Foreclosure Rescue/Loan Modification Scams

Foreclosure rescue and loan modification scams come in many forms, but the premise of each is a false promise that the scammer will save the consumer’s home.  Consumers who are looking for foreclosure prevention assistance should avoid any company that:

  • Guarantees to stop the foreclosure process regardless of what your circumstances are;
  • Instructs you not to contact your lender, lawyer, credit or housing counselor;
  • Collects a fee before providing you with any services;
  • Encourages you to lease your home so you can buy it back over time;
  • Tells you to make your mortgage payments directly to the company, rather than your lender; and/or
  • Tells you to transfer your property deed or title to the company.

Pitches from scam artists may sound like a way for you to prevent foreclosure, but their intentions are to take your money, not help you keep your house.  The Department is aware of the following scams:

  • The foreclosure prevention specialist: This “specialist” is a scam artist who charges outrageous fees in exchange for making a few phone calls or completing some paperwork – all things the homeowners could easily do themselves.  None of these actions results in saving the home.  This scam gives homeowners a false sense of hope, delays them from seeking qualified help, and exposes their personal financial information to a fraudster.
  • The lease/buy back: This scam deceives homeowners into signing over the deed to their home to a scam artist.  The scam artist tells them they will be able to remain in the house as a renter and that the homeowner will eventually have the opportunity to buy the house back.  Usually, the terms of this scheme are so demanding that the buy-back becomes impossible, the homeowner turned renter gets evicted, and the scam artist walks off with most or all of the equity.
  • The bait-and-switch:  This scam convinces homeowners that they are signing documents to bring the mortgage current.  Instead, they are signing over the deed to their home to a scam artist.  Homeowners usually don’t know that they’ve been scammed until they get an eviction notice.

Many federal agencies have published guides and information to assist homeowners who may be struggling to make their mortgage payments.  A few of these guides designed to help consumers avoid foreclosure related scams are linked below:

If you are having trouble paying your mortgage or you have received a foreclosure notice, then you should contact your lender immediately.  Be aware that there is never a fee to get assistance from your lender or from a HUD approved housing counselor.  For more information on assistance that may be available to you, please visit “Foreclosures.”