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Authorities: Foreclosure and loan modification scams now an epidemic, P2

In the last post, this blog began a discussion about the increase in nationwide loan modification scams, including recounting some experiences of a few victims of loan modification fraud. The issues of fraud have left many distressed homeowners in worse shape than before they came into contact with the con-artists. The foreclosure crisis has fueled many of the scams, as the con-artists prey on their fears of distressed homeowners.

A federal official who monitors fraud under the Troubled Asset Relief Program says, "The stories of the people who are victims of these scams are really heartbreaking and unfortunately, the HAMP mortgage loan modification scams have become a nationwide epidemic." The Internet has also been used by scammers. As of last November, the fraud unit under TARP reported that it had shut down 125 alleged schemes offering services through advertisements on Yahoo, Bing and Google.

Authorities say the distressed homeowners should learn the telltale signs of scam artists, keeping in mind that these scams also quite frequently have official-sounding names, and at times can even include government logos on their materials.

Some signs that an offer for loan modification or foreclosure assistance may be a scam, is that the assistance comes with a fee supported by a false promise to lower monthly mortgage payments, or the scammer asks for the deed to be signed over. Other signs that something may not be above-board include being advised to stop making mortgage payments, or being told to no longer work with loan servicers or lenders.

Individuals who are struggling to pay the bills should consider speaking with an experienced Cincinnati bankruptcy attorney about the individual situation. In seeking assistance from any type of foreclosure prevention counselor who is not a licensed debt relief attorney, it is important to remember that the federal government, under the Department of Housing and Urban Development, has an approval process. HUD-approved counselors can be found in nonprofits and official local government agencies across the country.

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

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