Homeowner Beware: Mortgage Scams on the Rise

I can't exactly say this bit of news comes as a surprise, given the current economy and the nature of ...well...human nature. But reports of mortgage fraud in the third quarter of 2009 (the most recent set of figures) show a hefty 7.5 percent hike over the year before.

This news comes to us from something called FinCEN. never heard of it? FinCEN is the Financial Crimes Enforcement Network, a unit of the Treasury Department that collects reports of suspicious mortgage activity.

This is one of those good news, bad news type stories, I want you to know. The good news is that the reported "increase" includes reports more than a year old; some more than two, so the agency warns that it doesn't necessarily mean scams are rising.

The bad news is that the agency says it has gotten hundreds of reports of some types of fraud--such as ones involving loan modifications--just since April.The really depressing thing about that is, since there have hardly been any meaningful mortgage loan modifications, the increase in reports of mortgage modification fraud would seem to indicate the crooks are a lot more efficient than the government. Guess no real surprise there, either!

If you had to hazard a guess where most of these reported mortgage fraud cases come from, where would you guess? Hint: What two states were right out front in bursting the real estate bubble? You guessed it. California and Florida account for some 42 percent of all reported mortgage fraud cases.

According to the FinCen report, the suspicious activity centered around two basic scams:
First, subjects conned homeowners into signing quit-claim deeds to their properties and then sold homes from under the former owners to straw borrowers; the homeowners subsequently received eviction notices. Second, others falsely claimed affiliations with lenders to convince distressed homeowners to pay large advance fees for modification services, but failed to take any action on the homeowners' behalf.
If you go to the FinCen website, you will find links to all sorts of forms you can fill out to report all sorts of alleged abuses. So, if you think you've be wronged, by all means you ought to check it out.

And, should you end up filing one of these forms, you may not get any financial relief, but you will likely become a statistic in FinCen's next report to the public.

Charles Feldman is a journalist, media consultant and co-author of the book, "No Time to Think: The Menace of Media Speed and the 24-hour News Cycle." He has written about real estate related issues for several years.
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