Don't Get Swindled by a Foreclosure Rescue Company

You can always count on the swindlers and scam artists to come out of the woodwork when desperate consumers get in trouble and need help. In this case it is poor unsuspecting consumers that are looking for ways to keep their homes and avoid foreclosure.

The new scam is being run by so called "foreclosure rescue companies". Many of these outfits charge consumers upfront fees and then walk away with the money. In Florida, you will see ads on television all day long offering to save you from the impending disaster of losing your home. More often than not, these "scam artists" have words like "federal" or "government" in their company name. The company names are intentionally misleading and often lead consumers to believe they are somehow connected to the so called federal government "housing bailout". In other words, official government agencies.

At a seminar for troubled borrowers near her home, one company offered a service that promised just what Ms. Martinez needed: for $1,000, the company said it would negotiate with her mortgage company to lower her interest rate.

“I was desperate,” said Ms. Martinez, 57, a clerk at the San Joaquin County Jail. She made an initial payment of $500 and paid another $500 a few weeks later.

Now the house is in foreclosure, and Ms. Martinez is waiting for the sheriff to evict her. She cannot reach the man she paid to modify her loan.

If you are in dire straights I would suggest two paths to getting help. First, talk to the company that services your mortgage loan. Many of these companies have set up relief programs to help stressed out consumers. Second, here are two websites you can go to find local housing counselors: Guide to Avoiding Foreclosure or Housing Crisis Resource Center.

Swindlers Find Growing Market in Foreclosures

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60 minutes World Of Trouble--Housing and Lending Practices Video

This 60 minutes video will make you sick. The kinds of lending practices you will see in this video were common place. There was one single goal--to create fee income and enrich management at the expense of ordinary Americans. Get the unsuspecting customer to refinance into a toxic mortgage like an Option Arm. Charge very high fees. This strategy enriched management at the expense of shareholders who got left holding the bag.

Three years before the housing market crash, Paul Bishop says he warned his superiors at World Savings - the nation's second largest savings and loan company - that many of the mortgages they were granting were misleading and predatory.

Watch CBS Videos Online

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I have written many times about the housing scam and Options Arms--The Toxic Mortgage

Ray Dalio on the current state of affairs in the market

Homebuyer Credit Won’t Stabilize Market, Analysts Say

Roubini Predicts U.S. Losses May Reach $3.6 Trillion

Six Errors on the Path to the Financial Crisis

Who Caused the Financial Crisis?

Option ARM--The Toxic Mortgage

Debt Binge--The Perfect Financial Storm

Madoff Whistleblower Blasts SEC

Fraud investigator Harry Markopolos blamed the Securities and Exchange Commission's "financial illiteracy" for failing to heed his warnings about money manager Bernard Madoff.

Mr. Markopolos had warned the SEC for nearly a decade that Mr. Madoff was operating a Ponzi scheme. Mr. Markopolos is set to testify before a House committee Wednesday, and 311 pages of his written testimony became public Tuesday evening.

In the documents, Mr. Markopolos described his efforts like a military intelligence operation. He said he and his team of investigators collected "intelligence reports" from field operatives and developed networks of contacts to provide information on Mr. Madoff's operation and the feeder funds that brought investors to the Madoff money-management business.

Markopolos Blasts SEC for 'Financial Illiteracy'

Text of Markopolos testimony

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