Government Establishes Task Force to Combat HAMP Scams, But Not Foreclosure Scams

Treasury, SIGTARP, and the Consumer FInancial Protection Board just formed a task force to fight HAMP fraud.

Mind you, they’re not aiming to fight the fraud servicers engage in–that is, using HAMP as a way to get force homeowners to stop paying their mortgages and then using that “default” as a means to tack on fees and ultimately foreclose.

Nope, our government is going to fight other fraudsters.

SIGTARP, the CFPB, and Treasury investigate mortgage modification schemes, among other things, in which companies charge struggling homeowners a fee in exchange for false promises of lowering the homeowner’s mortgage debt or payments through HAMP, a foreclosure prevention program funded by the Troubled Asset Relief Program (TARP) and administered by the U.S. Department of the Treasury.

omeowners struggling to make their mortgage payments should beware of con artists and scams that promise to save their homes and lower their mortgage debt or payments.
If you are struggling to pay your mortgage and are seeking a mortgage modification, keep the following tips in mind:

  • You can apply to the federal Home Affordable Modification Program (HAMP) on your own or with free help from a housing counselor approved by the U.S. Department of Housing and Urban Development (HUD).  Applying to the program is always FREE.  For more information on how to apply, call the Homeowner’s HOPE™ Hotline at 1-888-995-HOPE (1-888-995-4673) or visit
  • Only your mortgage servicer has discretion to grant a loan modification.  Therefore, no third party can guarantee or pre-approve your HAMP mortgage modification application.
  • Beware of anyone seeking to charge you in advance for mortgage modification services – in most cases, charging fees in advance for a mortgage modification is illegal.
  • Paying a third party to assist with your HAMP application does not improve your likelihood of receiving a mortgage modification.  Accordingly, beware of individuals or companies that ask you for payment and tout success rates or claim to be “experts” in HAMP.
  • If an individual or company claims to be affiliated with HAMP or displays a seal or logo representing the U.S. government in correspondence or on the Web, you should check the connection by calling the Homeowner’s HOPE™ Hotline.
  • Beware of individuals or companies that offer money-back guarantees.
  • Beware of individuals or companies that advise you as a homeowner to stop making your mortgage payments or to not contact your mortgage servicer.

Financially troubled homeowners can avoid scams by working with a HUD-approved housing counselor to understand their options and to apply for assistance.  Assistance from HUD-approved housing counselors is free, and homeowners can reach them by calling the Homeowner’s HOPE™ Hotline at 1-888-995-HOPE (1-888-995-4673) or by visiting

Meanwhile, the government is trying to settle with servers for their fraud.

I’m not angry that the government is trying to protect struggling homeowners. But they’ve badly misjudged where the biggest threat lies.

12 replies
  1. Peterr says:

    I don’t think they’ve misjudged anything. I think it is more that they are deliberately dangling this out there in hopes that no one will notice what they’re NOT doing elsewhere.

    Also, much of what is listed in the bullet points protects the mortgage servicers as much as it does the borrowers. The servicers don’t want the hassles of trying to correct the problems caused by scammers, so if the DOJ etc can cut down on the scams, it makes the banksters very very happy.

    Which, in the end, is what everything about the foreclosure mess seems to boil down to.

    [Also, having the government tell people not to strategically default is a plus from the bankster’s POV. Sure, companies strategically default with relative impunity, in order to straighten out a bad balance sheet. Troubled companies walking away from bad loans/debts (“you cut my debt in half and I pay, or I declare bankruptcy and you get pennies down the road sometime.”) is SOP in the business world . . . but shhhhhh: don’t tell the underwater homeowners.]

  2. Peterr says:

    Also, this bit really irks me: “Only your mortgage servicer has discretion to grant a loan modification.”

    Why servicers? Isn’t the owner of the mortgage the one who ought to have that kind of power?

    Servicers are the bookkeepers, not owners. They accept payments, assess interest and penalties, and pass the proceeds of the loan on to the owner(s) of the mortgage, all for a tidy bookkeeping fee. It is against the interests of the servicers to want to modify the terms of the loan. They have nothing to gain by it, and potentially may lose the servicing of the newly-modified loan.

    But if the question starts with “why . . .” then the answer begins with “$$$” and that $$$ ends up accruing to the banks.

    That’s the way the banksters got HAMP written, after all.

  3. scribe says:

    To be fair, the government targeting these particular scamsters is not a bad idea. (I have a story to relate, below.) But, the worst scamsters are the banks and lenders and their minions. And they continue to get a pass.

