, hoping to make the company sound more official, according to a county official in Michigan. The scammer preyed on an elderly woman who was struggling to make her mortgage payments and convinced her to pay him to assist her. The county official says the scammer even drove the woman to the bank to withdraw the money from her account.

The official says the same con artist visited a man at the hospital. The scammer tried to use his bed-side manner, hoping to con the sick man into signing documents. Another scammer conned a woman into turning over her deed. The scammer did not pay the mortgage payments and the woman lost her home to foreclosure.

In the next post, this blog will continue discussing the growing epidemic concerning foreclosure and loan modification scams, including some of the tell-tale signs that an offer of assistance may be tied to a scam.

Source: USA Today, "Mortgage modification scams trap desperate homeowners," Jennifer Dixon of the Detroit Free Press, Jan. 6, 2012

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