Arizona Gets $1.7 Million to Fight Mortgage Scams

The U.S. Office of Justice Programs awarded a $1.7 million grant to create a six-person unit devoted exclusively to investigating and prosecuting mortgage-related crimes in Arizona.

The new unit will operate as part of the Criminal Division of the Attorney General’s Office and will be operational within the next 90 days.

Attorney General Terry Goddard said the unit will enable his Office to go after more mortgage “rescue” businesses that exploit consumers struggling to keep their homes. Over the past three years, the AG’s Office has undertaken several dozen criminal and civil investigations of mortgage fraud, leading to 13 indictments and 19 lawsuits and settlements.

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“With our State’s economy and housing market still on shaky ground, many homeowners are being targeted by unscrupulous businesses that promise far more than they can deliver,” Goddard said. “This federal award will enable my Office to better ensure that any company engaged in mortgage relief follows the letter of the law.  We will continue to act aggressively against anyone violating the law.”

Over the last two weeks, his office sent more than 600 letters to loan modification companies and licensed mortgage brokers, advising them about the new state laws that went into effect this summer.

According to the AG, the new state laws prohibit foreclosure consultants (including loan modifiers) from charging upfront fees to consumers seeking to modify their existing loans.  The laws also require anyone doing any business in loan modifications to obtain a loan originator license from the Arizona Department of Financial Institutions.

Goddard has previously said that reverse mortgages are the next wave of fraud because “they’re counter-intuitive and difficult to understand.”  He also believes consumers should avoid the adjustable rate HECM program, “the adjustable rates scare me,” he said during a speech in front of seniors earlier this year.

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