    Now, to my story. We once had a client come in who made the mistake of dialing the number on one of those signs you see on phone poles at traffic lights, the ones that say “Avoid Foreclosure”. The scheme was that the folks who would remedy his problems would deed the property to a straw person, promise to cover the current owner’s bills and mortgage for 6 months or a year, then deed it back to our hapless pigeon with a new mortgage, come the end of that time, all for a nominal service charge. In reality, what they would do is mine the equity in the property, divvying it up between themselves (about $100k cash out) and their crew and leaving the homeowner with a much higher mortgage and $500, assuming they didn’t just keep the house and kick our hapless pigeon into the street. This bunch was a veritable United Nations of crime: the ringleader was a Jamaican woman most reminiscent of that fortuneteller lady from the 90s (who went to prison for wire fraud), her Ghanaian boyfriend, a Russian woman straw purchaser, a couple of lawyers from an adjacent state (and not admitted in ours) with names one might think were Jewish or Russian, and a couple other folks who played minor roles. Long story short, we threw a suit together alleging these folks were carrying out consumer frauds under our state’s consumer fraud law – by holding themselves out as mortgage brokers and debt relief agents without the appropriate licensing – and that the lawyers (who’d done a closing from the pigeon to the straw purchaser) were engaged in the crime of the unauthorized practice of law (by doing the closing involving realty and deeds in our state), and that these folks were all in a conspiracy (which they were) and therefore were all liable to us and the court should undo it.

    Thankfully, we caught the local judge in a good mood that day and when she issued the injunction and hauled the lawyers into court, the crew put their tails between their legs and gave us what we wanted, though I didn’t get what I wanted, which was prosecutions and jail time for some or all of them.

    A rare case, in that the pigeon had enough sense to get a lawyer who knew how to address these kind of scams. But it only addressed one case and not the systemic fraud the banks have perpetrated, scot-free, for years now.

  4. William Ockham says:

    @scribe: The really sad thing is that the scam the big guys have been running for the last decade is pretty much the exact same thing as the grifters in your story. MERS plays the role of the straw purchaser, divvying up the equity was done by the players in the mortgage-backed security business and the kicking to the street was done by the big financial institutions.

  5. rugger9 says:

    David Dayen and Yves Smith had articles yesterday [FDL News and Naked Capitalism, respectively] about how a robosigning whistleblower turned up dead on the day of her sentencing prior to turning state’s evidence. It’s quite clear that the Obama WH thinks they’ll tap into all of that bankster money in the election, but they are stupid to believe Timmeh and Helicopter Ben when these shills tell them this stuff.

    I’m not sure what it will take to make Obama’s epiphany occur, but he’d better “get it” soon, since I see a stealth candidate well funded by AFP and Crossroads and those orgs handling the ground game too, with unlimited money clogging up the airwave buys. The only way Obama survives politically is by being a progressive and tapping the OWS.

  6. pdaly says:

    @P J Evans:

    My prior long comment may have disappeared into moderation cloud, so here is a shorter reply.

    John O’Brien (Register of Deeds in Massachusetts’ Essex County, Southern District) has a form letter for borrowers to send to the Servicers of their mortgages to learn to identity of the mortgage owner.

    You’ll have to search for June 2011 in “Older News stories” link to find the form letter.
    I’ll try again to post it here in several separate comments.

    Here are O’Brien’s instructions to homeowner:


    These letters allow you to request information from your servicer/lender regarding the ownership of your mortgage.

    Your letter requesting the identity of the owner of your loan should be addressed to your LOAN SERVICER.

    Typically your loan servicer is NOT the owner of your loan but merely the party that processes your payments and sometimes acts as if they own your loan.

    You should use the CUSTOMER SERVICE address on your monthly statements (unless a specific address is identified on your statements for correspondence).

    Always send your letters FIRST CLASS MAIL and CERTIFIED MAIL RETURN RECEIPT REQUESTED and KEEP A COPY of your letter for your files with your certified mailing receipt.

    When your signed return receipt card comes back (green card), make sure you keep it with the copy of your letter so that you know on what day they received your request.

  7. pdaly says:

    Form Letter:

    ________________________, 2011

    Loan Servicer Name
    City, State Zip

    RE: Borrower’s Name
    Property Address
    Loan Number (from monthly statement)
    Originating Bank
    Date loan was originated


    Dear Sir/Madam:

    Please accept this letter as a Qualified Written Request (“QWR”) pursuant to the Real Estate Settlement Procedures Act (“RESPA”) at 12 U.S.C. 2605(e) as amended (“RESPA”).
    The requests made hereunder are directed to you as my loan servicer. These requests relate directly to the servicing of my loan insofar as you, as the loan servicer, cannot lawfully be servicing a loan that cannot be shown to be legally owned by an identified person or entity.

    In the reported news, any banks and mortgage companies have been accused of being involved in predatory lending and servicing schemes. Such matters are currently being investigated by federal and state authorities in all 50 states. As a citizen, I am extremely concerned about such practices by anyone, let alone my own mortgage company or anyone who may hold a beneficial interest in my loan.

