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Desperate Homeowners & More Loan Modification Scams

By Tanya Roth, Esq. on December 01, 2009 8:55 AM

Different day, same old scam. While homeowners across the nation are struggling to hold on to their homes, quick thinking cons are doing all they can to separate consumers from the last of their money. With this in mind, the Federal Trade Commission (FTC) filed a complaint in Florida federal court on November 18th against First Universal Lending for preying on just this sort of frantic homeowner with false promises of loan modification to rescue them from foreclosure.

In the case of Universal Lending, the FTC contends that the company assured clients it could modify their mortgages in "all or virtually all" cases while actually doing so in very few. Florida AG Bill McCollum said his office has received 131 letters in the past five years about First Universal and opened an investigation into the company's practices. The Palm Beach Post reports almost 13% of Florida homes are in foreclosure as of September of this year. Due to these numbers, the AG's office has focused in on mortgage fraud issues in the past year.

This suit is not only a distressing illustration of a nation-wide trend, but part of a lifeline the FTC is attempting to throw out to panicked homeowners willing to trust anyone who can help them forestall foreclosure. On November 24th, the FTC announced "Operation Stolen Hope" which will be a concerted national effort to crack down on foreclosure rescue and mortgage loan modification scams. The operation includes 118 actions by 26 federal and state agencies. The six new suits announced by the FTC will be joined by 25 state attorney generals and other state and local agencies filing 112 similar actions.

Most of the FTC cases and the Florida First Universal case have elements in common and that should be red flags for consumers. First, defendants in these cases usually promise to make mortgage payments "substantially more affordable." They tell consumers that they can do this in most if not all cases. Most importantly, as in Florida, most of the defendants in the FTC cases charged large up-front fees. Harold Kirtz, an FTC attorney says, "The concern we have and what we want to get across to the public is to be very careful of paying up-front fees before work is actually accomplished."

In Florida, the U.S. District Court for the Southern District of Florida has ordered a halt to Universal Lending's operations and has frozen its assets pending the outcome of the case.

The FTC asks people to report foreclosure rescue and mortgage modification scams to or by calling 1-877-FTC-HELP. The FTC makes those complaints available to federal, state, and local law enforcement through the Consumer Sentinel Network.

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