MBA's Story testifies on foreclosure rescue fraud MortgagePress.comRobert E. Story Jr., Mortgage Bankers Association, House Financial Services Subcommittee on Housing and Community Opportunity, Legislative Solutions for Preventing Loan Modification and Foreclosure Rescue Fraud
Robert E. Story Jr., CMB, chairman-elect of the Mortgage Bankers
Association (MBA), testified before the House Financial Services
Subcommittee on Housing and Community Opportunity at a hearing on
"Legislative Solutions for Preventing Loan Modification and
Foreclosure Rescue Fraud."
Below is Mr. Story's oral testimony, as prepared for
delivery.
"I am here today because MBA shares your concerns about the
rapid rise in these scams. There is no doubt we need to better
protect innocent homeowners. Those committing fraud prey on people
at the end of their financial rope. Their scams start with a phone
call, a mailing, or an advertisement promising help. These scammers
are difficult to distinguish from organizations offering real help.
They even use similar names. They are all designed to achieve one
thing and one thing only: to lure a person who is desperate for
help.
"When a fraudster makes contact, the borrower is told that their
situation is dire, and that they are going to lose their home. The
scammer does everything possible to raise the anxiety level of the
borrower. When the borrower is at their lowest point, the scammer
says there may be a solution. But the "solution" comes with a price
- the borrower must agree to cooperate. And the borrower is told to
cease any communication with their lender to avoid being
detected.
"These scams take many forms. Scammers promise to complete
paperwork and obtain a loan workout in exchange for fees that can
escalate into thousands of dollars. Then, the scammers either don't
follow through or perform menial tasks that a servicer or
HUD-approved counselor could complete for free.
"Scammers convince homeowners that they can save their homes
from foreclosure through deed transfers and promises to lease or
sell back the property--which never happens. In extreme instances,
scammers sell the home or secure a second loan without the
homeowners' knowledge, stripping the property's equity for personal
gain.
"So what can be done to stop these cruel practices? First and
foremost, borrowers need to turn to the right sources for help.
"MBA encourages borrowers in financial trouble to call their
mortgage servicer right away. Mortgage servicers want to avoid
foreclosure. They have an economic incentive to do so. Servicers
have the legal authority to create repayment plans, refinance, or
modify a mortgage.
"Borrowers should contact trustworthy sources for advice and
counseling. The HOPE hotline at 1-888-995-HOPE or a HUD-approved
counselor are trustworthy resources. State and local governments
across the country have also set up hotlines.
"Raising consumer awareness of scams is a vital function of
government and industry efforts. The Treasury Department and
banking regulators have issued alerts for consumers. And the FTC
has produced a fact sheet warning consumers about services that
promise to stop the foreclosure process.
"We also need to redouble our efforts to go after those who prey
upon vulnerable homeowners.
"The legal tools needed to investigate and prosecute fraud are
already in place. The federal mail and wire fraud laws reach all
possible varieties of foreclosure rescue fraud.
"What's missing are the resources. MBA has asked Congress to
appropriate additional funding for the FBI to investigate and
prosecute fraud. The funding would pay for new FBI field
investigators. It would also allow the Justice Department to hire
additional prosecutors focused on this area. The funding would also
support the operations of the FBI Interagency Task Forces in the 15
areas with the worst problems.
"MBA is particularly pleased that today, the House is taking up
S. 386, the Fraud Enforcement and Recovery Act. This bill includes
$245 million for law enforcement to crack down on financial fraud,
including foreclosure rescue fraud.
"On behalf of MBA, I would like to thank the subcommittee for
the opportunity to testify today. Foreclosure rescue fraud is a
growing problem that is becoming more expensive for homeowners and
lenders. MBA believes that increased enforcement, better
communication, and further innovation is required to adequately
protect borrowers from the costs of foreclosure rescue fraud."
A copy of Story's written testimony can be read
here.
For more information, visit www.mortgagebankers.org.
