Among them, #3 was Mortgage foreclosure scams, and right behind at #4 was Illegitimate credit repair & debt negotiation services. These both have an impact on my clients, before and after they meet with me.

Here is a link to the full article by the BBB.

The better business bureau advises:

3. Mortgage foreclosure rescue scams – Due to foreclosure information being publicly available, many scammers contact desperate home owners and promise to save their home. They will claim to know investors or a “loop-hole”, or will claim to be able to bypass the involvement of attorneys or other agents, thereby leaving the consumer in a complex and vulnerable situation. Victims of foreclosure rescue scams are asked to pay upfront funds or provide sensitive personal information. On many occasions the scammer will rob unknowing consumers of their money and do nothing for them in return, while in other cases the consumer may unknowingly sign away their property deed entirely, on pretense that “they’ll be able to buy it back later.”

Once the scam artist has the consumer’s property deed, they are in a position to raise the consumer’s rent so high that the consumer will not be able to afford to make the payments, and may wind up being evicted from their own home. The BBB strongly advises anyone going through foreclosure to thoroughly research any businesses they are dealing with. It is a good idea to contact the Department of Consumer Services to get more information on whom to go to for help.

4. Illegitimate credit repair & debt negotiation services – Due to the troubling economic situation, many consumers seek out credit repair or debt settlement companies- here is what you need to know about them and how to determine their legitimacy.

These services can not ask for money in advance.
They can not automatically get legitimate negative reports off your credit report.
Be extremely cautious about a service that recommends you not pay creditors so it can negotiate. This could negatively affect your credit report.
A service should never guarantee they can cut your debt by a specific percentage.

1) It is against federal law — the Credit Repair Organizations Act — for any credit repair company to charge you in advance for their services. The only time they can ask for payment is after all of the services they were to do for you are completed; whether this takes 3 weeks or 10 months. 2) A credit repair company cannot tell you that they can get negative (but legitimate) items off of your credit report. The main aspect of credit repair organizations’ work is writing to the credit reporting agencies to dispute the items on your report by asking for their validation. If the items on your report are real, such as liens, bankruptcies, etc, the credit reporting agencies will not have a problem validating them. Also, keep in mind that disputing items on your credit report is something you can do by yourself, for free- you can easily find the appropriate dispute letter templates on the internet. 3) Many debt settlement or negotiation companies request that you don’t pay your creditors and wait until you are behind in payments so that they can contact your creditors and attempt to negotiate to have your debt reduced in exchange for making a payment on the spot. While some creditors may agree to this to get at least partial payment, your credit rating will suffer, your interest rates may go up, and you may have trouble obtaining future loans or financing. 4) Debt settlement or debt negotiation companies should not guarantee that by enrolling in their services, they can cut your debt by any specific percentage, such as “40-60%”.

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67 from Chicago area charged in U.S. mortgage fraud probe

By Jeff Coen and Todd Lighty | Tribune reporters
1:37 PM CDT, June 19, 2008

Federal authorities in Chicago this afternoon announced charges against 67 people in a sweeping investigation of mortgage fraud with national reach.

The U.S. attorney’s office in Chicago said the dozens arrested here as part of Operation Malicious Mortgage include local mortgage brokers, loan officers, Realtors, home builders and lawyers.

A press conference was scheduled for 1 p.m. to discuss the charges, which include mortgage fraud, identity theft and bankruptcy fraud.

Federal prosecutors said the cases involve more than $170 million in fraudulently obtained home mortgages.

Across the country, prosecutors said 406 people have been charged in 144 prosecutions as part of the national effort. The FBI estimated losses at $1 billion.

“Mortgage fraud inflicts serious damage upon financial institutions but, more importantly, makes life more difficult for ordinary citizens,” U.S. Atty. Patrick Fitzgerald said in a statement. “These crimes, on the scale being addressed today, cause banks and lending companies, which have been saddled with huge numbers of fraudulent mortgages, to tighten their lending practices and adjust the cost of doing business.”
Read full article here.

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http://www.chicagobusiness.com/cgi-bin/news.pl?id=28897&seenIt=1

Madigan sues citing mortgage scam

(Crain’s) — Attorney General Lisa Madigan filed a lawsuit against a Chicago company for allegedly scamming financially troubled homeowners by posing as a mortgage rescue firm.

Victory Consulting & Investments Inc. is accused of violating the state’s Consumer Fraud and Deceptive Business Practices Act. Walter C. Armstrong, the company’s general manager, was also named as a defendant in Ms. Madigan’s suit.

The suit claims that at least five homeowners lost their homes through Victory Consulting’s alleged deceptive practices.

Neither Mr. Armstrong nor a Victory Consulting representative could be reached for comment.

The suit, filed in Cook County Circuit Court, marks the 12th time Ms. Madigan has pursued legal action against a firm claiming to offer mortgage assistance.

The suit claims Mr. Armstrong and Victory Consulting employees posed as clergy members to gain the trust of homeowners struggling to make mortgage payments. Customers were solicited through advertisements or found through foreclosure notifications filed with Cook County, the suit said. ……..

This is good news. My clients have had some crazy dealings with people claiming to help them with their mortgage problems, only to have to resort to filing bankruptcy to resolve their problems. Some waste hundreds and thousands of dollars with these companies. I recently attended a meeting with the US department of Justice and they laid out a strong stance on mortgage fraud. They are investigating all sorts of angles and are cracking down on real estate fraud heavily.

As always, check with the Better Business Bureau to investigate if these are legit companies, and read up on the number of complaints filed.

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