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Highlights: 

• Borrowers may be able to avoid foreclosure by obtaining a loan modification. Modifications that result in sustainable mortgage payments can be financially beneficial to both consumers and lenders/investors.
• Foreclosure "rescue" scams undermine legitimate efforts to avoid foreclosure and can be costly for consumers and financial institutions.
• The �౦��Ϸ����'s multi-part foreclosure prevention initiative to avoid foreclosure and help stop foreclosure "rescue" scams includes:
  • Outreach events for bankers and consumers.
  • A telephone and Internet referral service via the �౦��Ϸ����'s Call Center at 1-877-275-3342 or , which directs consumers to legitimate counselors, mortgage servicers, and state and federal law enforcement agencies.
  • An information tool kit that is available at and includes:
    • Is Foreclosure Knocking at Your Door ? brochure
    • Beware of Foreclosure Rescue Scams brochure
    • �౦��Ϸ���� Consumer News , Spring 2009, with articles on getting a loan modification and avoiding foreclosure "rescue" scams
    • Your Own Home module in the �౦��Ϸ����'s Money Smart adult financial education curriculum.

Continuation of FIL-54-2009 

Distribution: 
�౦��Ϸ����-Supervised Banks (Commercial and Savings) 

Suggested Routing: 
Chief Executive Officer 
Chief Lending Officer 
Chief Compliance Officer 

Note: 
�౦��Ϸ���� financial institution letters (FILs) may be accessed from the �౦��Ϸ����'s Web site at www.fdic.gov/news/financial-institution-letters/2009/index.html . 

To receive FILs electronically, please visit http://www.fdic.gov/about/subscriptions/fil.html . 

Paper copies of �౦��Ϸ���� financial institution letters may be obtained through the �౦��Ϸ����'s Public Information Center, 3501 Fairfax Drive, E-1002, Arlington, VA 22226 (1-877-275-3342 or 703-562-2200). 

 

�౦��Ϸ���� Launches Foreclosure Prevention Initiative 

Avoiding unnecessary foreclosure can be in the best financial interest of both borrowers and the financial industry. To address the continuing foreclosure problem, the �౦��Ϸ���� is launching a foreclosure prevention initiative to help consumers and the banking industry avoid unnecessary foreclosures and stop foreclosure "rescue" scams that promise false hope to borrowers.

Many borrowers finding it difficult to make their mortgage payments might be able to avoid foreclosure by obtaining a loan modification. The �౦��Ϸ���� supports loan modification programs that result in long-term sustainable payments the borrowers can afford such as the Making Home Affordable program. Such programs can be mutually beneficial, as borrowers save their home from foreclosure while banks or investors obtain an improved return from the modification compared to foreclosure.

Unfortunately, these efforts are being undermined by foreclosure "rescue" scams. Individuals or organizations perpetrating these schemes claim they will assist homeowners at risk of foreclosure to stay in their home or minimize damage to their credit report, and often require the payment of a large up-front fee. While some of these activities may be legal, they provide services that either can be obtained for free or are unnecessary to obtain a modification from a lender or servicer. For example, the Making Home Affordable program does not permit lenders or servicers to charge consumers a fee for a loan modification. In addition, foreclosure "rescue" scams can cause banks or investors to lose money, as some fraudsters instruct the homeowner to send future loan payments to them rather than the lender or servicer, or to pay other monies to them that could have been used to bring the mortgage loan current.

To help avoid foreclosure and stop foreclosure "rescue" scams, the �౦��Ϸ����'s foreclosure prevention initiative includes outreach, a referral service and an information tool kit. The tool kit is available at and features:

• Is Foreclosure Knocking at Your Door? brochure, which encourages consumers facing financing difficulties to contact their servicer, apply for a loan modification, and talk to a counselor. The brochure is available electronically and in print.
• Beware of Foreclosure Rescue Scams brochure, which provides consumers information on common scams, tips on detecting a fraudulent deal, and legitimate resources for help and to report criminal activity. The brochure is available electronically and in print.
• �౦��Ϸ���� Consumer News , Spring 2009 edition , which offers tips and advice to consumers on avoiding foreclosure with a loan modification and preventing foreclosure "rescue" scams.
• Your Own Home module of the �౦��Ϸ����'s Money Smart curriculum, which includes information on foreclosure "rescue" scams and directs consumers to legitimate sources for foreclosure prevention help.

Consumers are encouraged to report questionable activities, including solicitations or offers, to their servicer and state and federal authorities. Consumers can contact the �౦��Ϸ���� Call Center at 1-877-ASK-�౦��Ϸ���� (1-877-275-3342) or through to be referred to the appropriate state and federal law enforcement agency to report scams. Consumers having difficulty reaching their servicer can also contact the �౦��Ϸ���� Call Center for assistance in contacting their servicer or the appropriate state or federal regulator. The �౦��Ϸ���� will follow up on complaints regarding �౦��Ϸ����-supervised institutions.

The �౦��Ϸ���� encourages institutions to help raise consumers' awareness of foreclosure "rescue" scams. In addition to benefiting their communities and mitigating losses, financial institutions may receive positive consideration under the Community Reinvestment Act for these efforts.

Institutions may refer to the FinCEN Advisory FIN-2009-A001, Guidance to Financial Institutions on Filing Suspicious Activity Reports regarding Loan Modification/Foreclosure Rescue Scams , for a list of potential indicators of loan modification/foreclosure "rescue" scams. Financial institutions should act promptly when they believe fraudulent or improper activities have occurred. Appropriate actions may include, but are not limited to, filing a Suspicious Activity Report, reporting the activity to the Federal Trade Commission, and alerting appropriate law enforcement officials.

The �౦��Ϸ���� continues to work with the banking industry, law enforcement, as well as community-based and consumer organizations to avoid unnecessary foreclosures and help stop foreclosure "rescue" scams, particularly in underserved communities. The �౦��Ϸ���� also is participating in or organizing more than 50 outreach events during 2009 to provide information on avoiding unnecessary foreclosure and stopping foreclosure "rescue" scams.
Sandra L. Thompson

Director

Division of Supervision and Consumer Protection