Watch Out for Foreclosure Relief Scams

Falling behind on mortgage payments can be stressful, and scammers know it. They target homeowners at exactly the moment they may be most worried about losing their homes, offering what sounds like a quick solution or a way out. 

These schemes often promise to lower your payments, stop a foreclosure, or negotiate with your lender on your behalf. But instead of providing relief, scammers may take your money, damage your credit, or even put ownership of your home at risk.

Foreclosure relief scams come in several forms. Here are five common mortgage relief scams to watch out for:

1. Fake Housing Counseling

Scammers may pose as housing counselors, lawyers, or government and claim they can negotiate with your lender, lower your mortgage payments, or stop a foreclosure. hey may ask for an upfront fee, tell you to stop communicating with your lender, or even instruct you to send your mortgage payments directly to them. 

The Federal Trace Commission warns that in these setups, instead of helping, the scammer might pockets the money while your actual mortgage goes unpaid. By the time you realize what’s happening, you could be further behind on payments and at greater risk of foreclosure.

2. Fake "Forensic Audits"

A scammer may offer to review your mortgage documents for errors, claiming they can uncover problems that could lower what you owe, change the terms of your loan, or even eliminate your mortgage altogether. They’ll typically charge an upfront fee to conduct this so-called “forensic audit.” 

But the audit may provide little or no legitimate help, and the promised mortgage relief never comes. The Consumer Financial Protection Bureau lists this directly as a warning: a scammer "says they're doing a 'forensic audit' of your loan."

3. "Rent-to-Buy" and Leaseback Scams 

A scammer may offer to “save” your home by asking you to sign over the deed, promising to refinance the mortgage and let you stay in the property as a renter until you can buy it back. 

But signing over the deed means giving up ownership of your home. The scammer may then collect your rent, take your home’s equity, or even sell the property while the promised opportunity to buy it back never comes.

4. Equity Skimming

Scammers may search public foreclosure notices to identify homeowners in financial distress and then approach them with an offer to help. A supposed buyer or investor may promise to take over your mortgage payments, protect your credit, or pay you money once the home is eventually sold. 

After taking control of the property, however, the scammer may rent it to someone else and pocket the rental income instead of paying the mortgage. The homeowner can be left without the property or its equity and may still face significant damage to their credit or other financial consequences tied to the unpaid mortgage.

5. Bait-and-Switch Rescue Loans

A scammer may offer you a “rescue loan” or another form of mortgage assistance and pressure you to sign a stack of documents quickly. They may tell you the paperwork will refinance your mortgage, lower your payments, or help you avoid foreclosure.

But hidden among the documents may be paperwork that actually transfers the deed to your home. You may not realize you’ve signed away ownership until it’s too late.

Red Flags to Watch For

• If anyone asks for payment before they've done any work, that's most likely a scam. The CFPB states that companies offering mortgage or foreclosure help "aren't allowed to collect any fees up front."
• Instructions to stop making your mortgage payments or to stop talking to your lender. 
• A request to send your mortgage payments to someone other than your loan servicer. Your payment should only ever go to your lender or servicer, never a third party.
• Pressure to sign over the title or deed to your home, sometimes referred to as a "rent to buy" arrangement.
• Payment requests by wire transfer, cashier's check, gift card, or mobile payment app. These are hard to trace and even harder to get back.
• Documents you're told to sign quickly, without time to read or ask questions. Scammers often create a false sense of urgency in order to cause confusion.
• Mail, email, or calls designed to look like they're from a government agency. Real government officials never ask for payment to help you.

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How to Protect Yourself

• Keep paying your mortgage directly to your lender, and keep talking to them directly. 
• Get help from a HUD-approved housing counselor — this service is free. Or visit consumerfinance.gov/mortgagehelp to get started.
• Call the Homeowner's HOPE Hotline at 1-888-995-HOPE (4673) for free assistance.
• Never sign anything you don't fully understand, and never sign over your deed without review from an independent attorney or housing counselor.
• Get all services, fees, and payment schedules in writing before agreeing to anything.
• If someone claims to be a lawyer, verify their license with your state bar association.

Whenever someone pressures you to act immediately, it's worth slowing down, especially with your home on the line. That urgency is a tactic, not a solution.

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If You Think You've Been Targeted

If you've already paid a fee, signed documents, or transferred your deed, contact your mortgage servicer right away. Contact your servicer or lender immediately, even if the foreclosure process has already started. Then report what happened: file a complaint with the FTC at ReportFraud.ftc.gov or with your state attorney general. Acting quickly matters, so report it immediately if you think you’ve been targeted.

Scammers are constantly changing their tactics, but staying informed is one of the best ways to protect yourself and the people you love. Carefull helps families spot unusual financial activity and provides home title monitoring, so you can be sure your home is protected. Visit getcarefull.com to learn more.

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