Recession in the US economy had been prying in for entry since 2007. It assumed a larger proportion when the entire economy fell apart affecting all the major economies round the globe. Since the subprime mortgage crisis led to the economic shortfall, the mortgage market was badly affected. As a result more and more homeowners lost their homes to foreclosure.
The Obama Administration had to intervene to rescue the mortgage market from dwindling further. Loan modification was one of the measures that the government in the United States introduced to bail out homeowners from this trying situation.
Operation Loan Lies to minimize mortgage related scams Operation Loan Lies is a multi-state effort to reduce the incidence of mortgage related scams in different states. The Federal Trade Commission along with authorities in 20 different states have cracked down on mortgage loan modification firms to reduce the number of fraudulent activities performed by cons artists in the mortgage market. As such 189 lawsuits have been filed against various individuals and companies. One of the common complaints against the companies helping in loan modification is upfront fees. Majority of the loan modification companies charge very high upfront fees before they deliver the services they promise.
Colorado attorney general bans 7 loan modification companies In Colorado the state attorney general has banned 7 loan modification companies since they were cheating consumers through deceiving advertisements. The 7 companies will not be allowed to operate unless they abide by provisions of Colorado Foreclosure Protection Act. As per the Foreclosure Protection Act, a loan modification consultant will not be allowed to take upfront fees and has to enter into an agreement with the consumer that has specific provisions.
The 7 loan modification firms that were banned in the state include –
- Nationwide Modification Center Inc
- Eugene Alkana Law Firm
- Legal Home Solutions
- NC Home Solutions
- Traut Law Group
- Summit Resolutions
- Rescue Home USA
In California the attorney general’s office sued 21 individuals as well as 14 firms involved in fraudulent activities in the state.
Studies reveal that mortgage fraud in United States increased by 36% in 2008. The figure has been steadily escalating since then. Operation Loan Lies is expected to do well and reduce the mortgage related scams and provide some relief to the innumerable homeowners that are taken for a ride due to their helpless condition.