New plan to crack down on foreclosure scams

Federal law enforcement agencies, state investigators and prosecutors, civil enforcement authorities, and the private sector banded together today to protect homeowners from criminals operating foreclosure or loan modification schemes. This new, coordinated effort will improve fraud investigations, alert financial institutions to emerging schemes, step up enforcement actions, and educate consumers to help those in financial trouble avoid becoming victims of a loan modification or foreclosure rescue scam.

The Treasury Department issued an advisory Monday alerting financial institutions about new schemes related to loan modifications. The advisory identifies red flags that may indicate a loan modification or foreclosure rescue scam. The most common red flag is the requirement that fees be paid before services are provided.