Prevent Loan Scams

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New Federal Report Highlights 7.5% increase in Scam Reporting

According to a press release from the Financial Crimes Enforcement Network (FinCEN), the agency received nearly 16,000 reports of mortgage loan fraud scams in the third quarter of 2009 - a 7.5 percent increase over the previous year.

FinCEN was established by the U.S. Department of the Treasury in 1990 "to provide a government-wide multisource financial intelligence and analysis network." They released a report last week examining suspicious activity and types of fraud that occurred nationwide in the third quarter of 2009.

According to FinCEN's press release, there were two types of scams that were reported most often, one of which is a classic loan modification scam, where the scammer "falsely claimed affiliations with lenders to convince distressed homeowners to pay large advance fees for modification services, but failed to take any action on the homeowners' behalf."  Additionally, nearly half of all reports (42 percent) came from California and Florida, two of the states hardest hit by the foreclosure crisis. 

The problem of advanced fees is a significant issue in the fight against loan modification scams. Thankfully, many state legislatures have recognized that prohibiting these up-front fees is an important first step in eliminating loan modification scams. For information about loan modification scams in your state, including state laws regarding loan modification scams, click here.