Commentary: We're cracking down on those who defraud Americans

Timothy F. Geithner, Eric Holder and Shaun Donovan

McClatchy News

For most of our nation's history, pursuing the American Dream has involved owning a home. Few decisions have been financially bigger, and few have been more important, as families seek to establish roots in a community and secure their futures.

But for millions of Americans today, that dream has faded.

To make mortgage payments, many are cutting back on such essentials as food and health care. And yet, where a parent has been laid off or a child has suffered a medical emergency or some other financial hardship arises, cutting back on essentials may not be enough, and families are facing foreclosure.

On Feb. 18, President Obama responded to this crisis with bold action. In launching his Homeowner Affordability and Stability Plan, he has helped bring mortgage rates down to historic lows; provided a mechanism for homeowners whose house values have fallen below their loan balances to refinance into affordable mortgages; and created a way for those with at–risk loans to get their mortgages altered and their monthly mortgage payments lowered. These efforts will provide immediate assistance for up to 7 million to 9 million Americans.

But just as the administration intensifies its efforts to help homeowners, those who prey on the most vulnerable are intensifying their efforts as well. Through fake "mortgage modification'" and "foreclosure relief" companies, these predators are robbing Americans of their savings, their homes and their futures.

Currently, the FBI is investigating more than 2,100 mortgage fraud cases, up almost 400 percent from five years ago. It has assigned more than twice the number of agents to investigate mortgage scams. In the last few months alone, federal prosecutors have obtained important convictions that shed new light on the illegal abuse of homeowners. In Kansas, perpetrators charged homeowners facing foreclosure fees for services never delivered, and then filed fraudulent bankruptcy petitions on their behalf. In New York, similar operators got homeowners to "sell" their homes to "straw buyers" on the false promise that they would get their homes back after the houses had been saved from foreclosure. The Federal Trade Commission recently filed five new cases to halt illegal practices and has identified – and delivered very serious warnings to – approximately 71 distinct companies that are running suspicious ads.

In a major step this week, the Department of the Treasury, the Department of Justice, the Department of Housing and Urban Development and the Federal Trade Commission announced a new joint effort that cuts across federal and state governments and the private sector to combat foreclosure rescue scams. Led by the Treasury's Financial Crimes Enforcement Network, this effort creates an advanced targeting process to streamline investigations and prosecutions, and provides financial institutions with a new advisory to spot and report questionable loan modification schemes.

For American homeowners, this means that fraudulent companies will be shut down more quickly; companies that otherwise would have gone unnoticed will be identified and investigated; and the government's ability to identify and prosecute anyone involved in mortgage rescue scams will be bolstered.

It also enhances the ability of homeowners in need to obtain help, regardless of race, ethnicity or income level. The unfortunate fact is that during financial crises, disadvantaged communities often suffer more than most, both because often they don't have the resources to ride out bad times and because that is where con artists often focus their schemes. But rest assured we will combat mortgage fraud and discrimination wherever we find it.

To better ensure success, we also need the help of informed consumers and housing market participants. That is why the Department of Housing and Urban Development is delivering new warnings about loan modification fraud to department field offices, housing authorities, state and local agencies and non–profit organizations. In addition, the Federal Trade Commission will soon launch a new consumer education campaign.

American homeowners should be wary of anyone or any organization claiming to guarantee success against foreclosure, or charging up–front fees for loan modification services. Homeowners can get free help spotting these red flags, which, if missed, can lead to families losing money and falling even further behind on their mortgage payments.

Anyone with questions about how the administration's new plan works can find answers at: makinghomeaffordable.gov. The site provides one–stop shopping for programs to help American homeowners. In addition, the 1–888–995–HOPE hotline offers free foreclosure assistance.

American homeowners have been through enough these past two years. The last thing they need is to be taken advantage of while pursuing assistance to stay in their homes. To those individuals and companies whose illegal practices have harmed Americans, understand that if you prey on homeowners with fraudulent mortgage schemes, or discriminate against borrowers, we will bring you to justice.

And to the American people, who are all affected by the current economic crisis, know that this administration will never stop working on your behalf. Our country is facing the most severe financial crisis in generations. To meet such an extraordinary challenge, we are taking extraordinary steps. Our economic recovery plan will create or save 3.5 million jobs, and gives 95 percent of working Americans a tax cut. Our financial stability plan will help make sure the financial system provides the credit necessary for recovery.

Each of us has a stake in getting the economy back on track and Americans back to work. If fewer people lose their jobs, more people will stay in their homes. If more people stay in their homes, banks will grow strong again. If banks grow stronger, they will resume lending so families can make necessary purchases and send their children to college and small businesses can go back to expanding and hiring.

These policies, coupled with strong law enforcement, will help turn the housing crisis around. Once headed in that direction, America will do what it has done time and again – not simply recover, but rebuild and emerge stronger than ever.

ABOUT THE WRITERS

Timothy F. Geithner is the U.S. treasury secretary, Eric Holder is the U.S. attorney general and Shaun Donovan is the secretary of the U.S. Department of Housing and Urban Development.