South Florida’s high-level of housing distress and large population of minorities combine to make it a nation-leading hotspot for fraudsters offering mortgage modification scams, a new report shows.
According to analysis by Homeownership Preservation Foundation, Miami leads the nation in the number of reported mortgage modification scams, followed by Los Angeles, Las Vegas, Houston and Chicago.
The report found that racial and ethnic minorities were particularly susceptible to these scams, accounting for more than half of all complaints nationwide.
“Repeated studies have shown that minorities were disproportionately targeted for predatory lending during the housing boom, and we have compelling evidence indicating that minorities are bearing the brunt of an unusually high percentage of mortgage scams,” said Homeownership Preservation Foundation CEO Colleen Hernandez, in a statement. HPF’s report was based on a year’s worth of calls to its 888-995-HOPE hotline, which provides free counseling to distressed homeowners.
Florida had the nation’s second highest proportion of mortgage modification scam complaints, accounting for 7 percent of the total. California led the country with 22 percent.
A state law passed in 2008 made it illegal for companies offering mortgage modification help to charge homeowners upfront. The Federal Trade Commission proposed a rule last year that did basically the same thing.
The Florida attorney general’s office received more than 2,500 complaints about mortgage modification scams last year and is investigating 70 companies.
Earlier this month, the attorney general’s office filed a lawsuit against three Delray Beach companies, after hundreds of homeowners complained that they had paid upfront fees ranging from $495 to $2,000 for mortgage modification services that were never provided.
Nationwide, the average amount charged upfront by mortgage modification companies is $2,589, according to HPF’s report.
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