A grassroots campaign is being organized by a national group to warn people about loan-modification scams and allow them to file reports of suspected scams.
NeighborWorks America, a network of community nonprofits, will join Long Island and state officials Monday in Melville to publicize loanscamalert.org. The site will have real stories from victims as well as tips on how to spot scams and who can help. Federal and state prosecutors are partners in NeighborWorks’ effort.
In what might be one of the most powerful tools, the site will allow people to name names and give details of suspected scams to the Lawyers' Committee for Civil Rights. Reports can also be made in Spanish.
Loan-modification companies negotiate with lenders to get lower interest rates or other mortgage changes for troubled borrowers. Some guarantee a loan modification, a red flag. Others charge upfront fees for services in states where it’s illegal, such as New York, but never do anything for the homeowner.
“Those reports are going into a national database and they look for trends,” said Eileen Anderson, senior vice president of the Community Development Corp. of Long Island, a nonprofit housing agency. “If they can take subpoenaes out against bad guys, they’ll do that.”
About 200 community groups, including religious and social services organizations, have been invited to hear a panel of experts Monday talk about how to warn troubled homeowners of rescue scams.
The effort has been in the works for about a year, since federal officials began cracking down on the burgeoning and largely unregulated loan modification industry.
In April, U.S. Treasury officials announced a publicity campaign to alert consumers. At the same time, they said they had warned 71 companies with “potentially deceptive” ads, including firms with names that sounded like government agencies, and filed five cases against loan-modification firms that allegedly cheated or misled clients.