Mortgage Fraud Articles

Las Vegas, NV - Attorney General Catherine Cortez Masto's Bureau of Consumer Protection, in conjunction with the launch of the 12th Annual National Consumer Protection Week, March 7-13, 2010, is issuing a series of daily consumer advisories. The theme of the Consumer Protection Week is Dollars & Sense: Rated "A" for All Ages.

"Homeowners should arm themselves with information about the loan modification process. Unfortunately, several unscrupulous businesses, and attorneys, have 'sprung up' making unrealistic promises about their success rates in obtaining loan modifications," said Masto.

Loan modifications typically involve a reduction in the interest rate on the loan, an extension of length of the term of the loan, a different type of loan, or any combination of the three. A lender might be open to modifying a loan because the cost of doing so is less than the cost of default. Many homeowners facing foreclosure currently have a variable rate loan. Such a loan can be converted to a fixed-rate loan. Moreover, any arrearages can be "rolled-into," or added to the principal of the modified loan, the result being a larger principal, but lower monthly payments for the borrower over the life of the loan. Thus, loan modifications may be made by a lender in response to a homeowner's inability to repay the loan.

Scammers promise to obtain loan modifications for unsuspecting homeowners. In many cases, clients are advised by "their representatives" to forego making their monthly mortgage payments, ostensibly to allow the company to obtain a better negotiating posture with the lender. In actuality, these loan assistance companies are more interested in directing their clients' limited resources toward payment of their fees rather than toward paying the mortgage. This practice is particularly damaging to the homeowner as it does not increase the likelihood of a successful modification, rather, his or her credit history now reflects a delinquency which will impact negatively on the homeowner's ability to qualify for a modification.

Under the provisions of NRS Chapter 107, homeowners can have a representative or an attorney present with them at the mediation. However, it is not necessary to have either. Unscrupulous representatives have one primary concern - generating fees for themselves.

Consumers who wish to report mortgage fraud are asked to contact the Attorney General's Bureau of Consumer Protection in Las Vegas at 702.486.3194 to obtain a complaint form.

Consumer protection information can also be found on the Attorney General's website at www.ag.state.nv.us, the Nevada Fight Fraud website at www.fightfraud.gov, and at the Federal Trade Commission website at www.ftc.gov.

"I am pleased to join federal, state and local government agencies and national consumer advocacy organizations in consumer education efforts in the communities across the nation," said Attorney General Masto. "As part of this program, we will be issuing a daily consumer advisory regarding issues particularly relevant to Nevada consumers."