GAO Cautions Against Four Scams Targeting Financially Strapped Homeowners

The Sacramento Business Journal recently ran a story on a General Accountability Office report cautioning financially strapped homeowners against four types of scams targeting them:

• The GAO said consumers are being confronted with “advance-fee loan modification schemes” -- in which the homeowner will pay a fee up-front, then receive little or no service -- and sales-leaseback schemes, in which a homeowner is convinced to transfer the deed to the scammer with the false promise of being able to remain in the home.

• The two newer schemes, according to the GAO are:
  
  • a forensic mortgage loan audit scam, which the report called a “new twist on foreclosure rescue fraud." The homeowner pays a fee in hopes of using audit results to uncover regulatory violations in the mortgage loan origination and thereby reduce the loan principal or even cancel the loan;
  
  • a variation of the advance-fee scam, in which “a person promises to eliminate a homeowner's mortgage or other debt on the premise that the debts were illegal or the government would assume responsibility,” according to Matsui’s statement.

For more, see GAO report targets new mortgage scams.

For the GAO report (43 pages), see Homeownership Preservation (Federal Efforts to Combat Foreclosure Rescue Schemes Are Under Way, but Improved Planning Elements Could Enhance Progress). Go here for report summary.