Photo: Latino Homeowners Victim of Modification Scams
Nearly half the victims of mortgage loan modification scams are of African-American, Hispanic, or Asian descent, according to statistics released today by the Homeownership Preservation Foundation (HPF), an independent national nonprofit dedicated to helping distressed homeowners navigate financial challenges and avoid mortgage foreclosure since 2004. Nearly one-in-four of the possibly fraudulent scams reported were in California.
Since February of last year, HPF has operated a specialty unit of their Homeowner’s HOPE™ Hotline (888-995-HOPE), a resource for financially distressed homeowners. The unit focuses on those who believe they have been victimized by a scam or have been approached by someone offering related services they suspect are fraudulent. Virtually half of the calls fielded since the hotline was launched were from homeowners who voluntarily identified themselves as African-American, Hispanic, or Asian.
“Repeated studies have shown that minorities were disproportionately targeted for predatory lending during the housing boom, and we have compelling evidence indicating that minorities are bearing the brunt of an unusually high percentage of mortgage scams,” said Colleen Hernandez, HPF’s CEO.
California far and away has the highest incident of reported possibly fraudulent activity, accounting for 22 percent of the calls. Florida was the second highest with 7 percent, followed by Texas with 5 percent, New York with 5 percent, and Georgia with 4 percent.
Miami ranked highest among cities for reported scams, followed by Los Angeles, Las Vegas, Houston, and Chicago. Interestingly, while California’s reported fraudulent activity was significantly higher than other states, only one city from the Golden State ranked in the top five, indicating that purported scam activity isn’t concentrated in any one area.
The Federal Trade Commission in February issued a rule prohibiting the payment of any upfront fees to negotiate mortgage reduction payments on behalf of a homeowner. Nevertheless, an untold number of companies and individuals continue to openly and flagrantly violate the rule, asking on average for an upfront fee of $2,589.58 to modify a mortgage. In virtually all instances, either no mortgage reduction was achieved or no work was actually performed.