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The Second Wave of the Foreclosure Crisis - The Big Pickpocket


The Second Wave of the Foreclosure Crisis – The Big Pickpocket

The foreclosure crisis is commonly described as the avalanche of foreclosures that occurred during one of the worst recessions since the great depression. But for advocates, housing counselors, and homeowners from around the country, the crisis has a rarely discussed and drastically underreported second wave – a wave of foreclosure rescue fraud. This second wave exists because of, and followed directly behind, the unprecedented wave of homeowners who suddenly became vulnerable to foreclosure.  While foreclosure rescue fraud comes in various forms, it all boils down to the same result – the widespread pickpocketing of homeowners throughout the United States, when they can least afford it.

The industry behind this second wave is made up of groups claiming to offer foreclosure rescue services. They market themselves as the knight in shining armor, the David ready to take on Goliath, offering to save the homeowner from foreclosure. In reality, they often turn out to be a wolf in sheep’s clothing, wreaking havoc on the financial wellbeing of homeowners from around the country. Like a pickpocket, the initial fee or the loss of cash is only the tip of the iceberg. Scammers commonly gain access to bank accounts and social security numbers, and tell homeowners to stop paying their mortgage – decimating their credit, and sometimes leading to foreclosure and homelessness.

When the country was blindsided by the recession, homeowners who had what they believed to be steady jobs were handed pink slips as the country began to bleed jobs at an alarming rate. In a matter of months, the number of Americans in jeopardy of falling behind on their mortgage payments skyrocketed. Caught flat footed by a crisis unlike any other since the great depression, along with a focus on preventing complete global economic collapse, the response to the inevitable wave of fraud that would accompany the increased risk of foreclosure was slow. This slow response created a wide gap between American homeowners needing help, and those who could provide safe, legitimate help. This rapidly expanding gap was quickly filled by the worst in society. Those who played off the American dream of homeownership, and for many homeowners, turned the dream into a nightmare.

The Lawyers' Committee for Civil Rights Under Law and its coalition partners in the Loan Modification Scam Prevention Network (LMSPN) have been tracking the foreclosure rescue fraud epidemic since 2010. As of early 2014,the national Loan Modification Scam Database, managed by the Lawyers’ Committee, has compiled over 40,000 complaints with total reported losses of over 90 million dollars. In the coming weeks the Lawyers’ Committee will be releasing reports focusing on topics such as the domino effect of foreclosure rescue fraud, the targeting of homeowners with limited English proficiency and attorney involvement in scams. These short reports will complement the Lawyers’ Committee’s release of a comprehensive report about the issue and the coalition’s efforts to combat foreclosure rescue fraud to be released in mid-April 2014.

If you or anyone one you know has run into one of these scammers please file a complaint online here or call 888-995-HOPE to file a complaint and find safe, reliable and free help.


Lawyers' Committee for Civil Rights Under Law Reports for 2014

The Domino Effect of Foreclosure Rescue Fraud

The Long Arm of Fraud: Out of State Scam Operations Harm Most Homeowners


 

 About the LMSPN

 

The Loan Modification Scam Prevention Network (LMSPN) is a national coalition of government agencies, non-profits, and service providers using education and a centralized complaint gathering process to help stop foreclosure rescue scams. This effort is led by Fannie Mae, Freddie Mac, the Homeownership Preservation Foundation (1-888-995-HOPE), NeighborWorks America (LoanScamAlert.org) and the Lawyers’ Committee for Civil Rights Under Law (PreventLoanScams.org).