Flim-flammers who promise to help troubled borrowers obtain loan modifications are going to extraordinary lengths to snare their next marks, even so far as hanging out in restrooms.
In one instance, according to Yolanda McGill of the Lawyers' Committee for Civil Rights Under Law, a con-artist was nabbed "picking off" borrowers, one-by-one, in the parking lot as they waited for hours in long lines with thousands of others while attending legitimate loan modification rallies.
And in another case, McGill told the American Association of Residential Mortgage Regulators' annual conference in St. Louis, a crook had to be removed from a bathroom in a New York modification meeting, where he was lurking to find new "clients" when they came in to use the facilities.
Borrowers are susceptible to what McGill called "predatory opportunists," even at events like these, because the government's loan modification efforts take too long and are too difficult to comprehend. People are trying to be proactive, she told the state mortgage supervisors, "but they are just getting hammered."
"People are out there looking for a solution, but the extent to which they don't know how to get to the right spot is stupefying," said McGill, who is senior counsel for the lawyer group's Fair Housing and Fair Lending Project.
"They are getting bombarded with misinformation, and it's not just on some obscure late night TV channel. It's through the local news and it's through their churches. Confusion reigns, and it's a huge battle to work through all the noise. I'm at it all day long and it is depressing. The disconnect with the process is really amazing."
McGill said she has seen con artists who "actually help" two or three owners rework their mortgages, only so those people can round up 50 of their friends and associates who can then be ripped off. And now she's starting to see what she labeled "multi-touch" scams in which the scoundrels promise to undertake a series of fixes, saying that if one thing doesn't work, they'll try another and another.
"These package deals make people feel safer, because they offer several options," she told the conference. "It sounds great. 'Of course it's going to work.' But no it's not. Of course it's not."
And it's not just out-and-out thieves who are fleecing unsuspecting home owners, she added. "All kinds of professionals sell people down the river. Mortgage brokers, attorneys and real estate agents play both sides of the fence."
Indeed, legal representation is the second largest red-flag in the Lawyers' Committee's National Loan Modification Scam data base. Of the more than 5,000 complaints now on file, nearly 1,500 indicate that a lawyer took part.
"It pains me to say it," McGill said, "but a lot of attorneys are involved."
