Financial Services Law Developments: FYI: FinCEN Finds High Incidence of Loan Mod Scams

Monday, July 12, 2010

FYI: FinCEN Finds High Incidence of Loan Mod Scams

The Financial Crimes Enforcement Network recently issued the attached report on suspicious activity reports (SARs) concerning loan modification and foreclosure rescue scams, with data from more than 3,500 reports filed between 2004 and 2009 with 3,000 of the reports originated in 2009. The analysis showed that the nature of foreclosure rescue scams shifted.

Early SARs contained information about loan modification/foreclosure rescue scams that targeted financially troubled homeowners with promises of assistance. The scams involved the homeowners signing quit claim deeds, and resulted in loss of equity in or title to their property.

The scams described in later SARs reflect an evolution into advance fee schemes, in which purported loan modification or foreclosure rescue specialists promised to arrange modification of a homeowner’s mortgage for more favorable repayment terms. Following receipt of large advance fees, scammers rarely, if ever, provided any service.

The top metropolitan regions for mortgage loan fraud between Jan. 1, 2009, and June 10, 2010, were located in the states of Florida, California, New York, New Jersey, Pennsylvania, Illinois, Indiana, Wisconsin, District of Columbia, Virginia, Maryland, West Virginia, Arizona and Georgia.

Let me know if you have any questions. Thanks.

Ralph T. Wutscher

Kahrl Wutscher LLP

The Loop Center Building

105 W. Madison Street, Suite 2100
Chicago, Illinois 60602
Direct: (312) 551-9320

Fax: (866) 581-9302
Mobile: (312) 493-0874

RWutscher@kw-llp.com

http://www.kw-llp.com

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From: Ralph T. Wutscher [mailto:rwutscher@krw-llp.com]
Sent: Thursday, June 17, 2010 8:20 PM
To: Ralph Wutscher
Cc: Chicago Office; D.C. Office; SoCalOffice
Subject: FYI: More FTC Actions Against Fraudulent Loan Mod Companies

The Federal Trade Commission announced several new developments in its crackdown on fraudulent loan modification and foreclosure relief companies. One settlement order bans 16 marketers from the mortgage modification or foreclosure relief business, another requires payment of $11.4 million for violating a previous court order the FTC obtained against the same scammer for fraudulent telemarketing practices, and a new FTC lawsuit charges another online marketing operation with masquerading as a government mortgage assistance program.

The FTC is focusing on companies that charge consumers up-front fees and made false promises that they could get their loans modified or prevent foreclosure.

Some highlights include:

- Impersonation of MakingHomeAffordable.gov

- “Federal Loan Modification Law Center,” charging largely upfront fees of as much as $3k but not delivering services

- False claims of being able to obtain mortgage loan modifications for consumers in all or virtually all cases, false “money-back guarantees,” and false statements of affiliation with HOPE NOW

- Misleading “official government agency seals” or logos and links to federal government Web sites

For more detailed information, and copies of the court filings, please see:

http://www.ftc.gov/opa/2010/06/loanmods.shtm

Let me know if you have any questions. Thanks.

Ralph T. Wutscher

Kahrl Wutscher LLP

The Loop Center Building

105 W. Madison Street, Suite 2100
Chicago, Illinois 60602
Direct: (312) 551-9320

Fax: (866) 581-9302
Mobile: (312) 493-0874

RWutscher@kw-llp.com

http://www.kw-llp.com

Our updates are available on the internet, in searchable format, at: http://updates.kw-llp.com

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The Editor's Bio

Ralph T. Wutscher
Maurice Wutscher LLP
20 N. Clark Street, 33rd Floor
Chicago, Illinois 60602
Direct: (312) 493-0874
RWutscher@MauriceWutscher.com
https://www.MauriceWutscher.com/

Ralph Wutscher's practice focuses primarily on representing depository and non-depository mortgage lenders and servicers, as well as mortgage loan investors, distressed asset buyers and sellers, loss mitigation companies, automobile and other personal property secured lenders and finance companies, credit card and other unsecured lenders, and other consumer financial services providers. He represents the consumer lending industry as a litigator, and as regulatory compliance counsel.

Ralph has substantial experience in defending private consumer finance lawsuits, including cases ranging from large interstate putative class actions to localized single-asset cases, as well as in responding to regulatory investigations and other governmental proceedings. His litigation successes include not only victories at the trial court level, but also on appeal, and in various jurisdictions. He has successfully defended numerous putative class actions asserting violations of a wide range of federal and state consumer protection statutes. He is frequently consulted to assist other law firms in developing or improving litigation strategies in cases filed around the country.

Ralph also has substantial experience in counseling clients regarding their compliance with federal laws, and with state and local laws primarily of the Midwestern United States. For example, he regularly provides assistance in connection with portfolio or program audits, consumer lending disclosure issues, the design and implementation of marketing and advertising campaigns, licensing and reporting issues, compliance with usury laws and other limitations on pricing, compliance with state and local “predatory lending” laws, drafting or obtaining opinion letters on a single- or multi-state basis, interstate branching and loan production office licensing, evaluations and modifications of new or existing products and procedures, debt collection and servicing practices, proper methods of responding to consumer inquiries and furnishing consumer information, as well as proposed or existing arrangements with settlement service providers and other vendors, and the implementation of procedural or other operational changes following developments in the law.

Ralph is a member of the Governing Committee of the Conference on Consumer Finance Law. He is also the immediate past Chair of the Preemption and Federalism Subcommittee for the ABA's Consumer Financial Services Committee. He served on the Law Committee for the former National Home Equity Mortgage Association, and completed two terms as Co-Chair of the Consumer Credit Committee of the Chicago Bar Association.

Ralph received his Juris Doctor from the University of Illinois College of Law, and his undergraduate degree from the University of California at Los Angeles (UCLA). He is a member of the national Mortgage Bankers Association, the American Bankers Association, the Conference on Consumer Finance Law, DBA International, the ACA International Members Attorney Program, as well as the American and Chicago Bar Associations.

Ralph is admitted to practice in Illinois, as well as in the United States Court of Appeals for the Seventh Circuit, the United States District Courts for the Northern and Southern Districts of Illinois, and the United States District Court for the Eastern District of Wisconsin, and has been admitted pro hac vice in various jurisdictions around the country.