    I am worried that potential fraudulent and deceptive practices by unscrupulous banks, loan servicers and foreclosure mill attorneys involving the sale and transfer of mortgage servicing rights; deceptive and fraudulent servicing practices to enhance balance sheets; deceptive, abusive and fraudulent accounting tricks which may involve my mortgage account and/or any alleged debt or payments for which I may be legally obligated.

    To independently validate my concerns and in accordance with the applicable law stated herein, please respond to the following requests:
    1.) Please fully identify the owner of my loan by name, address and phone number.
    The “owner” of my loan shall be defined as the person or entity that purports to be lawfully entitled to the payments due under any promissory note that I allegedly signed when the loan was originated. If the “owner” is a so-called “securitized trust”, please identify:
    a.) the name of the specific trust in which my loan is supposedly “pooled” (and not simply the name of the Trustee);
    b.) the CUSIP number for the trust; and
    c.) the specific date my loan was sold into said trust.

    2.) Please provide a certified copy of my promissory note in its current condition showing all endorsements and/or allonges that show that the purported “owner” of my loan maintains legal “holder in due course” status under M.G.L. c. 106, s. 3-302 as of today’s date.

    3.) Please fully identify the current holder of my mortgage by name, address and phone number.
    a. If my mortgage is a MERS-designated mortgage, please identify the principal for whom MERS purports to act and provide written proof of the authorization of MERS to act for the lender with respect to my mortgage;
    b. Please send me a MERS Summary Report, also referred to as a MERS Milestone Report showing me all transfers of servicing rights and beneficial interest rights;
    c. If my mortgage has been assigned to another person or entity at any time, please provide certified copies of each and every assignment of the mortgage and advise whether or not such assignment was recorded on the public land records;

    d. If my mortgage is a MERS designated mortgage, please confirm or deny whether my promissory note was sold separately from my mortgage obligation and identify;

    i. Each and every party that purchased my promissory note or any interest;
    ii. The date upon which any such purchase(s) took place;
    iii. The amount of consideration paid for my promissory note.
    As you know, RESPA – as recently amended – requires written acknowledgement of the receipt of this QWR letter within five (5) days and a substantive response to the requested information within thirty (30) days. A failure to comply with this request may result in fines of up to $2,000.00 plus my attorney’s fees and costs.

    I hereby reserve any and all rights to make additional requests for information and to bring additional claims against any parties involved with my loan.

    You are also advised hereunder that to the extent that you or the “owner” of my loan may allege to be protected by any applicable statute(s) of limitation(s) with regard to any claims I may have for violations of state or federal law under the loan above-referenced, including my ability to rescind the loan transaction under applicable law, that any such claims are alleged to not be fully “discoverable” until full documentation is provided hereunder. I therefore reserve all rights to any and all claims, including rescission, until examination of the documents can be completed.
    Thank you for your prompt attention to this matter.


  8. pdaly says:

    Here’s a separate letter (looks like you can send this one if you are ready to pay off a mortgage, or just to determine the payoff amount if you were merely interested in knowing what the amount may be–as a way of forcing MERS to generate a written accounting of your payments to date)

    Your Name
    Your Address
    Yours City, State, Zip Code


    Servicer’s Name
    Servicer’s Address TILA and Payoff Request 131(f)
    Servicer’s City, State, Zip Code


    Address of Property Encumbered by Mortgage

    Transaction Dated: (Date of Note & Mortgage)
    Originating Lender: (Lender Named on Note)
    Current Servicer: (Refer to Monthly Mortgage Statement)
    Servicing Account Number: (Refer to Monthly Mortgage Statement)

    Dear Madam or Sir:

    In accordance with RESPA and Section 131(f) of the Truth-in-Lending Act, 15 U.S.C. Section 1641(f)(2), please provide me with the name, address, and telephone number of the current owner of the promissory Note and Mortgage referenced above.

    This is also a request for a Payoff Statement under the Truth-in-Lending Act.

    If my loan has been registered with Mortgage Electronic Registration Systems, Inc., please also provide me with a MERS Summary, also known as a MERS Milestone Report, showing the complete chain of title to my property.

    Be advised that you must acknowledge receipt of this request within five (5) business days; respond to the payoff request within seven (7) days; and respond truthfully with the identity of the legal owner and holder of my Note and Mortgage within thirty (30) business days, pursuant to 12 U.S.C. Section 2605(e)(1)(A) as amended effective July 16, 2010 by the Dodd-Frank Financial Reform Act and Reg. X Section 3500.21(e)(1).

    Thanking you in advance, I am

    Very truly yours,

    Type your Name

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