Foreclosure rescue scam artists more likely to be attorneys

Foreclosure rescue scams are on the rise and attorneys are more likely to be the perpetrators, according to a report from the U.S. Government Accountability Office (GAO).

Foreclosure rescue schemes, in which individuals and companies offer at-risk homeowners help with avoiding foreclosure but ultimately do not provide any, have more than doubled since 2009. That year, the Federal Trade Commission received just under 9,000 complaints about foreclosure rescue schemes. That figure jumped to 18,090 in 2010, then to 20,478 in 2011 before declining somewhat to 18,195 in 2012.

But complaints received through April this year indicate scams are set to rise again in 2013, the report said.

The GAO found that foreclosure rescue scams had become more complex since 2010 when the FTC issued the Mortgage Assistance Relief Services (MARS) rule, which banned advance fees for foreclosure rescue services. Attorneys were exempt from this ban if they met certain requirements.

Following this regulation, schemes involving attorneys have become more common, costing homeowners an average loss of $3,449, compared with an average loss of $2,727 for homeowners reporting scams with no attorney involvement.

Between September 2008 through May 2013, about 4.4 million homes had been lost to foreclosure, the GAO said.

Source: GAO