The Obama administration has already unveiled its plan to stem the rising home foreclosure rate, but with foreclosure scams also increasing, the administration today announced a multi-agency effort to crack down on scams that prey on struggling homeowners.
"Just as this administration has intensified our efforts to help American homeowners, those who would seek to prey on the most vulnerable are intensifying their tactics as well, often through purported mortgage modification and foreclosure relief companies," Treasury Secretary Tim Geithner said at an announcement in Washington. "These are predatory schemes designed to rob Americans of their savings and potentially their homes."
The FBI is currently investigating more than 2,100 mortgage fraud cases, up 400 percent from five years ago.
Joined by state and federal officials, including Attorney General Eric Holder, Geithner unveiled new initiatives to stop these schemes.
"We will shut down fraudulent companies more quickly than before," he said. "We will target companies that otherwise would have gone unnoticed under the radar. And we will aggressively pursue individuals involved in mortgage rescue scams."
He announced that the Treasury Department's Financial Crimes Enforcement Network will ratchet up its efforts to identify fraud suspects for civil and criminal investigation and issue an advisory to help financial firms flag questionable modification schemes for law enforcement.
Holder said the FBI has more than doubled the number of agents investigating mortgage fraud cases and created a national mortgage fraud team.
"The message is very simple: If you prey on vulnerable homeowners with fraudulent mortgage schemes or discriminate against borrowers, we will find you and we will punish you," he said.
Holder noted that the Justice Department is hearing a growing number of concerns about discrimination by loan modification companies.
"Discrimination in lending on the basis of race, national origin or other prohibited factors is destructive, it's morally repugnant and it is against the law," he said.
Federal Trade Commission chairman Jon Leibowitz said his agency sent warning letters to 71 companies running suspicious ads and today announced five new cases of companies that allegedly promised mortgage relief or rescue help, but delivered no such thing.
Four of these five companies allegedly used copycat logos and names -- like Federal Loan Modification -- to lure homeowners in need of help.
"If you pay them instead of your mortgage company, you will find yourself on the fast track from distress to disaster," Leibowitz said.
"Stay away from anyone who says they will save your home in return for money up front," said Illinois Attorney General Lisa Madigan.
Shaun Donovan, secretary of the Department of Housing and Urban Development, noted that participating in President Obama's Making Home Affordable plan is free of charge and urged distressed homeowners to go to the program's Web site, contact one of the 2,600 HUD-approved mortgage counselors or call the HOPE hot line for help.
Despite today's announcement being billed as a news conference, the officials took no questions and departed immediately after a brief series of opening remarks.