Mortgage Assistance and Foreclosure Relief Scams Prey on Those Who Are Struggling the Most
Scammers know when times get tough and money gets tight, choosing these times t0 step up their efforts to steal your hard-earned money
While you may not have a lot of extra cash, you probably have enough to pay the bills. But many people struggle to make ends meet, sometimes resorting to extremes to pay their mortgages. Scammers know this and target these struggling homeowners. So take a moment to be able to recognize mortgage assistance and foreclosure relief scams and the tactics thieves use to victimize you and your loved ones.
Scammers make their cons look real
Scammers use websites, emails, and other advertising materials with various logos, letterhead, or other marks to trick you into believing that their services are associated with official government agencies, nonprofit organizations, or even legitimate companies with whom you already do business. If you start getting notices from a mortgage company you've never heard of and that sounds weird, it can be easy to spot the scam. But if the scammers are able to figure out which mortgage company has the lien on your home, you might not scrutinize the scammers' communication as thoroughly, leaving you open to victimization.
Many Scammers Want you to pay an upfront fee
Scammers make all sorts of claims, statements and even threats in order to steal your money. But many of these mortgage assistance and foreclosure relief scams have one thing in common. They want some kind of upfront fee before anything happens. Some want a fee to qualify you for government-sponsored relief, such as the nationwide mortgage servicing settlement or the federal Independent Foreclosure Review program, or to negotiate with your lender in order to reduce mortgage payments or to save your home. Some so-called forensic loan 'auditors,' mortgage loan 'auditors,' or foreclosure prevention 'auditors' offer to have an attorney or other expert review your mortgage documents to determine if your lender complied with the law. But, of course, they also want you to pay an upfront fee for that.
Upfront fees are nearly always a dead giveaway that you're dealing with a scammer or some other shady person. Use extreme caution, especially when you're working with someone who contacted you. You should never pay upfront fees in order to receive services. Scammers love to get upfront fees since they can disappear quickly after taking your money. The company must clearly tell you the total fee it will charge you for its services, as well as give you a document from your lender showing the changes to your loan if you decide to accept the offer. It's also illegal for a company to charge you anything until You a written offer for a loan modification or other relief from your lender AND You accept the offer.
Don't stop payments or make payments to someone else
Never follow advice or directions to stop making mortgage loan payments, which will get you into a lot of trouble. If you stop making payments, you will hurt your credit score and severely limit any options you have for legitimate relief. Many scammers want you to stop making payments, often with the promise that something is happening behind the scenes, in order to free up cash flow you can send to them. If they don't ask you to stop payments, they may ask you to make your loan payments to someone other than your loan servicer or lender. If you get a request of any kind asking you to stop payments or make payments somewhere other than where you usually make them, call your lender or loan servicer using a known good phone number, such as one from your loan documents or payment coupons, to verify the legitimacy. Don't call the phone number on the notice or one that is given to you. A scammer will almost always provide you with a fake phone number that rings another scammer's phone.
No One can guarantee success
If you get any promises or guarantees that you'll receive any kind of loan modification, walk away immediately. No person or company can promise or guarantee that you'll receive a loan modification, nor can they guarantee that anything else will happen. Every situation, including yours, is unique. Success in your situation depends upon a variety of different factors that aren't predictable.
Signing Papers can spell trouble
If you are asked to sign papers you don't understand, use extreme caution. Instead, have the documents reviewed by a professional, such as a real estate agent, lender, or an attorney. Most professionals will give you a few minutes of their time at no charge, which may be all the time needed to spot the red flags of a scam. You can also contact a variety of nonprofit organizations, including us, or the North Carolina Attorney General to get an opinion as to whether you're dealing with a scam. If you are ever pressured to sign something, to make a payment, or to do anything else without adequate time to think about it, walk away. Legitimate companies that are conducting business properly won't rush you or pressure you. Scammers want you to feel pressure and to act quickly before you have time to realize what's going on.
Signing over your property
Don't ever work with anyone who asks you to sign over your property, regardless of the reason. As soon as you sign it over, it's no longer your property and there's often very little you can do to fix it. Do not sign over your property.
Legitimate Companies must disclose certain information
Companies are required to spell out important information in their advertisements and telemarketing calls, including that:
- They're not associated with the government;
- Their services have not been approved by the government or your lender;
- Your lender may not agree to change your loan; and
- You may lose your home and damage your credit if it tells you to stop paying your mortgage.
- Companies can't tell you to stop talking to your lender.
- You should always feel free to contact your lender directly to see whether they can offer you additional options. Companies that tell you otherwise are breaking the law.
Companies can't tell you to stop talking to your lender. Companies that tell you otherwise are breaking the law. You should always feel free to contact your lender directly for any reason.
Certain Payments and fee are red flags
If you are being told to make a payment with a gift card, it's definitely a scam. No company limits your payment method to gift cards. In fact, most companies dealing with mortgages and loan modification want payment via guaranteed funds, such as a cashier's check or electronic money transfer.
If you are being pressured to make a payment via electronic transfer, such as through Western Union, you may be dealing with a scammer. While a legitimate company may want you to make a necessary payment via electronic transfer, there shouldn't be any pressure to pay a particular way. And you shouldn't do this at the beginning of the process. Once you send money this way, you won't get it back.
If you have concerns about the legitimacy of a company, you can contact the North Carolina Attorney General to see if there is a history of complaints.
Watch out for Bait-and-Switch scams
In a bait-and-switch scam, scammers give you papers they claim you need to sign in order to get another loan or to make your mortgage current. But buried in the stack is a document that surrenders the title to your house to the scammers in exchange for a "rescue" loan. In addition to losing your home, you can be obligated to repay this loan.
Scammers use the rent-to-buy scheme in order to get you to surrender the title to your house as part of a deal that allows you to stay there as a renter and buy it back later. Surrendering the title won't, as the scammers claim, be a good deal. You lose your ownership in the property while the scammer walks away with your equity. Further, the terms of these deals are so expensive that buying back your home is impossible. As if that wasn't bad enough, if the new owner misses a payment, you're the one who is evicted, even if you made your rent payments.
They say You'll get a portion of the profits
In equity-skimming scams, scammers offer to find a buyer for your home, but only if you sign it over and move out. They promise to pay you a portion of the profit when the home sells. But once you transfer ownership, they simply rent out the home and pocket the proceeds while your lender proceeds with the foreclosure. As a result, you lose your home and you're still responsible for the unpaid mortgage because the ownership transfer does nothing to the mortgage.
Red Flag Phrases
If you see any of these phrases, you're probably dealing with a scam:
- Stop foreclosure now!
- Get a loan modification!
- Over 90% of our customers get results.
- We have special relationships with banks that can speed up the approval process.
- 100% Money Back Guarantee.
- Keep Your Home. We know your home is scheduled to be sold. No Problem!
Share This Information with Others
It can be hard for people to talk about finances, especially if they're in trouble. Even if you're not facing foreclosure yourself, we highly encourage you to share a link to this advice with your friends and family. You never know who you might be able to help.