May 18, 2009
It wasn't long after the financial meltdown that scores of scam artists popped up claiming to operate "mortgage rescue" services — but one went so far as to claim it was an actual government mortgage loan assistance program, and the Federal Trade Commission (FTC) isn't having any of that.
At the FTC's request, a federal district court issued an order to stop an Internet-based operation that pretends to operate "MakingHomeAffordable.gov," the official Web site of the federal Making Home Affordable program for free mortgage loan assistance. The FTC alleged that the defendants deceptively diverted consumers who searched online for the free government assistance program to commercial Web sites that offer loan modification services for a fee.
"Homeowners who are down on their luck need help, not misdirection by Internet impostors," FTC Chairman Jon Leibowitz said. "The Commission will continue to work with the Treasury Department to move quickly against scammers who prey upon financially distressed consumers."
Earlier this year, in an effort to stabilize the housing market and ensure that responsible homeowners can afford to stay in their homes, President Obama announced the Making Home Affordable program to help eligible homeowners refinance or modify their mortgages. The plan will help millions of families restructure or refinance their mortgages to lower their monthly payments and make their mortgages affordable now and in the future. Using the resources on MakingHomeAffordable.gov, consumers in trouble with their mortgages can get help — at no cost — from trained housing counselors.
In a statement, Treasury Secretary Tim Geithner said, "On April 6th, FTC Chairman Jon Leibowitz, Attorney General Eric Holder, HUD Secretary Donovan and I announced a multi-agency effort to crack down on foreclosure rescue scams and loan modification fraud. Todays swift enforcement action by the FTC demonstrates our strong commitment to protecting the integrity of the program by going after actors attempting to defraud or scam homeowners trying to use the makinghomeaffordable.gov site."
Neil Barofsky, the Special Inspector General for the Troubled Asset Relief Program (TARP), which provided valuable assistance in the FTC's investigation, said, "Frauds that target struggling homeowners will not go unanswered. Today's action by the FTC, supported by the investigators of our office, demonstrates our joint resolve to stop in its tracks any individual or organization that attempts to fraudulently profit off of a national crisis."
Anyone who has been victimized in this matter should contact the FTC at 1-800-FTC-HELP. To report possible fraud in this or any other TARP-related program, complaints can also be filed at www.sigtarp.gov or 877-SIG-2009.
According to the FTC's complaint, the defendants purchased "sponsored links" for their advertising on the results pages of Internet search engines, including yahoo.com, msn.com, altavista.com and alltheweb.com. When consumers searched for "making home affordable" or similar search terms, the defendants' ads prominently and conspicuously displayed the Web site address "makinghomeaffordable.gov." Consumers who clicked on this advertised hyperlink were not directed to the official Web site for the Making Home Affordable program, but were diverted to Web sites that solicit applicants for paid loan modification services. These commercial Web sites, which are not part of or affiliated with the U.S. government, require consumers to enter personally identifying and confidential financial information. The operators of these Web sites either purport to offer loan modification services themselves or sell consumers' personally identifying information to persons who sell such services.
The FTC filed an emergency request for a temporary restraining order on Friday, May 15, 2009, in the U.S. District Court for the District of Columbia. Later that day, Judge Colleen Kollar-Kotelly entered a temporary restraining order, barring the defendants from using the MakingHomeAffordable.gov hyperlink or representing that they are affiliated with the United States government. The order also requires the four search engine providers to identify those who paid them to place the ads, and to refuse to place paid ads that contain active hyperlinks that are labeled MakingHomeAffordable.gov or any other domain name containing ".gov." The FTC's complaint is against one or more persons who are unknown to the agency at this time because the defendants have cloaked their practices in the anonymity of the Internet.
What to do
For more information, read Fred Yager's tips for avoiding foreclosure and mortgage rescue scams.
