Mortgage scams on the rise after government issues housing settlement

After the government approved a $25 billion housing settlement in February, scams promising relief to homeowners with troubled mortgages have risen, according to the Washington Post.

“Every time there’s a new government program announced — in this case, it’s a very large settlement — scam artists use that as an opportunity to defraud people,” Lisa Madigan, the Illinois Attorney General, told Washington Post.

Federal prosecution of such scams has risen 92 percent in the past three years.

In Alabama, homeowners were promised a piece of the pie in exchange for routing numbers to their bank accounts. In Illinois, they were promised a refinance on their loan, but only after they paid an initial fine.

While historically, most fraud cases dealt with the commencement of a mortgage, currently, 40 percent of those investigated by the FBI promise to handle foreclosures or refinancing of troubled home loans.

To try to curb the mortgage scam trend, state and federal agencies have sought out hundreds of lawsuits and sent thousands of orders demanding that the scams stop.

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