April 6, 2009

Remarks of Treasury Secretary Timothy F. Geithner
Press Conference Announcing
New Multi-Agency Crackdown on Loan Modification and Foreclosure Rescue Scams
As Prepared for Delivery

On February 18th, the President announced a series of initiatives to address the nation's housing crisis and help American homeowners.

The Making Home Affordable programs were designed to keep mortgage rates low, allow responsible homeowners to refinance into affordable mortgages or alter at-risk loans and help homeowners lower their monthly mortgage payments.

Working with the Federal Reserve, our actions have brought down mortgage rates to historic lows, giving millions of Americans the ability to refinance.

But just as this Administration intensifies our efforts to help American homeowners, those who would seek to prey on the most vulnerable are intensifying their tactics as well, often through purported "mortgage modification" and "foreclosure relief" companies.

These predatory scams callously rob Americans of their savings and potentially their homes.

Today, I am announcing a major interagency effort to combat foreclosure rescue scams. The fact that I am joined by the Attorney General Eric Holder, the Secretary of Housing and Urban Development Shaun Donovan, and Federal Trade Commission Chairman Jon Leibowitz speaks directly to the Administration's deep commitment to protect America's consumers and homeowners. And I am especially pleased to have the Illinois Attorney General, Lisa Madigan, with us today to demonstrate the federal-state partnership to target mortgage loan modification and foreclosure relief scams.

Contributing to these joint efforts, Treasury is announcing _two_ specific initiatives.

"First", Treasury's Financial Crimes Enforcement Network, known as FinCEN, is issuing an advisory to help financial institutions spot questionable loan modification schemes and report that information for law enforcement purposes. The advisory provides "red flags" for financial institutions that may indicate a loan modification or foreclosure rescue scam.

"Second", we are announcing a targeted effort - to be coordinated by FinCEN - to deter fraudulent activity and combat fraudulent loan modification schemes. FinCEN, working with our partners from the law enforcement and regulatory communities, will utilize information provided by the financial industry, along with other information supplied by participating agencies, to identify possible loan modification fraud suspects for civil and criminal investigations. FinCEN will also help law enforcement agencies streamline and coordinate their efforts so that the resources of multiple investigative and prosecutorial agencies are focused in the most efficient way. I'd like to thank Jim Freis and his team at FinCEN for taking a lead in this effort.

What today's announcement means for American homeowners is this: We will shut down fraudulent companies more quickly than before. We will target companies that otherwise would have gone unnoticed under the radar. And we will increase our knowledge of how these companies operate, enhancing our efforts to identify and prosecute every individual involved in a mortgage rescue scam.

Also, to homeowners taking part in our new loan modification program: Know that free help is available through non-profits and government-affiliated agencies in your communities - you can go online and seek them out. Be cautious of anyone or any organization that claims to guarantee success or seeks to charge upfront fees for services related to these programs, those are red flags not to be ignored. And if you have any questions about how our plan works, go to makinghomeaffordable.gov. The website is a great resource to better understand the help being made available by this Administration.

Let me close by saying that aggressive action at the earliest stages will make it more difficult for bad actors to engage in fraudulent activity.

I am pleased to acknowledge the efforts of Neil Barofsky, the Special Inspector General for the Troubled Asset Relief Program, who is here today and has been actively working with the Office of Financial Stability to build fraud protections into our programs, including the Making Home Affordable program. Mr. Barofsky has a history of successful mortgage fraud prosecutions, and we have benefited from his knowledge and experience. For example we have adopted his recommendation that every modification package include a cover sheet containing fraud warnings and a reference to the Special Inspector General's fraud Hotline. I know his office stands ready to receive any referrals concerning fraud in the TARP program generated by this initiative.

American homeowners have been through enough over the past two years. The last thing they need now is to be taken advantage of as they try to hold on to their homes. Today's announcement underscores that this Administration is doing everything we can to prevent that from happening.

I'd now like to turn it over to Attorney General Eric Holder who will be followed by Chairman Leibowitz, Illinois Attorney General Maddigan and Secretary Donovan.

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