Sketchy mortgage vultures keep circling.
As we’ve written, they’re preying on distressed homeowners instead of their old scheme, hawking houses people can’t afford.
Problem is, the authorities charged with stopping the often illegal practices are overwhelmed.
Propublica/Marketplace: During the go-go years of the real estate bubble, shady mortgage brokers thrived, thanks to the sluggish response of regulators and law enforcement agencies. Amid the ruins of the crash, there’s a new boom attracting unscrupulous mortgage professionals: “Foreclosure rescue” companies promising — in exchange for a large up-front fee — to persuade lenders to modify desperate homeowners’ mortgages. And authorities are again finding themselves ill-equipped to deal with the deluge.
In a giant game of whack-a-mole, law enforcement agencies at all levels across the country have filed suit against 150 such companies, but they continue to proliferate, and the number of consumer complaints continues to rise.
California Attorney General Jerry Brown is one of those on the offensive, going after numerous companies in his state.
“The loan modification industry is teeming with confidence men and charlatans, who rip off desperate homeowners facing foreclosure,” Brown said in July. “Despite firm promises and money-back guarantees, these scam artists pocketed thousands of dollars from each victim and didn’t provide an ounce of relief.”
But as Propublica points out, even when officials go after one of these companies, the results can be poor.
Four states have sued 21st Century, and at least three more have open investigations. Over 150 consumers from more than 30 states have filed complaints against 21st Century with the Better Business Bureau. No active firm has more complaints.
Yet the company forges on. Operating under a new name, Fidelity National Legal Services, it continues to solicit consumers nationwide, even in states where authorities have won court injunctions.
Tthe game has changed but the players have not. Subprime is alive and well, though it has a new name.