Federal, state officials warn of foreclosure scam
By Bill Raack, St. Louis Public Radio
St. Louis, MO – Homeowners facing possible foreclosure are being warned about the growing scam of loan modification offers.
With foreclosure activity at near record highs in the St. Louis area and elsewhere, the number of cases of homeowners being scammed into modifying their loans is also skyrocketing.
The Federal Trade Commission says there were more than six-thousand complaints filed last year about these scams, where homeowners can be coerced into paying money upfront to companies claiming to help with refinancing. Missouri Attorney General Chris Koster says complaints are up one thousand percent since just two years ago.
"After an upfront fee is paid, the consumer simply gets no services. These outstate companies that are soliciting from the coasts will drawn in Missouri consumers and then simply abandon them as soon as they have the consumers money," Koster said at a press conference at the St. Louis Federal Reserve on Friday.
Koster says his office is prosecuting about a dozen cases right now and investigating another dozen companies, as well.
Illinois Attorney General Lisa Madigan says loan modification scams are among the worst she's seen.
"Whether these folks call themselves loan mod consultants or mortgage rescuers, these are truly con artists and they are nothing more than opportunistic predators," Madigan said.
Groups of local volunteers fanned out across St. Louis, St. Charles and St. Clair Counties Friday afternoon to distribute literature about loan modification scams.