Feds Crack Down on Foreclosure Scams

April 6, 2009 — -- 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.