Economy

California warns homeowners against foreclosure audit scam

State officials warned struggling homeowners Monday about a new variation on loan-modification scams: "forensic loan audits."

Under the dubious service, homeowners are enticed to pay upfront fees for an audit of their mortgage loan, purportedly to determine their lender's compliance with state and federal laws. It's pitched as a way homeowners gain leverage in the loan-modification process.

In reality, the audits do nothing to help those facing foreclosure, according to state Attorney General Jerry Brown's office.

"It's the latest phony foreclosure-relief 'service' by an industry that continues to be long on promises and short on results," said attorney general spokesman Evan Westrup. "It's another way to get homeowners in distress to pay for services that ultimately aren't helping or providing the relief they need."

Brown's office partnered with the state Department of Real Estate and the State Bar in the warning.

Real Estate Department spokesman Tom Pool said ads offering "forensic loan audits" to distressed homeowners have appeared on TV, radio and in print. Last year, the Real Estate Department investigated more than 2,000 instances of loan-modification scams. Of those, nearly 350 individuals and businesses were ordered to halt illegal activity, according to the attorney general's office.

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