Mortgage Reduction Programs and Mortgage Settlements Giving Rise to Dramatic Increase in Mortgage Scams

There are many mortgage-related scams out there to watch out for. Do you know how to avoid becoming a victim?

Whenever there is a chance to seize an opportunity, you can bet the scammers will be there to take it. And that’s exactly what happened within just a short time after the federal government put the latest $25 billion mortgage settlement in place to help struggling homeowners. This settlement, which was reached earlier this year, makes some of the nation’s biggest banks be more proactive in their approach to help homeowners who need help with their payments.

In Alabama, for example, many of the homeowners who are struggling to make their payments have been receiving phone calls from people who are trying to scam them out of their hard earned money. The person making the phone calls promises the homeowner that they can receive cash payments from the settlement as long as they would give the routing number from their bank account.

Struggling homeowners in Illinois have been receiving similar phone calls and requests. The homeowners were receiving phone calls from people telling them that they did indeed qualify for a settlement amount from their lender. They only thing they were required to do was to pay a huge upfront fee for processing in order to get that settlement money.

But one of the more astounding stories comes from California, one of the hardest hit states in terms of foreclosures and troubled mortgage borrowers. According to The Washington Post, the Attorney General of California – Kamala Harris - received a phone call that told her she could receive some financial compensation from the settlement as well.

With vulnerable homeowners and the billions of dollars available in government aid, it is a perfect combination for scammers who know how to take advantage of people who are in need. And the more money that is available and the more vulnerable homeowners there are, the more creative the scams get. As a result, both state and federal officials have made an effort to help curb these types of crimes. For one thing, they have created task forces and put more investigators on the job to help catch the people who are involved in the scams. In some of the hardest hit states, including Nevada, California and Florida, officials have even held informational meetings and seminars to help disseminate information that will educate the public about the various types of scams and what to look for in a scam so they can tell the difference between a really good con job and the real thing. But despite all of those efforts, there are still many fraudsters who get through the cracks and continue to con people.

Patrick Madigan, an assistant Iowa attorney general, has helped officials in his state come up with plans to curb mortgage-related scams. However, according to him, it becomes “like a game of Whac-a-Mole.” He went on to say that once you get one fraud under control, several more pop up that must be taken care of.

Here is how serious the problem is: In the last three years, the Justice Department of the United States has filed almost 1,500 cases involving mortgage fraud. That includes about 3,000 defendants, according to an agent from the department. In those same three years, the prosecutions for mortgage fraudsters increased by more than 90 percent.

You do not have to be a victim, though. According to the FBI website, you can take some steps to avoid mortgage fraud. If you get phone calls, emails or letters from people or companies that say they can eliminate your mortgage debt for an upfront fee, it is definitely a scam. Also, never sign over the deed to your home – even “temporarily” – to anyone who claims they can help you with your mortgage payments. The best thing to do is speak directly with your lender and they can tell you if you qualify for any financial help from the recent settlement or if you have other options.

Speaking directly with your mortgage lender or identifying a new mortgage lender in your area to remortgage in the course of seeking remediation for your old mortgage is often the best way to seek appropriate advice. Identify a new mortgage lender that is lending in your location here.

Don’t let your vulnerability cloud your judgment. Make good and well-informed decisions when it comes to something as important as your mortgage.

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