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Loan modification scammers hitch a ride on Obama coattails to lure homeowners

Scammers are using President Obama’s mortgage relief program – and his photo – to squeeze bogus fees from homeowners trying to avoid foreclosure

Across the country, dubious loan modification firms are claiming affiliation with the Obama administration’s $75 billion program to help struggling homeowners trim mortgage payments.

Some are running websites with photos and video of Obama and the logos of federal government agencies.

“They sort of play on people’s desperation,” said Lionel Ouellette of the Brooklyn-based nonprofit housing advocacy group Changer. “They exploit people’s trust.”

The hucksters mail solicitations to foreclosed homes in official-looking letters that make reference to the Obama program.

For a hefty upfront fee, they offer to negotiate an Obama loan modification, but do virtually nothing to get payments lowered.

The problem has exploded

The Treasury Department said reports of loan modification and foreclosure rescue scams soared from 41 in 2004 to 3,080 last year.

In New York, loan modifiers dropped leaflets proclaiming “OBAMA NEW LAW CAN HELP” on a Queens block with one of the highest concentrations of foreclosures in America.

Michael Mastman, a housing counselor with Grow Brooklyn, a Bushwick nonprofit affiliated with the Brooklyn Cooperative Federal Credit Union, said up to half the 200 clients he saw last year fell victim to scammers.

“Typically, what I hear is, ‘They said they were going to get me the Obama plan,’” he said. “They do make the problem worse.”

Attorney General Andrew Cuomo has ordered 213 mortgage rescue firms to stop their bogus pitches after probers found that many collected illegal fees and failed to help. Many of those firms cited Obama’s program, Cuomo’s aides say.

The President unveiled the Making Homes Affordable program in February 2009.

A month later, Joseph McIlvaine of Sewell, N.J., started an Internet site called 2009

“Call us toll free or fill out form below today to see if you qualify for President Obama’s Home Affordable Modification Plan,” his site says. “This is your bailout.”

In December, New Jersey prosecutors cited a McIlvaine firm for offering loan modification services without a license. McIlvaine, who was fined $5,000, did not return calls.

And homeowners who went to the Obama program’s website got sponsored links to loan modifiers.

The Federal Trade Commission sued the advertisers for misrepresentation. The companies settled the case last month, agreeing to forfeit $67,000.
[tags]Joseph McIlvaine,, Grow Brooklyn, Brooklyn Cooperative Federal Credit Union, mortgage relief scam, loan modification scam[/tag]

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  1. Obama plans new push on mortgage loan modifications for frustrated homeowners
  2. Loan modification scammers in Tolleson AZ claim they are from the city

Tags: Brooklyn Cooperative Federal Credit Union, Grow Brooklyn, loan modification scam, mortgage relief scam,, oseph McIlvaine

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