Last updated: August 2009

Scam artists are targeting homeowners who are facing foreclosure. These scams involve thieves who steal people's homes and equity after promising to help save the home from foreclosure.

Mortgage Rescue Scams

Scam artists often find distressed homeowners through public foreclosure notices or government offices. These scam artists make deceptive promises to save the home from foreclosure. Two common forms of deception include:

• "Phantom help" – very high fees charged for very little or nothing but paperwork or unfulfilled promises of assistance until it is too late.
• "Sale-leaseback" – the homeowner surrenders title, thinking they can become a renter and buy the property back over the next few years; however, the scam artist typically sets the price so high that he is able to evict them when they are unable to make the "rent" payments, or when they are unable to afford the repurchase price. The sale-leaseback is often pitched as a loan and sometimes homeowners don't even know they are signing away title to their home.

How to Protect Yourself

• Ignore posters slapped on telephone poles, median strips and at bus stops offering foreclosure help;
• Be wary of an individual or company that tells you to transfer your property deed or title to the company;
• Do not make payments to any party other than the lender;
• Do not sign a quitclaim deed without being specifically instructed by your attorney or representative to do so. Do not agree to any deal that allows you to rent the property and then buy it back at a later date;
• Do not accept an offer from somebody who wants to make good on your missed payments and take the house off your hands in exchange for documents that assigns them the surplus from the foreclosure sale;
• If you cannot afford to keep your home and decide to sell, do so through a licensed real estate agent who will help you sell the home for a fair market price;
• Do not sign anything with blank lines or spaces. Information could be added later without your knowledge;
• Read everything that you sign carefully. Be cautious of any company or individual who pressures you to sign something that you have not read or do not fully understand;
• Don't agree to send payments to an individual or company that is not your lender;
• Be wary of an individual or company that calls itself a "mortgage consultant," "foreclosure service," or something similar;
• Avoid any service that accepts money only by cashier's check or wire transfer;
• Be wary of an individual or company that collects a fee before providing services to you;
• If you do not speak English use your own translator. You should not depend on the "rescue" firm's translator or anyone else's;
• Get your own, independent attorney, rather than using the one selected by the "rescue" firm.
• If you are having trouble paying your mortgage, contact your lender directly. You may be able to renegotiate your payment schedule.

What to Do If You Think You Are a Victim

• Find a consumer lawyer to represent you. Consumer lawyers can be found through the National Association of Consumer Advocates.
• Call 311 for mortgage counseling or 1-866-SAVE-HOME for anti-predatory lending assistance.
• Speak to a counselor certified by the United States Department of Housing and Urban Development (HUD).
• If the scam also involved criminal activity such as forged documents, you should contact your local law enforcement agency for possible recourse.

Real People, Real Stories- Avoid Mortgage Scams

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