Mortgage scams

Sunday, Nov. 29, 2009 | 2:06 a.m.

Federal Trade Commission Chairman Jon Leibowitz was in Las Vegas last week to announce a crackdown on companies scamming homeowners. These companies charge hefty upfront fees with the promise to rescue homeowners from foreclosure — but they fail to deliver.

The FTC is working with the Justice Department and state agencies, including the Nevada attorney general. The group has moved against 118 companies and individuals in 23 states that have been preying on homeowners facing foreclosure.

In a meeting with the Las Vegas Sun’s editorial board last week, Leibowitz said he came to Nevada to make the announcement because “it’s a rich environment for scammers.” The state’s rate of foreclosure — one in 23 — is the nation’s highest.

As Richard A. Serrano reported in Thursday’s Las Vegas Sun, an FBI task force has been pursuing criminal mortgage fraud cases in a complementary effort. The FTC has authority to go after companies only in civil court, but it can move quickly to shut a company down and seek restitution.

It is good that federal and state agencies are working together, but there is more work than they can handle. There are too many scammers.

Given that none of the law enforcement agencies says it has enough resources to combat mortgage fraud, Leibowitz says there needs to be more public awareness of the threat.

Leibowitz said the companies his agency targets are typically run through the Internet and often advertise incredible claims — perfect records of modifying home loans and surefire strategies to beat foreclosure. The FTC says warning signs of fraud include high upfront fees and demands that homeowners make their mortgage payments to the company, not lenders.

Congress should provide more resources to the federal agencies combating mortgage fraud. However, people should be careful about companies offering foreclosure relief. The adage is true: If sounds too good to be true, it probably is.