The report identified some of the practices I’ve written about extensively on GetOutOfDebt.org and they do a great job of presenting examples of what they found.
From April, 2010, until March, 2011, the project identified more than 150 companies suspected of being scammers based on information from their websites and initial contact with company representatives. The partner organizations conducted 84 investigations including testing of 80 companies. The very names of many websites appear designed to mislead the consumer into believing the organization is either an authentic government department or governmentsponsored website. Many sites include the words “HUD,” “Fannie Mae,” “Freddie Mac,” “HAMP,” “Obama” or “Hope Now” in their web address or in the description of their services, in an apparent attempt to bolster the illusion of legitimacy. Some examples uncovered by the project include:
The investigation found that the market is rife with corrupt practices: firms are over-promising, under-delivering and charging for services that are readily available from nonprofit organizations for free. And, in a troubling trend, some companies are advising homeowners to commit acts of fraud against their lenders.
The analysis of the 84 test reports and investigations uncovered common tactics used by scammers to entice the homeowner to use their services.
- 55 percent of the companies required an upfront fee to start work or required a low initial fee to conduct minimal work on behalf of the company, such as reviewing loan documents.
- 43 percent of the companies guaranteed or promised they could secure a loan modification even before learning about the homeowners’ financial limitations.
- 24 percent of the companies advised or encouraged homeowners to stop making their mortgage payments or to stop contacting their lenders.
- 16 percent guaranteed a new, much lower interest rate ranging between two and 6 percent on modified loans.
- 12 percent discouraged homeowners from seeking free government supported services from HUD-approved housing counseling agencies.
- 8 percent encouraged homeowners to create fraudulent documents or provide fraudulent information in order to improve their chances of getting a modification.