Feds Crack Down on Foreclosure Scams

The announcement was applauded by Neil Barofsky, the special inspector general for the Troubled Asset Relief Program, who warned in February that the administration's mortgage modification plan could be vulnerable to illegal schemes. On Barofsky's recommendation, the administration issued an anti-fraud release to warn homeowners about fraud and refer them to a national hot line.

"We applaud Secretary Geithner's leadership in taking these crucial steps to protect homeowners," Barofsky said in a statement. "And indeed the anti-fraud cover sheet has already resulted in referrals to Sigtarp's hot line and have led to active criminal investigations."

Government Initiatives Aim to Stop Scams

The multi-agency crackdown is the latest in a growing number of government initiatives to stop these scams. This week the Federal Reserve Board will start airing a 30-second ad in movie theaters in the seven states hit hardest by foreclosures, pointing people to the Fed Web site for tips on getting help to avoid foreclosure.

The 30-second spot states: "Having trouble keeping up with your mortgage payments? Are you facing foreclosure? Before you do anything, you need to get information on how to avoid foreclosure scams. Don't get taken advantage of. It shouldn't hurt to get help. Go to FederalReserve.gov and click on 'Five Tips for Avoiding Foreclosure Scams.' Learn how to protect your home and avoid foreclosure fraud. It's information you can trust from the Federal Reserve. Go to FederalReserve.gov and click on 'Five Tips for Avoiding Foreclosure Scams.'"

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