Recently, the foreclosure mediation team at RSI has been thinking a lot about foreclosure scams and mortgage modification fraud. Now that we’ve launched foreclosure mediation programs in Lake, Kane and Winnebago Counties here in Illinois, we’ve been focusing on how to provide quality housing counseling and mediation services and get the word out to the public that these services exist. The problem is, it can be difficult to get our message out about the free, high-quality, court-sponsored programs we offer when homeowners in foreclosure are often bombarded with offers for foreclosure help from less than reputable sources. Foreclosure scammers are often very savvy about how to target vulnerable populations, making it difficult for the average homeowner to distinguish these offers from legitimate, government-sponsored programs. As the RSI foreclosure mediation team works with homeowners and conducts outreach, we have seen the devastating effects of these scams first-hand. We are working with the courts to provide better information to homeowners in the form of websites and brochures that offer resources about what to look out for and how to report incidents of fraud.
Last Wednesday there was an exciting development in the effort to crack down on foreclosure scams, with the Consumer Financial Protection Bureau, the Federal Trade Commission and the attorneys general of 15 states, including Illinois, suing alleged mortgage foreclosure scammers in what is being called “Operation Mis-Modification.” Forty-one suits in all are being brought, representing a massive effort by both state and federal agencies to deal with an issue that, years after the foreclosure crisis began, still leaves too many homeowners victimized.
The Consumer Financial Protection Bureau filed three suits seeking civil fines, compensation for victims, and injunctions against the companies and individuals it alleges collected over $25 million in illegal advance fees. Illinois Attorney General Lisa Madigan filed suits against two mortgage assistance companies she says are “nothing more than fronts for scammers.” In all, the lawsuits filed as part of “Operation Mis-Modification” represent allegations of fraudulent activities reaching back to 2011.
As RSI’s efforts to connect homeowners with free, high-quality housing counseling and mediation services continue, we will be monitoring and updating you about developments in these suits. Whatever the outcomes, the lawsuits help draw attention to the issue of mortgage modification scams, so that homeowners can better educate themselves.