Looking to re-victimize those already suffering abusive foreclosure practices and mortgages they can't afford, scammers are moving faster than the bureaus deploying the National Mortgage Settlement.

The $25 billion National Mortgage Settlement signed by federal and state officials and the nation's largest banks on Feb. 9, promises to cure some of the ills arising from the housing crisis, but real relief is still months away.

Meanwhile, and even before the settlement was penned, scammers were out in force using the Internet and tele-marketing guises to masquerade as settlement officials, bank representatives and third-party "settlement administrators" promising fast settlement results - for a fee - to unsuspecting, vulnerable consumers, according to attorneys general in virtually every state in the nation.

"Even before today’s $25 billion mortgage servicing settlement was announced, Alabama consumers received phone calls trying to trick them into giving out financial information that could be exploited and abused," according to Luther Strange Alabama's Attorney General.

The National Mortgage Settlement includes billions of to pay for loan modifications, mortgage principal reductions and refinancing costs for existing, qualifying homeowners, as well as money for cash payments directly to consumers who've lost their homes and were wronged during foreclosure.

Official settlement benefits are free

Despite the come-on claims from scammers, there is no cost to consumers who will eventually benefit except, perhaps, as taxpayers who continue to foot the bills for institutional wrong doings.

The largest ever federal-state civil settlement, stems largely from faulty foreclosure practices mortgage servicers instituted shortly after the housing market crashed.

Bank of America, JP Morgan Chase, Citigroup, Ally Financial and Wells Fargo, signed on to the agreement designed to cure an institutionalized culture of foreclosure abuse.

Violations included "robo-signed" (forged or falsified) affidavits in foreclosure proceedings; deceptive practices, including "dual tracking" (simultaneously working a modification application and a foreclosure procedure on a mortgage); failures to offer non-foreclosure alternatives before foreclosing on borrowers with federally-insured mortgages; filing improper documentation in federal bankruptcy court, losing and misplacing crucial homeowner documents and generally giving distressed homeowners the runaround, rather than a single point of contact.

A recent report "Servicers Continue to Wrongfully Initiate Foreclosures: All Types of Loans Affected," by several consumer law advocate trade groups found, during the year long negotiations that led to the settlement, mortgage servicers pretty much continued business as usual.

"These (foreclosure abuse) practices are current and widespread," according to the report.

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Servicers Foreclose While Processing All Kinds of Loan Modifications

Of the respondents who reported representing a homeowner placed in foreclosure while awaiting a loan modification in the last year, the percentage of attorneys representing homeowners awaiting loan modifications under HAMP or for a GSE loan (Fannie Mae, Freddie Mac) were the highest.
Source: NCLC, NACBA, NACA

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Now, ironically, already victimized homeowners must contend with a new form of fraud capitalizing on the old fraud committed by mortgage servicers.

The national settlement is a done deal, but not it's full implementation.

According to the settlement's timeline, beginning Feb. 9:

• "Over the next 30 to 60 days, settlement negotiators will be selecting an administrator to handle the logistics of the settlement and monitor compliance."

• "Over the next six to nine months, the settlement administrator, attorneys general and the mortgage servicers will work to identify homeowners eligible for the immediate cash payments, principal reductions and refinancing. Those eligible will receive letters."

• "This settlement will be executed over the next three years."

Three more years? Mortgage servicers' behavior during the settlement's year of negotiation indicate three years is at least as long as it will take for full restitution under the settlement.

Scammers see the settlement's timeline as a great opportunity to commit fraud and haven't wasted any time trying to pull the wool over the eyes of consumers. The crooks know consumers are anxious for relief, they know anxiety breeds vulnerability and they know bureaucracy always bogs down the wheels of justice.

That includes manufactured, institutionalized bureaucracy, if statements from the mortgage servicers named in the settlement are any indication.

Aware of the settlement's likely outcome, mortgage servicers not only continued the abuses, according to the consumer law advocates study, they also appear to have spent the last year negotiating in not such good faith.

When the settlement was signed, none of the servicers said they were fully ready to reach out to those they'd abused.

As an example, "…Bank of America expects to develop new or enhanced programs to provide borrower assistance and refinancing assistance, to make direct payments to state and federal governments and borrower restitution, and to agree to national servicing standards. The agreements in principle are subject to ongoing discussions among the parties and completion and execution of definitive documentation, as well as required regulatory and court approvals," according to Bank of America's statement.

"Expects to develop?"

Between the continued abuses and heel-dragging by mortgage servicers, it's no wonder the settlement prompted California Attorney General Kamala D. Harris to call for Freddie Mac and Fannie Mae to temporarily suspend all foreclosure sales in California as a "a good-faith pause."