Lisa Simpson
Aug 4,2010
In: Foreclosure

Ban on Fees Related to Loan Modifications

Ban on fees related to loan modifications.

The FTC is taking steps to place bans on upfront fees for loan modification assistance. This step is coming on the heels of plans chalked out by the feds together with state to extend its activities on cracking down on mortgage scams to nab further nefarious schemes that are victimizing the troubled homeowners struggling with their houses during these recession days.

USA Attorney General Eric H. Holder said, “Working together, we can send a clear and straightforward message: If you perpetrate mortgage fraud . . . we will find you and we will charge you and we will put you in jail.” Leading federal officials discussed with the attorney generals coming from 12 states to coordinate their actions.

The fed officials have been operation with the attorney generals of many states since last April to sniff out the suspicious modification offers. The instance in July may be cited when Jerry Brown, the Attorney General of California filed law suits against 21 persons and 14 firms for being involved in these types of disreputable activities. The nationwide crackdown movement has been named Operation Loan Lies.

By the close of July the FBI was handling over 2,600 pending fraud cases – all related to mortgage issues. The central team has been working with their state counterparts following the setting up of a multi-agency move last spring.

Treasury Secretary Timothy Geithner said that the Federal Reserve now wants to extend their activities to cover all scams related to consumer debts. Geithner said, “You need to do it on a coordinated basis because these guys don’t respect state borders, don’t respect national borders.”

Jon Leibowitz the chairperson of the Federal Trade Commission said that the latter is thinking of imposing a national ban, sometime later towards the closing months of this year, on the practice of fixing upfront fees for modification of loans.

Meanwhile foreclosures continue to run ahead and the only way out for the consumers is to have their mortgage dues reduced. The scammers are taking full advantage of the murky situation and preying on the desperate.

They are trying to squeeze out huge upfront fees for the help being offered. Pedro Morillas of California Public Interest Research Group said, “People are paying upfront and then have no real guarantee that the modification service will actually modify the loan.” The group is supporting this move for imposition of a ban on these fees.

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