Mortgage loan scams hurt homeowners
Predators have ways to find vulnerable families and take advantage, charging hundreds or thousands of dollars, promising relief but not delivering what they agreed.
Mortgage and foreclosure scams hurt homeowners. According to the Michigan Foreclosure Response Toolkit, Michigan ranks in the top five states in the country for mortgage fraud and foreclosure rescue scams. Many times, the homeowners are already facing economic hardships like job loss, reduced work hours, medical bills or divorce. Predators have ways to find vulnerable families and take advantage, charging hundreds or thousands of dollars, promising relief but not delivering what they agreed.
The Michigan Attorney General recently accused a man in Southeast Michigan claiming to be part of a fake religious organization of stealing $300,000. He allegedly promised homeowners he would settle up with their lenders for a fee, but pocketed the money instead.
Loan Scam Alert contains descriptions of common types of loan fraud and getting help from trusted authorities. It is illegal for a company/individual to charge fees in advance to work with your lender to modify, refinance or reinstate your mortgage, according to the Federal Trade Commission (FTC) Mortgage Assistance Relief Service (MARS) Rule. How to spot scams lists other important red flags.
Victims of mortgage fraud in Michigan may be able to obtain reimbursement through a special mortgage settlement fund. Through the joint efforts of the Governor’s Office, the Michigan Legislature and the Attorney General, Public Act 295 of 2012 created the Homeowner Protection Fund. The Legislature appropriated $7.5 million to the Homeowner Protection Fund to be used for “foreclosure rescue scam victim restitution payments . . . as approved by the attorney general.”
For victims to qualify, the following four circumstances must exist:
- The perpetrator was convicted of a qualifying crime involving the exchange of money or services for promised assistance with obtaining, servicing, modifying, refinancing or negotiating a mortgage on a primary residence, stopping a foreclosure or with redeeming a mortgaged primary residence after foreclosure.
- The Court ordered restitution to the victims.
- The victim is a Michigan resident.
- The defendant has not paid the restitution and is not able to pay the restitution within a reasonable time.
Having trouble paying your mortgage? Free help is available. Many Michigan State University Extension offices have HUD-approved housing counselors who provide real help at no cost to the homeowner. Find one near you at MIMoneyHealth.org/ to call for an appointment in person, by phone or online. Michigan Foreclosure Prevention Program includes legal aid offices and housing counselors. In other areas, find a HUD approved housing counselor.