Forces Join to Protect Borrowers from Foreclosure Relief Scams
Industry Update
December 12, 2015
The Office of New York State Attorney General Eric Schneiderman and several media associations within the state have announced a joint initiative to crack down on unlawful advertising of foreclosure rescue scams, which have surfaced all over the country in the last few years but have been especially prominent in New York, one of the markets hardest hit by the foreclosure crisis.
In addition to Schneiderman, who has been a fierce advocate not only of foreclosure prevention but of preventing perpetrators from scamming vulnerable homeowners facing foreclosure, media outlets participating will be the New York News Publishers Association, the New York Press Association and the New York State Broadcasters Association.
Perpetrators of the scams target homeowners who are in the process of foreclosure and seeking some help with a mortgage modification. The number of scammers targeting New Yorkers has risen in recent years, including an increase in so-called “Deed Theft” cases in which the scammers convince the homeowners to forfeit ownership rights to their homes.
Through the new initiative, the media outlets will scrutinize foreclosure relief advertisements for possible scammers, who often target vulnerable homeowners through trusted local media outlets. The initiative is voluntary; dozens of community outlets are being asked to participate.
“Vigilant, well-informed homeowners are the best protection against these deceitful mortgage rescue scams,” Schneiderman said. “These scams are particularly repugnant because they take victims of the housing crash and make them victims again.”
Foreclosure rescue scams have conned approximately $100 million from 42,000 homeowners, according to a December 2014 report by the Center for NYC Neighborhoods and the Lawyers Committee for Civil Rights Under Law. In New York alone, more than 2,700 homeowners have submitted complaints to the Lawyer Committee’s office, trailing only California and Florida in the number of complaints reported to the Loan Modification Database. New York homeowners have documented more than $8.25 million in losses as a result of foreclosure relief scams.
Victims of the scams have often reported to the AG’s office and housing counseling partners that it as advertising in local media outlets that lured them into the scam. The ads are often in violation of state and federal laws that require the companies who are advertising to include specific disclosures in ads pitching foreclosure prevention or loan modification services.
New York homeowners have documented more than $8.25 million in losses as a result of foreclosure relief scams, or an average of about $4,183 per victim—about $900 more than the national average. Losses have the potential to go far beyond the initial dollar amount, however; they could wind up in the tens or even hundred of thousands of dollars if the victim’s home falls into foreclosure.
Victims of the scams have often reported to the AG’s office and housing counseling partners that it as advertising in local media outlets that lured them into the scam. The ads are often in violation of state and federal laws that require the companies who are advertising to include specific disclosures in ads pitching foreclosure prevention or loan modification services. Schneiderman and the media outlets are asking the members of their organizations to review foreclosure relief ads to make sure they are in compliance with the state disclosure laws.
This initiative is part of a broader effort by Schneiderman to end the mortgage crisis in New York. In 2012, he launched the Homeowner Protection Program (HOPP), a network of 85 housing counseling and legal services providers that provides free, high-quality representation to struggling borrowers who are at risk of foreclosure. HOPP has assisted more than 50,000 New Yorkers to date.
Schneiderman’s office launched AGScamHelp.com, a Web-based app that helps homeowners determine if a mortgage assistance company is government-vetted. The app helps users locate nearby counseling and legal services agencies in the HOPP network, search government-vetted agencies, report scams, and receive tips on avoiding scams. The AG’s office reports that the app has more than 6,600 weekly users and has been used by more than 112,000 people since the site was launched.
Source: DS News
