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Tuesday, April 20, 2010

New TARP plan prone to scams

According to a top administrator of the Troubled Asset Relief Program (TARP), the recent changes to the program could lead to increased fraud. In a quarterly report issued on Tuesday the program's Inspector General Neil Barofsky says that frequent changes to the programs provide opportunities for experienced criminal elements to prey on desperate homeowners.

The program has already spawned several scams in which borrowers are fraudulently persuaded to pay upfront fees for nonexistent modifications, added Barkofsky. He complained that the Treasury Department isn't requiring appraisals in advance of principle reductions, making it easier for lenders to fraudulently qualify for incentive payments.

The report concluded that No program of this type and scale can be considered well designed without robust protections of taxpayer funds against the predation of criminals.

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