PrintSIGTARP_April2010_Quarterly_Report_to_Congress.pdf
Revisions in the government’s Making Home Affordable Program (HAMP) may create new incentives for loan servicers and to defraud troubled homeowners according to a new report from the Inspector General who oversees the Trouble Asset Relief Program (TARP).
“Criminals feed on borrower confusion, and frequent changes in the programs provide opportunities for experienced criminal elements top prey on desperate homeowners who have not been educated as to the risks of fraud,” states the report released yesterday.
The Inspector General criticized the Treasury Department for failing to warn and education homeowners about the risk of fraud by servicers, citing the recent financial incentives to encourage borrowers and services to undertake in short sales rather than allow properties to go into foreclosure.
One prevalent short sale scheme-called “flopping”- centers on home values that are fraudulently deflated for the purpose of decreasing the cost of the short sale to a “straw” purchaser. The property then is quickly resold for its true market value, enriching an owner or servicer.
The recently implement principal reduction provisions of the HAMP program similarly create the opportunity for fraud by owners and servicers who falsely use artificially low values for properties undergoing modification.
The IG recommended that Treasury enact a uniform appraisal system to ensure that properties are not undervalued, and that it inform homeowners of how the new changes in the program work.
For a copy of the report, click on the link at the top of this story.
April 21st, 2010 at 4:19 pm
Geithner at treasury only cares about his Wall Street pals. Congress and the President are nothing but their puppets as well. Does anyone need more proof than comparing the amount of taxpayer money spent to save the banks, who then show their appreciation by raising credit card interest rates to levels that would land anyone else in jail. Loan modification scams are a distraction, the real criminals are in office. Time to wake up, America!