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ADVERTISING COMPLIANCE SERVICE
SAMPLE ISSUE: Article #3:
MULTI-AGENCY CRACKDOWN TARGETS FORECLOSURE RESCUE SCAMS, LOAN MODIFICATION FRAUD
COORDINATED EFFORT CUTS ACROSS FEDERAL AND STATE GOVERNMENT AND PRIVATE SECTOR
On April 6, 2009, 2010, the Obama Administration announced a new coordinated effort across federal and state government and the private sector to target mortgage loan modification fraud and foreclosure rescue scams. The new effort aligns responses from federal law enforcement agencies, state investigators and prosecutors, civil enforcement authorities, and the private sector to protect homeowners seeking assistance under the Administration's Making Home Affordable program from criminal actors looking to perpetrate predatory schemes.
JOINT PRESS CONFERENCE
At a joint press conference, Treasury Secretary Timothy Geithner, Attorney General Eric Holder, Department of Housing and Urban Development (HUD) Secretary Shaun Donovan, and, on behalf of state enforcers, Illinois Attorney General Lisa Madigan, joined FTC Chairman Jon Leibowitz in warning consumers about these types of scams and in encouraging consumers to seek out free, HUD-approved housing counselors for help with their mortgages. FTC and Illinois Attorney General Madigan also announced enforcement actions and initiatives.
HOW FTC FITS IN
Also on April 6, 2009, 2010, the U.S. Department of the Treasury, the U.S. Department of Justice (DOJ), HUD, FTC, and the Illinois Attorney General discussed new initiatives to coordinate information and resources across agencies. Reason: to maximize targeting and efficiency in fraud investigations, alert financial institutions to emerging schemes, step up enforcement actions and educate consumers to help those in financial trouble avoid becoming the victims of a loan modification or foreclosure rescue scam.
Earlier this year, the Administration announced "Making Home Affordable." This is a program to help eligible homeowners refinance or modify their mortgages. The plan will help up to 7 to 9 million families restructure or refinance their mortgages to lower their monthly payments and make their mortgages affordable now and in the future. This program also brings greater opportunity for criminal actors to prey upon consumers seeking assistance.
FTC SURVEY IDENTIFIES 71 COMPANIES RUNNING SUSPICIOUS ADS
FTC recently surveyed online and print advertising for mortgage foreclosure rescue operations nationwide and identified some 71 distinct companies running suspicious ads. The Treasury Department's Financial Crimes Enforcement Network (FinCEN) also conducted a recent study on mortgage fraud. That study found that between July 2002 and June 2008, depository institutions filed nearly 180,000 mortgage fraud suspicious activity reports (SARs), with those involved in mortgage fraud often involved in other types of crime as well.
"The Administration's Making Home Affordable program is a critical piece of our efforts to stabilize the financial system and ensure that it works with our efforts to grow the economy." So said Treasury Secretary Tim Geithner. "American homeowners desperately need the relief this program offers, but the very last thing they need is to be taken advantage of as they try to hold on to their homes. This Administration is deeply committed not just to providing at-risk homeowners with assistance but also to cracking down on anyone who seeks to defraud them."
ADVANCED TARGETING EFFORT IS ALREADY UNDERWAY
To this end, Treasury and FinCEN announced an advanced targeting effort already underway. This effort is intended to combat fraudulent loan modification schemes and coordinate ongoing efforts across agencies to investigate fraud and assist with enforcement and prosecutions. FinCEN will marshal information about possible fraudulent actors, drawing upon a variety of data available to law enforcement, regulatory agencies, and the consumer protection community, for the purpose of identifying and proactively referring potential criminal targets to participating law enforcement authorities.
As part of the multi-agency effort, Attorney General Eric Holder outlined ways in which DOJ has been cracking down on mortgage fraud schemes, including several successful convictions of scam artists in recent months. He also emphasized the Justice Department's commitment to working with federal and state law enforcement and regulatory partners to ensure a coordinated and comprehensive response to the problem, describing the department's work with FTC and state attorneys general to reinvigorate the Executive Working Group, which allows partners to coordinate and exchange intelligence on consumer fraud and competition issues.
"For millions of Americans, the dream of home ownership has become a nightmare because of the unscrupulous actions of individuals and companies who exploit the misfortune of others." So said Attorney General Eric Holder. "The Department of Justice's message is simple: if you discriminate against borrowers or prey on vulnerable homeowners with fraudulent mortgage schemes, we will find you, and we will punish you."
ONE COMPANY SPENT $9 MILLION ON TV AND RADIO ADS: FTC
On the civil enforcement side, FTC has filed five new cases to halt the allegedly illegal practices of individuals and companies offering loan modification or foreclosure scams. According to FTC, one company spent $9 million on TV and radio ads in less than one year. FTC is also joining forces with a wide array of government, non-profit, and mortgage industry members to launch a new consumer education campaign to help those in financial trouble avoid becoming the victims of a loan modification or foreclosure rescue scam.
FTC ANNOUNCES FIVE LAW ENFORCEMENT ACTIONS, SENDS 71 WARNING LETTERS
"Today the FTC announced five law enforcement actions and sent 71 warning letters to operations using deceptive tactics to market their mortgage loan modification and home foreclosure relief services." So said Jon Leibowitz, FTC Chairman. "We're enforcing the law against these scam artists who are deceiving consumers while they're down; we're putting others on notice that unless they change their ways, they're next; and we're working with other government agencies, non-profits, and mortgage servicers to reach out to our neighbors in distress with the details of how and where to get help."
NEW MULTI-AGENCY INITIATIVE
Have Already Taken Law Enforcement Action
Under a new multi-agency initiative, there will also be strong coordination between federal and state governments that are battling foreclosure scams. On April 6, 2009, 2010, FTC released a list of over 20 states that have already taken law enforcement action on loan modification or foreclosure rescue scams. For example, also on April 6, 1009 in Illinois, Attorney General Madigan is filing lawsuits against two Chicago-area mortgage rescue fraud schemes seeking temporary restraining orders to immediately stop the defendants from providing mortgage rescue services.
Lawsuits Filed in Illinois
The joint release pointed to the numerous rescue fraud lawsuits filed in Illinois–24 to date–as illustration of how Attorney General Madigan and other state attorneys general are using their enforcement authority to prosecute mortgage foreclosure rescue fraud across the U.S. On the state level, over 150 enforcement actions have been brought against mortgage rescue companies.
"We have repeatedly found that these foreclosure rescue operations are swindling desperate homeowners out of money they can't afford to lose," said Illinois Attorney General Madigan. "Struggling homeowners need to know that free help is available. The 24 lawsuits I have filed prove foreclosure rescue operators don't help. They don't call your lender, they don't modify your loan, and they don't represent you in court if you're in foreclosure. All they do is take your money. By combining our powers, state and federal authorities are sending a clear message to these mortgage rescue scammers: It is not a question of if we'll come after you; it is only a question of when."
LAWYER's REFERENCE SERVICE
Joint Press Release, Federal Trade Commission, Department of Treasury, Department of Justice, Housing and Urban Development, and Illinois Attorney General, April 6, 2009, 2010.
# # #
Volume XXIX
Issue 8
April 20, 2009, 2010
Pages 17-20
Advertising Compliance Service is a REFERENCE COMPENDIUM of JLCom Publishing Co., L.L.C.
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