Bloomberg Anywhere Remote Login Bloomberg Terminal Demo Request


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Bloomberg Customers

Housing Bust Leads to Rise in Mortgage Scams

Posted by: Chris Palmeri on July 14, 2009


When he was Governor of California in the 1970s, Jerry Brown got the nickname “Governor Moonbeam” for his hippy-dippy ways. But he’s pretty shrewdly getting attention these days for targeting scammers who prey upon distressed homeowners.

Brown is currently California’s Attorney General and is mulling a run for governor again. On July 15 he’s announcing a major new initiative to crack down on massive loan modification scams operating in Los Angeles and Orange County. The move is part of a national crackdown orchestrated by the Federal Trade Commission called “Operation Loan Lies.”

On July 6, Brown’s office sued a “foreclosure consultant” and an attorney who allegedly conned 2,000 desperate homeowners, telling them they could save their homes by filing bogus lawsuits against lenders. The suits claimed the mortgages were no longer valid because the loans had been sold so many times on Wall Street. The alleged scammers charged the homeowners thousands of dollars in fees. Many still lost their homes.

In May, Brown obtained a guilty plea from a woman who used forged documents to convince more than 100 homeowners to hand over an average of $3,000 for non-existent loan modification services. In March his office shut down Foreclosure Freedom, a fraudulent loan modification company that continued to collect fees and mortgage payments from dozens of homeowners without ever providing services.

There was plenty of fraud going on during the housing boom. It’s even worse today, as desperate people living on the financial edge are being scammed.

Brown’s office offers these tips for homeowners

DON’T pay money to people who promise to work with your lender to modify your loan. It is unlawful for foreclosure consultants to collect money before they give you a written contract describing the services they promise to provide and before they actually perform all the services described in the contract.

DON’T transfer title or sell your house to a “foreclosure rescuer.”

DON’T pay your mortgage payments to someone other than your lender or loan servicer.

DON’T sign any documents without reading them first.

DO call your lender yourself.

Reader Comments

Jason Hector

July 15, 2009 3:36 AM

This type of take the money and run is typical and gives a bad name for those, like myself ( who are a Real Estate Broker and on the California Dept of Real Estate Advance Fee Listing list.

I find that almost 50% of the people who request our service have already given money to someone else and they failed to follow through till a loan modification decision.


July 15, 2009 9:37 AM

Do get your lazy axx head out of your butt and think for yourself. Do read your mortgage agreement before signing it. Don't assume a mortgage you can't afford. Don't expect Uncle Sham to come to the rescue you for being a greedy, indolent wannabe.


July 15, 2009 2:40 PM

zoundz like "moonbeam" has woken -up an is smellen da coffee or is he haven hot "grass" tea. good for him, whoever REALLY goes after the crooks/vultures would get my vote. bye the bye: we citrus growers us to call "jerry, king of the medfly brown", but people have short memories. i bot and gave out hundreds of bumper stickers "if its yellow, let it mellow, if its brown ,flush it down". hawaii was having a water shortage,hawii state bumper sticker impacted jerry's run for office. but i think he is wiser, a wizer? ya ca folks need willie brown&jerry brown back running "foolsgoldstate". sincerely good luck.

Post a comment



BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

BW Mall - Sponsored Links

Buy a link now!