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Mortgage Foreclosure Scams See Huge Spike: Report

Posted: 04/16/2012 6:17 pm Updated: 04/17/2012 10:38 am

Foreclosure Scams

If you're a struggling homeowner watch out! The chance that you'll get scammed is way up.

The number of reported mortgage foreclosure scams has shot up 60 percent so far in 2012, according to the nonprofit Homeownership Preservation Foundation. About 50 percent of the scams involve attorneys or others claiming to offer "specialized services."

The surge in schemes comes in the wake of recently launched federal programs that scammers have been able to exploit.

"Regretfully, every new government initiative spawns a slew of foreclosure avoidance scams, often from the same cast of characters doing business under various names to avoid easy detection and identification," Colleen Hernandez CEO of the organization said in a release that accompanied the findings.

In one recent example, New York Attorney General Eric Schneiderman has warned that scammers may exploit the recent national mortgage settlement to take advantage of homeowners. The scammers claim to be government officials involved in the settlement and try to pry personal financial information, Schneiderman said earlier this month.

In another example, a judge shut down a Santa Ana mortgage relief operation last month after the band of five companies and three websites raked in more than $1 million by allegedly taking advantage of hundreds of consumers, according to the Los Angeles Times. The operation allegedly used two scams: One that charged homeowners thousands of dollars to join a class-action lawsuit and another that for a price of at least several hundred dollars offered to do a home loan audit that would find lender violations at least 90 percent of the time.

With the threat of foreclosure constantly looming there are many potential victims available for these scammers. One in every 662 housing units received a foreclosure filing in March, according to RealtyTrac. That's an uptick from the month before indicating that there might be a surge in repossessed properties.

CORRECTION: An earlier version of this post misidentified Colleen Hernandez. She is the CEO of the Homeownership Preservation Foundation.

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Filed by Jillian Berman  |