Rhode Island is the smallest state in the country, which allows, as Rhode Islanders often joke, everyone to know each other and each other’s business. News on different local issues usually spreads quickly, but this does not seem to be the case with news about mortgage loan modification scams. Day after day, the consumer protection unit in the Rhode Island general attorney’s office receives numerous phone calls with complaints from consumers who have been victims of these fraudulent schemes. A mortgage loan modification fraud is defined legally as “any material misstatement, misrepresentation or omission relied upon by an underwriter or lender to fund, purchase, or insure a loan;” pretending to provide financial help to an economically stressed homeowner in order to skim off equity from the home.

If you have not yet had a personal experience with mortgage fraud schemes, you must know someone or about someone who has gone through this unfortunate and terrifying experience. These criminals reach out to you with comforting words, reel you in with startling savings as an outcome of a loan modification and offer you their unconditional and on stand-by support and guidance. But next thing you know, as the weeks pass by, these loan officers and their staff becomes more distant until you can no longer reach them by phone or email. At this point it is too late because you listened to their advice and stopped paying the mortgage payments to your home resulting in a notice of evacuation from what used to be a permanent, safe and secure place to lay your head. Speaking from my personal experience, it was not delightful having to rush to find living arrangements and leaving behind memories. My family felt betrayed and helpless, the lack of knowledge on fraud schemes played a large part in the losing of our home. Such feelings, which can leave a lasting effect on families but should and can be prevented with a more informed public.

Even though Attorney General Peter F. Kilmartin, in partnership with the Loan Modification Scam Alert Campaign, hosts free mortgage foreclosure info sessions, Rhode Island continues to have one of the highest rates of mortgage delinquency and foreclosures in the nation some as a result of these scams. Mortgage fraud has actually become more prevalent over time due to the effects of the economic recession, homeowners facing foreclosure, and people looking for easy money. While losses due to scams is hard to estimate, law enforcement and the mortgage industry participants have been attempting to quantify them yielding to the most recent estimate about $10 billion in fraudulent loan applications in the year of 2010. The number of commercial mortgage loan delinquencies increased from 4.9 percent in December 2009 to 8.79 percent in December 2010 a change of 79 percent in 2010. One of the most controversial mortgage frauds can be dated back to December 11, 2015, where a Providence lawyer and five other officers were charged with bank fraud, wire fraud, identity theft and conspiracy involving more than a dozen properties in Rhode Island and Massachusetts. The lawyer and five other officers kept their identities concealed by using different names of various entities and individuals. Residents across Rhode Island through Massachusetts lost their homes and investments in those homes.

Information must be made easily available in different forms and languages in order to reach a diverse group of people. Info sessions should be made mandatory for all homebuyers in an effort to educate individuals before being presented with a similar situation. Alerts of fraud schemes prevalent in corresponding areas should be sent to every city by mail. Something must be done to retract the works of unscrupulous lenders and mortgage officers. The current punishments for committing these mortgage loan frauds are simply not enough; loan officers are forced to distribute restitutions for only a small amount of money that does not amount to the loss of their homes. Law enforcement should be much more involved and these scams should be of priority as it puts families in risk of ending up homeless.

Cindy Lopez is a native Rhode Islander who has attained schooling from Classical High school and Providence College. A senior graduating in May 2016, she majored in Political science and has become interested in mortgage loan modification scams after being personally affected in the year of 2012- losing her family’s home- and further researching in the consumer protection unit at the attorney general’s office of Rhode Island.