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Scams Target Latino Homeowners

As more and more desperate homeowners seek help in saving their homes from foreclosure, consumer advocates have detected new heartbreaking scams.

Some of the those who provided Hispanics with subprime and no-down-payment mortgages they could not afford are now targeting Latinos trying to refinance their homes, says Erlinda Avena, president of the San Diego Home Loan Counseling and Education Center.

“[Scammers] are promising to refinance or get loan modifications that they can’t guarantee. They’re charging an arm and a leg, promising the world, and the result is that people end up losing their homes,” says Avena, who is Mexican American.

The U.S. Department of Housing and Urban Development, Federal Trade Commission, Justice Department, and Treasury Department are cracking down on mortgage fraud that victimizes all types of homeowners, but Latinos are disproportionately affected, HUD Secretary Shaun Donovan says.

“The very predators responsible for some of the housing products that caused the housing crisis are responsible for this,” says Donovan. “We need to bring those who unfairly and illegally target Hispanics to justice.”

Publicity about President Barack Obama’s efforts to help homeowners refinance mortgages has helped these scammers, Donovan says. Many imply they are linked to the federal government—for example, the Federal Loan Modification Law Center of Irvine, California, which the FTC accused of charging $1,000 to $3,000 upfront to refinance homes while making little or no effort to contact lenders to renegotiate mortgages.

Scammers advertise in English and Spanish on the radio, Internet, and television, and use telemarketers to collect information and payments from homeowners, says the FTC, which recently sent warning letters to 71 companies suspected of deceptively marketing mortgage loan modifications or foreclosure rescue services.

AARP Segunda Juventud examines how the changes proposed by the Obama administration will impact older Hispanics and their families. In our exclusive series, President Obama's First 100 Days, we look at retirement, health care, the economic stimulus, and mortgage bailout efforts, and offer incisive interviews with Latinos in Obama's inner circle, including Interior Secretary Ken Salazar and Cecilia Muñoz, the president's director of Intergovernmental Affairs.

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