Rise in Loan-Mod Scams Prompts Consumer Alert from Calif. Attorney General

LOS ANGELES, CA: California Attorney General Kamala Harris warned homeowners across the state Friday against scams involving mortgage-loan modifications.

The Office of the Attorney General has received an increased number of complaints from homeowners and mortgage companies about such scams, Harris said, prompting her to issue a consumer alert.

According to Harris, scammers are calling and mailing homeowners, pretending to be their mortgage servicer or a representative from the Home Affordable Modification Program to offer fake loan modifications and “trial payment plans” to lower mortgage payments.

“These scammers may send genuine-looking letters with the logo of the homeowner’s mortgage company, the homeowner’s account number, and deceptive contact information that routes homeowners to the scammers instead of their mortgage servicer,” Harris stated in a news release. “They may also call from telephone numbers that show up on caller ID as the homeowner’s mortgage company.”

As with legitimate HAMP offers, homeowners are told by the scammers that their loans may be permanently modified if they make three trial period payments and follow certain other requirements, the attorney general said.

The scammers will instruct homeowners to send payments via wire transfer or money order to sham addresses that supposedly belong to their mortgage company, only to later discover that they have been sending payments to scammers and have lost thousands of dollars while their real mortgage company has not received any payment during the duration of the scam, she said.

Other common mortgage-modification scams called out by Harris include:

• Illegally charging homeowners upfront fees for mortgage modification services and then providing little or no assistance;
• Falsely guaranteeing or implying that modification applications will be approved (often through falsely claiming affiliation with HAMP, other government programs, or mortgage servicers); and
• Tricking homeowners into transferring part or all of their property interests to a scammer, usually in an effort to drain equity from a property.

To avoid being victims of such scams, the Attorney General’s Office advised homeowners to contact their mortgage servicer using the contact information on their regular mortgage statements to make sure that an offer or approval is legitimate.

If the offer or approval is for a HAMP modification, homeowners can also call the federal government’s Making Home Affordable hotline at 1‑888-995-HOPE to confirm its legitimacy.

Fake HAMP offers or approvals can be reported by calling 1-877-SIG-2009 or online at Sigtarp.gov.

Consumer complaints about loan-mod scams can be submitted online through the Office of the Attorney General.

Free assistance for low- and moderate-income Californians is available through Keep Your Home California by calling 1-888-954-KEEP or online at Keepyourhomecalifornia.org.

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