If you’re a struggling homeowner trying to save your house from foreclosure, beware the latest mortgage-relief scam: Dozens of companies have been accused of falsely promising mortgage relief—while collecting millions of dollars in illegal upfront fees, according to a report by the Los Angeles Times.
The Consumer Financial Protection Bureau recently filed three lawsuits against eight firms accused of ripping off homeowners. The agency says the companies collected more than $25 million in illegal upfront fees while promising to modify mortgages or prevent foreclosures.
The crackdown on the mortgage-relief scam is code-named “Operation Mis-Modification”.
“These companies pocketed illegal fees, taking millions of hard-earned dollars from distressed consumers, and then left those consumers worse off than they began,” Richard Cordray, the bureau’s director, told the Los Angeles Times. “These practices are not only illegal, they are reprehensible.”
According to the bureau, there are a few red flags to tip off potential victims. Consumers should be wary of any demands for upfront payments and any guarantee that a modification or other assistance will be obtained.
The Federal Trade Commission also filed six lawsuits, according to the Los Angeles Times. Overall, officials from 15 states—including Florida, Illinois and New York—have filed a combined 32 lawsuits.