Lisa Madigan (D-Ill.)
Timothy Geithner
WASHINGTON (Legal Newsline)-Illinois Attorney General Lisa Madigan and the Obama administration announced Monday a crackdown on scams disguised as mortgage relief programs.
Federal officials, together with state agencies such as offices of attorneys general, say they will use a multiagency approach to pursue companies that prey on struggling homebuyers trying to use new federal programs designed to help reduce mortgage payments.
"By combining our powers, state and federal authorities are sending a clear message to these mortgage rescue scammers: It is not a question of if we'll come after you; it is only a question of when," Madigan said.
U.S. Treasury Secretary Timothy Geithner said his office and the U.S. Department of Justice, the Department of Housing and Urban Development and the Federal Trade Commission will target companies that attempt to beguile consumers as they try to modify their home mortgages.
Geithner said flimflam artists are "intensifying their activities" to woo consumers into their traps, promising to get banks off consumers' backs and help them keep their homes.
"These predatory scams callously rob Americans of their savings and potentially their homes," Geithner said. "We will shut down fraudulent companies more quickly than before. We will target companies that otherwise would have gone unnoticed under the radar."
The Federal Trade Commission said it has identified 71 companies running questionable Internet or print advertisements aimed attracting struggling homebuyers caught in the foreclosure crisis.
The agency says it has filed five new civil lawsuits to halt illegal loan modification scams, including against one company that spent $9 million on TV and radio ads in less than one year. The FBI is investigating about 2,100 mortgage fraud cases, U.S. Attorney General Eric Holder said.
"If you discriminate against borrowers or prey on vulnerable homeowners with fraudulent mortgage schemes, we will find you, and we will punish you," Holder said.
In Illinois, Madigan has filed 24 lawsuits against alleged home foreclosure scams.
"We have repeatedly found that these foreclosure rescue operations are swindling desperate homeowners out of money they can't afford to lose," Madigan said. "Struggling homeowners need to know that free help is available."
She said many home foreclosure rescue operators don't help consumers.
"They don't call your lender, they don't modify your loan, and they don't represent you in court if you're in foreclosure," Madigan said. "All they do is take your money."
From Legal Newsline: Reach staff reporter Chris Rizo at chrisrizo@legalnewsline.com.