One of my favorite things about American industriousness is how often we use it to bilk each other out of money. Today a bunch of federal agencies and the Illinois attorney general announced that they’re going after a rash of mortgage modification frauds and foreclosure scams. From the AP story:
Government officials said Monday that scammers are seeking to take advantage of borrowers in danger of default by charging them upfront fees of $1,000 to $3,000 for help with loan modifications that rarely, if ever, pay off.
The frauds often involve companies with official-sounding names designed to make borrowers think they are using the Obama administration’s efforts to help modify or refinance 7 million to 9 million mortgages…
Officials say such operations almost always are fraudulent, and that help is available for free from government-approved housing counselors.
Going after bad guys is a good idea. I shall not be anything other than supportive of that.
However… in my own (admittedly limited) reporting on companies that purport to help rescue flailing homeowners, I learned that there are real reasons why people turn to these outfits. Lenders are unresponsive. Non-profit housing counselors are overwhelmed. The for-profit companies that people then turn to no doubt include some all-out scam artists. But I have a feeling that others are simply responding to people’s frustrations—in ways that probably aren’t illegal, even if they are unsavory insomuch as they sell a service that could be gotten for free elsewhere.
When I was writing this story, I spoke to one man who knew he was paying for hand-holding, but he was okay with that. “Peace of mind is the main thing,” he told me. As I wrote then, there are plenty of people willing to sell it to him.
Barbara!