Millions of homeowners have struggled to make their mortgage payments during the COVID-19 pandemic, and it’s important for all homeowners to know about mortgage loan modification scams and how to avoid them.
Mortgage modification scams are schemes to take your money – often by making a false promise to save you from foreclosure. These so-called foreclosure or mortgage advisers often use public notices or lists of distressed borrowers purchased from private companies to find their targets. They may offer to “prevent” foreclosures or “rescue” desperate homeowners from foreclosure through advertisements, emails, phone calls, or in person.
Here are some examples of mortgage modification and foreclosure prevention scams:
Foreclosure rescue and refinance fraud. Scam artists offer to act as intermediaries between homeowners and lenders to negotiate repayment plans or loan modifications. They can even “guarantee” to save your home from foreclosure. They tell you to make the mortgage payments directly to them so they can forward the payments to your lender. Instead, they can pocket your money and leave you worse off on your loan.
Fake “government” modification programs. Scammers create websites that mimic federal websites and use trade names like those used by government agencies. They may use “federal”, “TARP” or other words, acronyms and abbreviations associated with official government programs. These tactics are designed to trick you into believing that they are endorsed or affiliated with the federal government.
Sale-leaseback and lease-purchase regimes. Scammers trick you into transferring your title to them with promises of new and better financing. They say you can rent out your house and eventually buy it back. But, if you don’t follow the terms of the lease-purchase agreement, you can lose your money and your home. The scammers have no intention of reselling your home to you; they want your house and your money.
Asking you to pay a fee in advance to receive services
Promise to get you a loan modification
Ask you to sign the title deed of your property
Asking you to sign papers you don’t understand
Say you should start making payments to someone other than your manager or lender
Telling you to stop making mortgage payments altogether
If you think you have been contacted by a scammer or have been the victim of a mortgage scam, report the scam to the Federal Trade Commission or your state attorney general. Stop paying the scammer. You can also seek the help of a lawyer.
If you can’t pay your mortgage or are worried about missing a mortgage payment, you have options. The first thing to do is call your mortgage broker. Find out what steps to take, relief options and where to go for help with your mortgage.
If you need more help, contact:
HUD approved housing counselors. Housing counselors licensed by the U.S. Department of Housing and Urban Development (HUD) can discuss options with you if you are having difficulty paying off your mortgage or reverse mortgage. It may also include forbearance or a modified payment schedule.
Lawyers. If you think you’ve been the victim of a mortgage loan modification scam, you can also consult a lawyer. There may be resources to help you through your local bar association, legal aid, or, if you are in the military, your local legal aid office.
State Attorney General. You can contact your state attorney general’s office for more information about state protections and file a complaint.