Connecticut Attorney General's Office

Press Release

Attorney General Meets With Top Federal Officials, Other State AGs To Coordinate Fight Against Mortgage Rescue Scams

September 17, 2009

Attorney General Richard Blumenthal today met with U.S. Treasury Secretary Timothy Geithner, U.S. Attorney General Eric Holder, other top federal officials and other state attorneys general to coordinate state and federal efforts to fight mortgage rescue scams.

Blumenthal and other state attorneys general informed federal officials of their experiences and efforts to fight mortgage rescue scams during the meeting at the U.S. Department of the Treasury in Washington, D. C.

"We mark the start of an aggressive allied attack on mortgage rescue scams -- joining state and federal enforcers to track down and crack down on these scammers," Blumenthal said. "Never before in the past three decades have three senior cabinet secretaries engaged in such a meeting, heralding a bold new effort.

"Mortgage rescue schemes are becoming an epidemic -- preying on families facing foreclosure in exploding numbers. These mortgage rescue scams raise false hopes and then cruelly exploit them, which is why my office is fighting them and welcomes the federal government as a strong ally.

"Like quicksand, these supposed debt rescue schemes sink consumers deeper in distress the more they struggle. We must rescue families from false rescuers, who offer lead-filled lifelines.

"Rescue predators pitch a variety of financial snake oil -- promises to stop foreclosures and save homes, reduce mortgages and erase credit card debt, eliminate back tax obligations and rehabilitate bad credit histories. Most charge upfront or advance fees -- only deepening debt. Debt reducers promise homeowners help, but deliver only hardship. They leave consumers out of cash and out of luck, and even out of their homes. As economic woes worsen, financial bottom feeders become more prevalent and pernicious.

"Debt reduction schemes exploit our most distressed consumers -- homeowners devastated by debt and terrified of looming foreclosure. Many are willing to spend their last pennies on unfair and excessive advance fees for only a pittance of relief, deceptively pitched."

The legislature this year enacted Blumenthal's proposal to ban mortgage rescue firms from charging upfront fees, a red flag for fraud.

Blumenthal added, "Connecticut has adopted a landmark ban on upfront fees for mortgage repair schemes -- a model for national action in the battle against exploitation of consumers seeking to save their homes. I proposed and fought for it, and will enforce it vigorously. Today's meeting is an historic step toward a powerful alliance of state and federal law enforcers battling scammers who profit on homeowners facing foreclosure."