Smart Borrower Blog

New Association Aims to Combat Loan Modification Scams


Oct 26th, 2009 @ 1:00 PM by Amber Nelson


NeighborWorks America, a non-profit created by Congress, has launched a national public education campaign aimed at helping homeowners, particularly those facing foreclosure, avoid mortgage modification scams.

Their recently launched website, www.loanscamalert.org, provides information and resources to help spot scams, as well provides a central place to notify authorities of scams they may have encountered. In addition to the website, the campaign will draw on the support of public agencies at all levels of government as well as other financial institutions and non-profits to get the word out.

According to their press release:

The national foreclosure rate has reached an all-time high of 7.97 percent, and millions more foreclosures are expected in coming years. “As the foreclosure rate grows, more and more homeowners are being deceived by scam artists who prey on their fears,” said Eileen Fitzgerald, Chief Operating Officer of NeighborWorks America. “This campaign is based on the belief that knowledge is the best defense, which is why the campaign equips homeowners with the tools they need to minimize their risk and stop scammers in their tracks.”

The campaign launched a kick-off campaign in Los Angeles that will be followed up in major cities across the country.

Full Release:
National Campaign Empowers Homeowners to Combat Loan Modification Scams
A network of local, state and national partners announces new resources for at-risk
homeowners to recognize scams, report them and find legitimate help

<Los Angeles, California> – Today in Los Angeles, a partnership of local, state and national
government agencies, nonprofit organizations and financial institutions gathered at City Hall to
launch a national public education campaign designed to help homeowners protect themselves
against loan modification scams, find trusted help and report illegal activity to authorities. This
was the first of several kickoff events scheduled to announce the “Loan Modification Scam
Alert” campaign rollout in major cities across the country.

The national foreclosure rate has reached an all-time high of 7.97 percent, and millions more
foreclosures are expected in coming years. “As the foreclosure rate grows, more and more
homeowners are being deceived by scam artists who prey on their fears,” said Eileen Fitzgerald,
Chief Operating Officer of NeighborWorks America. “This campaign is based on the belief that
knowledge is the best defense, which is why the campaign equips homeowners with the tools
they need to minimize their risk and stop scammers in their tracks.”

Los Angeles is one of several metropolitan areas in California to consistently rank among cities
with the highest foreclosure rates. It has the highest number of homes in foreclosure in the
nation. “Too many residents in Los Angeles, like homeowners nationwide, are losing thousands
of dollars and their homes to scam artists who make big promises and then do little or nothing
to help them save their homes,” said Los Angeles Mayor Antonio Villaraigosa. “Anyone can be a
victim and the people of Los Angeles need to know what resources are available to them. They
need to know that legal aid groups, financial institutions, and HUD-certified counselors are
offering free services to anyone seeking help.”

In April, Mayor Villaraigosa announced a path breaking city ordinance to increase protections
for Angelenos against fraudulent mortgage loan modifications. This measure – the first of its
kind in the United States – fills a critical gap in the regulation of mortgage consultants and
grants rights to homeowners at risk of foreclosure. The ordinance protects homeowners,
imposes harsher penalties on scam artists, and informs Angelenos of their rights as residents of
Los Angeles.

In addition to remarks from Mayor Villaraigosa and Ms. Fitzgerald of NeighborWorks, the
kickoff event featured representatives from LA City Council, the local faith-based community,
the Federal Trade Commission and Los Angeles Neighborhood Housing Services. Also present
were local homeowners who shared their personal experiences with loan modification scams to
inform other homeowners in their community about this activity.

NeighborWorks America will coordinate the nationwide effort through its 235 communitybased
affiliates and other local, state and national partner organizations, including the
Department of Housing and Urban Development (HUD), the Federal Trade Commission, the U.S.
Department of the Treasury, Fannie Mae, Freddie Mac and the Lawyers’ Committee for Civil
Rights Under Law.

Together, the partners aim to reach thousands of distressed homeowners in hundreds of
communities at high risk for fraud activity. The campaign will target all audiences, but its
resources are focused sharpest on those groups that have already seen high levels of scam
activity, including seniors, Hispanics, African Americans and Asian Americans.

As part of the campaign, information, resources and reporting capabilities are now available
around the clock at www.LoanScamAlert.org and by calling 1-888-995-HOPE (4763). Community
groups may also visit the Web site to access campaign materials available for download and
distribution in their area.

Through real-life scam stories, collateral materials, print advertising, local radio PSAs, events,
word of mouth and social media activity, the campaign will educate the public about the
warning signs of a loan modification scam. “Borrowers must avoid any individual or firm that
asks for a fee in advance, guarantees a loan modification or tells you to pay them instead of
paying the mortgage. Only a lender can guarantee a loan modification and they do not charge,”
said Lori Gay, president and chief executive officer of campaign partner Los Angeles
Neighborhood Housing Services, Inc., one of the 235 organizations in the NeighborWorks
network.

Homeowners are also urged to report scam activity at once to the proper authorities through
the campaign Web site and hotline. “We want to stress how crucial it is for people to learn the
signs of a scam and quickly report any encounter that just doesn’t ring true,” said Tom Syta,
assistant director of the FTC’s Western Region. “Scammers are out there trying to take
advantage of people in a tough spot. The campaign is making it easier for homeowners in
distress to fight back, and help us shut scam artists down.”

The partnership has designated November as “National Loan Modification Scam Awareness
Month” and will promote a variety of special events and initiatives throughout the month. In
the coming weeks, the campaign will also travel to Miami (Oct. 29), Las Vegas (early November)
and Columbus (mid-November). For more information about the campaign visit
www.LoanScamAlert.org.

A Webcast of the Los Angeles event will be available on-demand anytime after noon PST on
Oct. 26 at: http://media.xfactorcom.com/loanmodificationscamalert/20091026/.

About NeighborWorks America

NeighborWorks America is a national nonprofit organization created by Congress to provide
financial support, technical assistance and training for community-based revitalization efforts.
NeighborWorks includes a national network of 235 community-based organizations in 50 states,
which strives to create healthy communities through the work of thousands of residents,
business people, government officials and other partners.

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.

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