Mortgage settlement could spark more scams

The recent announcement of the $25 million mortgage settlement between five major banks and state and federal government officials was probably welcome news to many people in the real estate business.

But it has at least one downside: It will probably cause a rise in scams targeting borrowers seeking assistance.

Currently, between $4 billion and $6 billion is lost each year due to borrower-assistance swindles, says Joanne Kerstetter, vice president of education and community relations for Money Management International, a credit counseling service. Those numbers could go up over the next few years as scammers take advantage of the mortgage deal in their schemes.

“They’ll use government terms,” Kerstetter said. “They’re going to sound very official, as if they’re part of the settlement.”

Also, some of these scammers will guarantee access to borrower assistance funds – a major red flag, she says.

“Generally speaking, the advertisements that say, ‘Call us to get money,’ are not representing organizations officially involved with the settlement,” Kerstetter said.

Consumers should be wary of any company that reaches out to them with unsolicited offers of assistance. If they need help, they should contact their lenders or a financial counseling agency certified by HUD.