The ink was barely dry on the government’s $25 billion mortgage settlement with the nation’s biggest banks earlier this year when scam artists seized on the opportunity, the Washington Post reported today. In Alabama, struggling homeowners received calls promising them cash payments from the settlement, if only they would provide the routing number to their bank accounts. In Illinois, homeowners were told they qualified under the settlement for a loan refinancing, but only after they paid a hefty upfront fee. In California, the attorney general herself received a call claiming that she was eligible for aid from the settlement. Illinois Attorney General Lisa Madigan said her office has seen an “explosion” in such scams since the bottom fell out of the housing boom in 2006. State and federal authorities have stepped up efforts to curb mortgage-related crimes. They have hired more investigators and created special task forces. They have ramped up efforts to alert the public to scams. They have held mortgage fraud summits in hard-hit states such as California, Nevada and Florida, and have supported laws to ban the practice of demanding upfront fees from consumers. Authorities have filed hundreds of lawsuits and sent out thousands of cease-and-desist orders to shady businesses.
