Obama administration and states target mortgage scammers

Alarmed by the proliferation of con artists taking advantage of Americans trying to keep their homes out of foreclosure, the Obama administration Monday announced federal and state agencies would work together to crack down on scams.

The effort was announced by Attorney General Eric Holder, Treasury Secretary Tim Geithner and others. It targets those who are offering hope -- usually at a high cost -- to troubled homeowners but providing little actual help.

"For millions of Americans, the dream of home ownership has become a nightmare because of the unscrupulous actions of individuals and companies who exploit the misfortune of others," said Holder. He said the message of this joint operation is clear: "If you discriminate against borrowers or prey on vulnerable homeowners with fraudulent mortgage schemes, we will find you and we will punish you."

Geithner said these scams are often used by companies that portray themselves as government agencies and adopt Internet addresses that appear official. Such firms "callously rob Americans of their savings and potentially their homes," he said. "We will shut down fraudulent companies more quickly than before. We will target companies that otherwise would have gone unnoticed under the radar."

The officials said 20 states have started to crack down on these scams. Illinois Attorney General Lisa Madigan, who participated in Monday's announcement, said she plans two lawsuits, which will bring her total to 24 since 2006. "It's not a question of if we'll come after you," she said. "It's only a question of when."

The scope of the problem was suggested by a recent FTC survey of advertising by mortgage foreclosure rescue operations. The survey identified 71 companies running suspicious ads.

The program announced Monday puts significant emphasis on greater coordination among agencies, better education for consumers and increased warnings and alerts. Treasury's Financial Crimes Enforcement Network also promised more aggressive targeting of scammers.