The voices of Urban Institute's researchers and staff
May 10, 2011

Scammers Prolong Foreclosure Crisis

May 10, 2011

Three years after the U.S. housing market collapsed, over 4 million home mortgages are still delinquent or in foreclosure. And, yet, a recent Associated Press poll found that economists think our economy is strong and on the mend. But though a foreclosure crisis that persists in many communities no longer makes news, if we want to see a true economic recovery we must address the troubled housing market.  A good place to start is exposing the scammers who are bilking vulnerable and scared homeowners out of thousands of dollars.

Prince George’s County, Maryland, a Washington, D.C. inner-ring suburb, exemplifies a housing market still in crisis. Prince George’s, the nation’s wealthiest majority-black county, was targeted heavily by subprime lending while the housing bubble grew. Its foreclosure rate is 4.8%, the highest in the region, and remains one of the country’s harder-hit communities. Nearly one in every ten loans is severely delinquent-- 90 or more days overdue—and nearly one in every four is either delinquent or in foreclosure. Zip codes inside the beltway are especially hard-hit, with “troubled loan” rates nearing 30%.

Prince George's County Housing Market Still in Crisis

Prince George

Scammers are flocking to Prince George’s County – and nearby areas – in ever greater numbers to take advantage of these desperate homeowners.  As a defense against these predations, the Prince George’s County Coalition for Homeownership Preservation each month convenes housing counselors, legal advocates, federal housing agency representatives and elected officials to address the crisis. Each month they bring horror stories to light - scammers pose as housing counselors or lawyers versed in dealing with mortgage lenders.  They promise to secure loan modifications that will reduce payments or principal and keep people in their homes. They charge thousands or tens of thousands of dollars up front for their “services” and then just disappear. They are stealing from people already on the edge.

Fortunately, there are legitimate counseling services that actually will help homeowners in trouble, and their services are free. There is a nation-wide list of HUD-approved counselors, and the Capital Area Foreclosure Network lists the D.C. region’s counselors. These organizations are underfunded and overworked, however, and they fight an uphill battle against deep cuts in federal funding and all of the get-your-money-quick scams.  But, they can help.

Meanwhile, don’t let a rising stock market and falling unemployment rates fool you. The economic crisis is alive and well in many of the nation’s housing markets, and people are still being taken for a dangerous ride.

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Comments

Well said. The foreclosure crisis will continue long after the media's attention span.