With the economy losing momentum and the housing market sagging, there has been no shortage of scammers looking to take advantage of struggling homeowners. Now, three government offices are trying to put an end to it.
The Treasury Department, together with the Consumer Financial Protection Bureau and the office of the Special Inspector General for the Troubled Asset Relief Program, or SIGTARP, announced on Thursday that they will be collaborating on a task force to investigate mortgage modification scams.
The new group will aim to crack down on scammers who offer to help homeowners revise the terms of their mortgages -- but instead collect a fee up front and then never deliver on their promise.
Such scams have become prevalent in the wake of the housing market collapse and subsequent recession. High unemployment and evaporating homeowner wealth have left countless Americans scrambling to make ends meet.
Thousands have turned to the Home Affordable Modification Program, or HAMP, a federal initiative meant to offer cash-strapped homeowners a way to modify their mortgages and avoid foreclosure.
But scammers are looking to capitalize on homeowners' desperation. A common tactic is for the scammer to claim some affiliation with HAMP and promise to get the homeowner's debts or monthly payments lowered, in exchange for payment up front.
The homeowner might front the cash, but they never receive the help they're looking for.
A SIGTARP official speaking on background told The Huffington Post that such scams are taking place nationwide, and may be advertised through any number of media -- print, Web, TV, radio and over the phone.
A consumer fraud alert issued by the three offices noted that homeowners can look for certain red flags. Anyone asking for payment up front is probably not on the level. And scammers often say they can "guarantee" a mortgage modification -- even though in reality, only mortgage servicers can authorize these changes, and third parties are unable to make any such guarantees.
The announcement of the joint task force comes only weeks after SIGTARP took similar measures against mortgage modification scams online, when it targeted more than 100 Web sites advertising questionable homeowner-assistance programs on Google, Bing and Yahoo! search result pages.
The number of homeowners looking to revise their mortgages through HAMP reached a 16-month high in September after flagging over the summer. The drop in modification filings may have been due to widespread complaints about the efficiency and effectiveness of the program.
Although HAMP initially set a goal of keeping between three and four million homeowners out of foreclosure, it proved unable to handle the volume of applications. Many modification have been canceled while still in the preliminary stages, and according to SIGTARP estimates, HAMP is now only on track to help about 800,000 homeowners.