Geithner: Preying on vulnerable homeowners will not be tolerated

The all-to-common advertisement on the radio or television, which promises that a company can restructure variable-rate mortgages in order to prevent the home from going into foreclosure, is often just that–an advertisement. These offers have lured American homeowners to place their trust and money into such firms. And subsequently, many homeowners are coming to the realization that their wasted funds have been stolen by companies that did not actually work of their behalf or charged them for services and documents that can be obtained by the government for free.

“These are predatory schemes designed to rob Americans of their savings and possibly their homes,” said Timothy Geithner, Secretary of the Treasury.

John Leibowitz, Chairman of the Federal Trade Commission, agreed. “These companies are kicking people when they are down, charging enormous upfront fees, and sabotaging efforts by homeowners when they could be getting help for free.”

In an effort to stamp out these companies, the Federal government has begun an unprecedented partnership with state and local governments, which “underscores that this administration is doing everything we can … to prevent this from happening,” said Geithner.

Speaking from the state level Lisa Madigan, the Attorney General of Illinois, announced recently another lawsuit against a company targeting Spanish speaking homeowner, which brought the total number of lawsuits to 24 companies since 2006.

Madigan’s office has sent out letters to 70 additional companies warning them that they will be sued if they do not pay back the defrauded homeowners.

Additionally, Madigan spoke directly to the struggling homeowners when she warned them to “stay away from anyone who says that they will save your home for money upfront,” as it is almost certainly a scam.

Giving the sternest warning, Eric Holder, the Attorney General, stated that “If you prey on vulnerable homeowners with fraudulent mortgage schemes or discriminate against borrowers we [the government] will find you and we will punish you.”