The mortgage fraudsters are back, but this time they’re preying on people struggling to keep their homes out of foreclosure.  In her commentary, Kelsey VanOverloop looks at how the “Foreclosure Rescue” come-on works and what homeowners can do to avoid the serious consequences of dealing with an unethical lender.  VanOverloop describes the fraudulent schemes:

Today’s mortgage fraudster preys on the vulnerable, those who have run out of options and are desperate for help. They seek out people known to have fallen on hard times, pressuring them into making snap decisions about things they know little about. Unlike those schemes we saw during the peak of the housing market, which capitalized on the dream of owning a home, the fraud of today takes advantage of the fear of foreclosure. These practices bolster the stereotype of the predatory lender, except now the predators are the ones ostensibly offering assistance, tempting ignorant homeowners into what appears to be an easy solution to their tough problems. All this further erodes trust in the housing market which, in the long term, undermines the stability of lenders and homeowners alike.

VanOverloop asserts the mortgage fraud will only slow the recovery from the housing crisis.  Furthermore, the moral underpinnings of mortgage fraud and how it affects all of us are explained:

Mortgage fraud is taking money out of a market working to rebuild itself, and these schemes, along with the intervention it will take to end them, will only slow recovery. They also further deteriorate trust in the housing market, where this quality is critical. We need to trust our builders to build safe homes, trust our realtors to price homes fairly, and trust our lenders to have in mind the best interests of the people who comprise their market. When this trust is damaged, it is more difficult to stem falling home values and housing recessions. Unethical mortgage operations, like all selfish and shortsighted economic activities, do not only harm the immediate victims; they hurt all of us.

  • Janet

    I think what no one understands is there’s more money in foreclosures than modifying mortgages. How do I no you mite ask? Bin there done that.

    1.They get your down payment and closing cost.

    2. They get your payment each month and put that money in suspense keeping it as long as they like putting you in default as the bank makes money on the market on your surplus money in suspense this causes a default in your account.

    3. Than the default adds charges for more money you did not contract for “in the thousands”.

    4. This does not include charges to modify your loan, over sized escrow, lawyer fees and something I have been paying called “OTHER” you are now in default.

    5.The bank gets a lawyer his job is to take your home no matter what and his fees are large which you have to pay.

    6.You take every cent you have and give it to the bank to save your home for me a little over 45,000.00 in one year one check to fix my default was 21,409.00 and payments to the trustee for reinstatement.

    7. Foreclosure you are charged thousands of dollars for fees and charges in my case over 30,000.00.

    8.You lose your equity in your home in my case I owed 123,000.00 my home was worth 352,000.00. You would think a loan modify would be better but not profitable for the bank or the trustee.

    9.On top of all the money the bank and the trustee got, they get to keep or hold all your surplus money from the illegal sale of your home in my case a little over 68,000.00 which I’m sure is in a interest baring account. It’s been over a year and the surplus money from the sale of my home is still in the hands of the trustee.

    10.Your credit is so trashed and your so broke from giving the bank all your money to save your home you can’t rent anything.

    In lou of all the money I gave the mortgage company it did not save my home. I guess this will never end and good people will lose there homes as our government turns away from the real need to reform these banks at there core.We need to bailout the people not the banks in my case how did the bank lose one cent? And the crimes they commited on the people to get their home is unforgivable. My home was auctioned sometime in Dec.2007 without notice which is illegal in MD. I was evicted on a pulled writ of possession which was before the Special Court Of Appeals. All most everything I owned in my home was what they called “trashed out” which means it was put in to dumpers or taken by hired workers hired by the new owner of my home that bought my home at auction while the sheriff watched.With no where to go my family and I became homeless My mom 81, my son 27 mentally retarded, my nephew 15 and myself 48 widowed and disabled. Now one year late we live in a camper which is the only thing I can pull together. The bank took my money and my home and trashed my credit it’s hard to rent anything with foreclosure over your head. My fear is I will never be able to start over and have a home again. There is many people at msfraud.org with story’s. I lived in my home for 23 years thru illegal means it is gone where do I find help. And at this point who can afford a lawyer to fight when you gave all your money to the bank and/or the trustee to save your home.

  • http://www.hadd.com CS

    Builders’ role in the mortgage mess is flying too much under the radar in mainstream media. I’m glad you published something about needing to trust industry professionals, including builders.

    Few people seem aware that builders, too, were doing mortgage fraud and predatory lending through their in-house lenders and/or affiliated lenders. Some have been indicted and convicted now but the big companies that can afford it, pay fines or settle with the government and avoid criminal prosecution.

    The stories don’t always make mainstream news, or if they do, the issue of this being widespread is glossed over. Warnings about mortgage fraud were apparent if you knew where to look, years ago. The problem was, most of the general public didn’t know it and didn’t even know they SHOULD look. Those who were online had an advantage over the many who were not–as most of the warnings were on blogs, government press releases, etc.

    The most glaring warning that got ignored was the FBI’s. It warned between 2004 and 2006 that mortgage fraud was rampant, growing, and could seriously impact the entire economy if not stopped. The agency was refused more resources to fight it. This year the FBI’s mortgage fraud report predictably said the crime was still growing, and named builders in a number of the schemes.

    As usual, this passed almost unnoticed in mainstream media.

    Had the public been informed years ago, they may not have been gullible enough to go into toxic loans like lemmings off a cliff, and much of this mess might’ve been averted simply by allowing consumers to know the truth, in time. Instead, the media chose to insulate builders and others in the real estate and lending industries, and mostly kept promoting the industry propaganda to ‘buy now before you get priced out forever!’

    I urge ALL consumers to get online, learn to do real research, and take off the blinders; most of what you really need to know anymore is online. You will not find the truth about anything by watching the TV evening news.