Homeowner Rescue Scams

Although the thought of losing your home to foreclosure can be a very frightening prospect, there are a large number of scam artists who prey on homeowners at risk of foreclosure with rescue scams that can leave you in even worse financial shape than foreclosure.  For a homeowner facing the frightening threat of foreclosure, the offers from mortgage rescue scam artists often sound too good to be true and make the alluring claim that they can help save your credit and your home.

In some cases, the scam artist offers to provide phantom assistance in working as an intermediary with a mortgage lender to obtain a forbearance or modification on the loan, collect an up-front payment for services and then never provide any of the promised services.  In most cases, the homeowner could have obtained these services for free by simply calling a HUD-certified housing counselor or calling their mortgage lender and discussing their options with the lender.

In other cases, the scam artist offers to pay off the delinquent mortgage loan for the homeowner and allows the homeowner to continue to live in the property by paying rent to the scam artist.  However, the scam artist in fact did not make any payments to the mortgage lender, convinces the homeowner to sign over the deed to the property and steals the rent that was paid by the homeowner.

In all cases, these homeowner rescue scam artists take up-front payments and fail to deliver on any of the promises that were made during high-pressure sales pitches.  Thankfully, there are many resources available to help you avoid homeowner rescue scams and the Federal Trade Commission (FTC), the nation’s consumer protection agency, has adopted a rule that protects homeowners from the negative effects of these homeowner rescue scams.

Know Your Rights:  The Federal Trade Commission’s new rule on “mortgage assistance relief service” providers provides you with important rights and sets out explicit requirements for anyone who attempts to sell you these types of services.  These rights include:

  1. You do not have to pay any money to anyone until the company delivers the results to you that they promised.  Under the rule, it is illegal for the company to attempt to collect any up-front fee from you for any of the promised services.

  2. Anyone who contacts you offering these types of services must disclose key information to you about their services, including that they are not associated with any government entity and that you should feel free to contact your mortgage lender to discuss your options.  If these disclosures are not provided, the company is not providing legal services under the FTC’s rule.

Warning Signs:  Fortunately, there are several very common warning signs to look for when you are contacted by anyone who offers to help you avoid foreclosure.  As a starting point, you should avoid anyone who makes the following statements:

  1. Tells you not to contact your mortgage lender, attorney or housing counselor;

  2. Claims that all or most of its customers get loan modifications or mortgage relief;

  3. Asks for an up-front payment or fee before they provide you with any services;

  4. Accepts payment only by a cashier’s check or wire transfer;

  5. Encourages you to lease your home from them so you can buy it back over time;

  6. Tells you to make your mortgage payments directly to them, rather than to your lender;

  7. Tells you to transfer the deed to your property to them;

  8. Offers to buy your home for cash for much lower than the selling price of similar homes; or

  9. Pressures you to sign papers that you have not had a chance to read thoroughly or that you do not understand.

Where to Find Legitimate Help:  If you need any type of assistance in avoiding foreclosure or attempting to stay in your home, you should first immediately contact your mortgage lender who may be able to work with you to provide you with options that would allow you to avoid foreclosure and stay in your home.  You can also contact a HUD-certified housing counselor through the Homeownership Preservation Foundation (HPF), a non-profit organization that operates the national 24/7 toll-free hotline (1.888.995.HOPE) or at hopenow.com.

More Resources are Available for Homeowners to Avoid Homeowner Rescue Scams:  If you are struggling to make your mortgage payments or facing the imminent threat of foreclosure, you should know how to avoid homeowner rescue scams and contact legitimate assistance providers who can provide you with valuable and free services to help you avoid foreclosure and potentially stay in your home.  Please take the time to review the information available on the following resources:

 

                       List of Housing Counselors in Kansas – U.S. Department of Housing and Urban Development


                       Information on Mortgage Relief Scams – Federal Trade Commission


                       Loan Modification Scam Alert – NeighborWorks® America