Last issue’s Part I of this article discussed how Hurricane Florence has battered the Carolinas and surrounding areas with historic rainfall and flooding, and remnants of the storm are expected to continue for days. Around this same time last year, Hurricane Harvey pummeled many southern U.S. states and Puerto Rico was devastated by Hurricane Maria, both storms leaving behind unprecedented destruction.
While many individuals respond to natural disasters with kindness and generosity, opening their hearts and their wallets to those in need, providing aid and assistance when it is needed most, some unscrupulous individuals will take advantage of the situation to line their own pockets through fraud.
In addition to the disaster-related fraud schemes described by FinCEN, two others have become particularly common in areas affected by natural disasters, Loan Modification and Repair fraud, which target homeowners affected by disaster. In the prior issues we addressed Benefits Fraud, Charities Fraud and Cyber-Related Fraud. The list continues:
Loan Modification Fraud
With a Loan Modification scam, fraudsters will seek out mortgage borrowers affected by a natural disaster and promise a loan modification or forbearance for a fee. Once they collect the fee, however, the fraudsters are never heard from again.
With a Repair Fraud scam, fraudsters promise to make repairs to damaged homes. This is especially attractive to those affected by the natural disasters, as repair contractors are often difficult to find given the extensive damage in disaster areas. Once again, however, a fee to begin the work is collected, then the fraudsters disappear.
It is important for mortgage borrowers to deal only with official, authorized personnel regarding their loan or their home. Loan modifications and forbearances can only come from a borrower’s servicer, and all repair work should go through official, documented channels.
Regardless of whether you are a homeowner recovering from a natural disaster, a financial institution working to serve those affected, or a concerned individual wanting to help, we urge you to be cautious. And if you suspect disaster-related fraudulent activity, please report it.
**excerpts from article by Jennifer Horne for Fannie Mae via Economic Focus**