Staying Fit
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Twenty distressed homeowners received offers of help to restructure their troubled loans from a “service” company operating out of glossy Orange County, California, prosecutors say.
For people trying to survive hard economic times, the prospect of lower mortgage payments was welcome news. But it was all a scam, prosecutors allege, and victims who paid upfront for the help that never came each lost an average of about $5,000.
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Seven defendants have been charged with crimes including grand theft, money laundering and unlawful loan modifications and await trial. If they are convicted, their alleged misdeeds would be just the tip of an iceberg that often sinks older Americans struggling to hold onto their homes amid a pile of bills.
Authorities sound the alarm
Today federal regulators and law enforcement officials are actively warning consumers about these types of solicitations, which often come from low-rent boiler rooms where scammers use call lists targeting older, vulnerable homeowners.
“With large equity stakes, they are big-time targets, especially considering their potential for cognitive impairment,” said David Neil Kirkman, a former special deputy attorney general in North Carolina who spent 20 years prosecuting elder fraud and is the author of the 2020 book Elder Fraud Wars.
The scope of the crimes is largely unknown, since much of the enforcement and prosecution of the crimes occurs at the state, county and local levels, Kirkman said.
In its 2020 Elder Fraud Report, the FBI said fraud losses reported to the bureau by victims age 60 and older were nearly $1 billion. The losses arose in crimes that ran the gamut from extortion to tech-support scams. However, Kirkman, based on his experience as a county prosecutor and research cited in his book, believes such estimates could be off by a factor of 40, because so few of the crimes are reported to law enforcement.
The Consumer Financial Protection Bureau (CFPB), a federal agency set up to safeguard against financial abuse, recently warned that millions of struggling homeowners should be wary of mortgage loan modification scams, set up to take consumer’s money on the false promise of preventing a foreclosure.
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