Industry NewsMortgage

Congress looks into foreclosure rescue scams

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Rising mortgage delinquencies and foreclosures have created a "target-rich environment" for rescue scam operators, a Federal Trade Commission official told members of a Senate committee looking into scams aimed at the elderly. Foreclosure scam artists are targeting areas hard hit by the housing downturn with advertisements in local publications, or contacting homeowners listed in public foreclosure filing records, said Peggy Twohig, associate director of the FTC's Division of Financial Practices. In some cases, fraudulent foreclosure rescue schemes will attempt to take title to a homeowner's property, Twohig said. In others, they may charge troubled borrowers thousands of dollars to represent them in negotiations with loan servicers that rarely stop foreclosure. The most common type of foreclosure rescue scam involves a reconveyance of a property to a third party, often through a quitclaim deed, with the homeowner expecting to get the home back when it's no longer in da...