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Department of Justice Files Huge Foreclosure Scams Case

By Michele Dawson | October 16, 2012

If you’ve been facing foreclosure on your home, and thought you had found a company that can help, only to find out that you’ve been duped and are out of a substantial amount of money or end up losing your house anyway, you’re not alone.

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The U.S. Department of Justice last week filed 110 cases against 153 defendants across the country, alleging $37 million worth of losses stemming from foreclosure rescue scams — the result of a year-long investigation dubbed the Distressed Homeowner Initiative.

More than 15,000 victims nationwide were identified.

In addition, State Attorneys General also filed criminal cases against 51 defendants, with losses at more than $2 million. At least 104 civil enforcement actions were taken against 125 defendants with losses to homeowners at approximately $5 million.

“We recognize the negative impact that mortgage fraud and foreclosures have on our economy and on our communities, said FBI Associate Deputy Director Kevin L. Perkins. “We cannot merely investigate after the fact.  We must use intelligence and sophisticated techniques to identify and stop those who seek to defraud American homeowners.”

One way so many victims were duped was through official-looking web sites that misused the Treasury seal key government program names, like the Home Affordable Modification Program. The Treasury Department’s Office of Financial Stability’s Antifraud Unit and the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) ordered some 900 mortgage-rescue web sites or advertisers shut down or into compliance.

Many of the cases involved perpetrators charging substantial fees with the promise that the homeowner could escape foreclosure or that a loan modification could be worked out.

But cases ran the gamut.

“For example, in July, five individuals were indicted in Texas for allegedly sending false military orders to lending institutions, claiming benefits entitled to servicemembers, and then leasing out the homes to collect rental payments,” Attorney General Eric Holder said in remarks delivered in Washington.

In Roseville, Calif., two were charged, allegedly charging homeowners advance fees for loan modifications, mortgage loan audits, credit repair, debt relief, bankruptcy filings and a program to sell homes to "investors" with a rent-to-own option, according to the Sacramento Bee.

The pair allegedly focused on Spanish-speaking homeowners. Their services were promoted on a Spanish-language Christian radio program. They also advertised on Spanish-language television, according to the Bee.

In Maryland, another pair of defendants was charged with telling financially ailing homeowners they could sell their homes to investors but stay as renters until they could afford to buy their homes back, according to the Baltimore Sun.

Michele Dawson is a freelance writer based in Phoenix, Arizona. She spent seven years as a newspaper reporter and has written for various magazines and web sites specializing in real estate and home improvement, including Realty Times, SmartHomeowner, California Builder, and the Sacramento Business Journal.
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