According to the U.S. Government Accountability Office, there are two primary types of foreclosure rescue and loan modification scams:
- Advance-fee loan modification scheme: This occurs when you are asked to pay a fee ahead of time for the promise of a guaranteed loan modification.
- Sales-leaseback scheme: While there are several versions of this scam, at its core it involves the homeowner surrendering the title to his/her home in exchange for being allowed to continue occupying it as a renter, buying the home back over the next few years. Once the title is turned over, however, the scam artist forces the homeowner out of the home.
Six Warning Signs That You Are Being Scammed
- A company/person asks for a fee in advance to work with your lender to modify, refinance, or reinstate your mortgage. In addition to such fees being prohibited by the FTC, the company/person demanding one will likely take your money without performing any of the services.
- A company/person guarantees they can stop a foreclosure or get your loan modified. No one other than your lender can guarantee they can stop foreclosure or modify your loan.
- A company/person advises you to stop paying your mortgage company and pay them instead. Under no circumstance should you ever send a mortgage payment to anyone other than your mortgage lender.
- A company/person pressures you to sign over the title to your home or sign any paperwork that you haven’t read or don’t fully understand. A legitimate housing advisor should not and will not pressure you to sign a document of any kind. Remember, surrendering the title to your home is one of the two primary ways people get scammed every day!
- A company/person claims to offer “government-approved” or “official government” loan modifications. Scam artists often pretend to be affiliated with the federal government. Be sure to check any third-party’s credentials by contacting your mortgage lender or by calling our Homeowner’s HOPE Hotline at 888-995-HOPE™ to learn more about government programs for which you may qualify.
- A company/person you don’t know asks you to release personal financial information. Always confirm that you are speaking with a legitimate company/person by contacting your mortgage lender directly or by calling our Homeowner’s HOPE™ Hotline at 888-995-HOPE™.
