Despite a number of new government initiatives to curb the high level of foreclosure scams in the wake of the housing market collapse, one nonprofit group recently found that fraudulent activity in this sector surged in the first quarter this year.
According to mortgage records and real estate data from the Homeownership Preservation Foundation, foreclosure scams spiked 60 percent during the three-month period, as fraudsters continued to create new and unique ways to skirt around federal regulation.
"Regretfully, every new government initiative spawns a slew of foreclosure avoidance scams, often from the same cast of characters doing business under various names to avoid easy detection and identification," said HPF chief executive officer Colleen Hernandez.
Hernandez noted that a majority of the scams involve the promise of counseling for distressed borrowers to help them avoid foreclosure as a high cost. However, once funds are received by the fraudulent party, no meaningful services are ever provided.
It was noted that distressed households in search of advice from an industry professional should never agree to a service where an upfront fee is requested, as this is most likely a key indicator that the activity is fraudulent.