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
When financial pressures mount and homeowners face the threat of foreclosure, fraudsters ramp up mortgage assistance and foreclosure relief scams. These operations exploit fear and urgency, promising quick fixes for a fee. In reality, victims lose thousands of dollars, miss legitimate relief deadlines and sometimes forfeit their homes. Understanding the tactics, federal protections and state resources can prevent you and your loved ones from falling prey to these schemes.
Recognizing Official Communications
Scammers will mimic government agencies, nonprofit counselors and mortgage servicers by using official-looking logos, letterhead and URLs that are slight variations of legitimate websites. Genuine mortgage relief notices come from your existing loan servicer or the U.S. Department of Housing and Urban Development, not a new company you have never heard of. Always verify the sender by calling the phone number on your mortgage statement or visiting your servicer’s official website rather than responding to the contact information provided in the unsolicited message.
Upfront Fees and the Federal Rule
Under the federal Mortgage Assistance Relief Services Rule, providers cannot charge any upfront fee for mortgage assistance services. Legitimate counselors offer assistance first and collect fees only after you have received a written loan modification or other relief from your lender. If anyone demands payment before services are rendered, that is almost always a scam. Never pay fees via gift cards, prepaid debit cards or cryptocurrency, as these methods are favored by fraudsters and almost impossible to trace or recover.
Never Stop or Redirect Payments
Scammers often instruct homeowners to halt mortgage payments or to send payments to a different address or account. Following these directions will damage your credit, incur late fees and accelerate foreclosure proceedings. Always continue making payments to your known lender or servicer while you investigate any relief offer. If you receive instructions to stop payments or redirect your mortgage check, call your lender directly using the contact information on your mortgage statement to confirm legitimacy.
No Guaranteed Outcomes
No company or individual can guarantee a loan modification, principal reduction or foreclosure prevention. Every homeowner’s circumstances are unique, and lenders evaluate requests based on income, hardship documentation and loan terms. If a provider promises a guaranteed result or promises to stop foreclosure immediately, it is a red flag. Legitimate counselors will explain that approval depends on lender review and that decisions can take 30 to 90 days or more.
Review Documents Carefully
Always read every page of any document before signing. Scammers bury clauses that transfer title or impose excessive fees in lengthy contracts. Have an independent, reputable professional, such as a housing counselor approved by HUD, a real estate attorney or a trusted nonprofit—review documents at no or low cost. If you are pressured to sign immediately or told the offer will expire if you delay, walk away and seek verified help.
Avoid Signing Over Your Property
One of the most destructive scams involves convincing homeowners to sign over their deed under the guise of a “rescue” loan or rent-to-own arrangement. Once the deed is transferred, scammers extract equity, charge exorbitant rent or abandon the property, leaving you with no legal recourse. Never sign any document that transfers ownership or places a lien on your home without independent legal advice.
Required Disclosures for Legitimate Companies
Lawful mortgage assistance providers must disclose in writing that they are not associated with the government, their services have not been approved by your lender, your lender may not agree to changes and you could lose your home if you stop payments. They must provide a written offer from your lender showing the terms of any loan modification before collecting fees. If a company fails to provide these disclosures, it is operating illegally.
Common Payment Red Flags
If you are told to pay with gift cards, prepaid debit cards or crypto, it is definitely a scam. Legitimate fees are collected by check, cashier’s check or electronic transfer directly to the loan servicer after relief is granted. If you face pressure to pay a specific way or immediately, that is a telltale sign of fraud. Always question unusual payment requests and verify with your lender.
Scam Variations to Watch For
Bait-and-Switch: Fraudsters send a stack of papers claiming to ease your foreclosure, but one document secretly transfers your deed.
Rent-to-Buy Schemes: You sign over title while remaining as a “tenant” with the promise to repurchase later. The terms are so onerous that buyback becomes impossible and you lose both equity and home.
Equity Skimming: Scammers recruit you to transfer the deed, then rent out your home and pocket the income while letting the mortgage fall into default.
Red Flag Phrases
- “Stop foreclosure now!”
- “Guaranteed loan modification”
- “100 percent money-back guarantee”
- “Special relationships with banks”
- “You don’t need to speak with your lender”
Reporting Scams and Seeking Help
If you suspect a scam, report it immediately. Contact the Federal Trade Commission at 1-877-FTC-HELP or file a complaint online. North Carolina homeowners can also reach the North Carolina Attorney General Consumer Protection Division at 919-716-6000 and the North Carolina Department of Insurance Consumer Services at 1-855-408-1212. Certified HUD housing counselors offer free, unbiased advice and can be found through the U.S. Department of Housing and Urban Development.
Staying Ahead of New Scams
Scammers adapt quickly, using AI-generated voice calls, cloned websites and text message phishing to impersonate trusted entities. Enable multi-factor authentication on your email and financial accounts, use strong unique passwords, and verify any unsolicited outreach by visiting official websites directly. Sign up for scam alerts from the FTC and state agencies to receive timely warnings about emerging fraud trends.
By staying informed, preserving a paper trail and consulting legitimate resources, you can protect your home and finances from predatory scams. Share this advice with friends and family so your network remains safe when times get tough.