Fighting Mortgage Scams: Governments Team Up

The housing crisis has left millions of homeowners desperately trying to avoid foreclosure, but their plight is only made worse by schemers who promise help but instead seek only to scam. Now the Obama administration is highlighting its multi-agency effort to stop these scams.

So far this year, the government has filed charges against 22 companies for running foreclosure-rescue scams.

The scams typically work like this: a company promises to stop the foreclosure process for a fee. Homeowners desperate to stay in their homes pay the money upfront only to find out later that the company had done nothing but take their cash.

One such company targeted by authorities is Nation's Housing Modification Center, a California loan modification company that had civil charges filed against it Wednesday. The company was the subject of a recent ABC News investigation.

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Former employees of the company told ABC News that it was little more than a "boiler room" operation filled with telemarketers reading from a special script targeted at anxious homeowners facing foreclosure.

"They're convincing people to give money to them in advance, promising to do something that they're not doing, that they don't even have the resources, capabilities, knowledge or manpower to do," said former employee Tom Fatica, who said he was fired from NHMC after he questioned the absence of the attorneys and accountants who were supposed to help homeowners.

Civil charges were also filed against another California company, Infinity Group Services of Orange County.

Authorities aren't just cracking down on folks who promise – and then fail – to get homeowners out of foreclosure.

Just last week in California, three mortgage brokers were arrested for allegedly stealing nearly $1 million from borrowers seeking to adjust their home loans.

The men -- Michael McConville, 31, Garrett Holdridge, 23, and Alan Ruiz, 28 -- were charged with scamming more than 70 homeowners into refinancing by falsely promising, among other things, low interest rates.

"Working together we can send a clear and straightforward message: if you perpetrate mortgage fraud, we will find you and we will charge you and we will put you in jail," Attorney General Eric Holder said at a meeting Thursday morning at the Treasury Department in Washington.

The meeting served as an update on the administration's announcement in April of a multi-agency crackdown on foreclosure scams and mortgage modification fraud.

At today's session, Holder, Treasury Secretary Tim Geithner, Federal Trade Commission Chairman Jon Liebowitz, and other federal and state officials highlighted the progress made by this joint effort.

As of the end of July, Holder said, the FBI had more than 2,600 pending mortgage fraud cases under investigation around the country, up from 1,600 in 2008.

Liebowitz announced that thus far this year the government has filed charges against 22 companies for running foreclosure rescue scams. On Wednesday, he noted, civil charges were brought against a California loan modification company called Nation's Housing Modification Center. The company was the subject of a recent ABC News investigation.

Former employees of the company told ABC News that it was little more than a "boiler room" operation filled with telemarketers reading from a special script targeted at anxious homeowners facing foreclosure.

"They're convincing people to give money to them in advance, promising to do something that they're not doing, that they don't even have the resources, capabilities, knowledge or manpower to do," said former employee Tom Fatica, who said he was fired from NHMC after he questioned the absence of the attorneys and accountants who were supposed to help homeowners.

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