Mortgage Assistance and Foreclosure Relief Scams Prey on Those Affected by Government Shutdown
Scammers are setting their sights on home owners affected worst by federal government shutdown
As the longest-ever government shutdown rolls on, people are having to resort to more and more extreme measures to make ends meet. Scammers, unfortunately, know this and are making the rounds to take advantage of unsuspecting homeowners. That's why it's important to make sure you are aware of mortgage assistance and foreclosure relief scams and the tactics scammers use to steal whatever money you still have.
Scammers make their cons look real
Scammers use websites, emails, and other advertising materials with government 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 do business. If you get notices from a mortgage company you've never heard of, it can be easy to spot the scam. But if the scammers is able to figure out which mortgage company has the lien on your home, you might not scrutinize the scammers' communication as thoroughly.
Many Scams Simply Want you to pay an upfront fee
Scammers make all sorts of claims 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 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.
Upfront fees are nearly always a dead giveaway that you're dealing with a scam. Use extreme caution when paying an upfront fee, especially when you're working with someone who contacted you, not the other way around.
Don't stop payments or make payments to someone else
Never follow advice or directions to stop making mortgage loan payments. If you stop making payments, you will hurt your credit score and severely limit any options you have for legitimate relief. Additionally, never start making payments to someone other than your loan servicer or lender. If you receive a notice from your loan servicer or lender, call first to make sure it's legitimate. Don't call the phone number on the notice. Instead, call the phone number on your payment coupon or loan documents. The number on the notice may be fake.
No One can guarantee success
If you get promises or guarantees that you'll receive a loan modification, walk away. 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 and success depends upon a variety of different factors.
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. 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 being pressured to sign something immediately, to make a payment immediately, or to do anything else without adequate time to review, walk away. Legitimate companies who are conducting business properly won't rush or pressure you.
Don't ever work with anyone who asks you to sign over the title to your property. As soon as you sign it over, it's no longer your property.
Never pay upfront fees
Never under any circumstances 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.
Legitimate Companies must disclose certain information
Companies are legally 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. 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.
Certain Payments and fee should be 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. But use caution, even with these payment method methods.
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 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/borrower misses a payment, you're the one who is evicted, even if you made your rent payments.
You'll get a portion of the profits
In equity-skimming scam, scammers offer to find a buyer for your home, but only if you sign over the deed 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 transfer 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!
Report suspected scams
A mortgage assistance or foreclosure relief scam could cost you your home. If you think you are being scammed or have already been scammed, report it immediately. The longer you wait, the more difficult it could be to prevent serious problems.
- Contact your State Attorney General.
- Report a scam to the federal Financial Fraud Enforcement Task Force.
- File a complaint with the Federal Trade Commission (FTC).
- File a complaint with the Consumer Financial Protection Bureau.
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.