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Don't Become a Victim of Foreclosure Fraud

someone attempting foreclosure fraud

Mortgage loan frauds are on the rise across the country. Foreclosure scammers use phone calls, direct mail, the Internet, email and even door-to-door solicitations to attract potential victims.

If you’re struggling to remain in your home, you’re a prime target for foreclosure fraud.

What You Should Know

Too good to be true. Stay away from financial solutions that sound too good to be true. Scam artists will offer quick-fix foreclosure advice for a price.

Be wary of any company that contacts you. They read foreclosure listings and then contact desperate homeowners with shady deals.

Know what you are signing. Don't let a counselor pressure you into signing paperwork you haven't had a chance to read thoroughly or don't understand. You may be signing onto foreclosure fraud without knowing it.

Rent backs. Beware of individuals or companies that want to buy your home and let you rent it back. The rent will be excessive, and the buy-back price could be 50 percent higher than the sale price. They also can evict you whenever they want.

Change in loan terms. Another form of mortgage loan fraud involves changing your loan terms if you agree to a big payment in advance and then stop paying your lender. Often, they don’t follow through on payments, causing you to default.

Don't believe the scammers. Scammers tell homeowners that free foreclosure-prevention services don’t have the staffing or financial leverage to get quick relief on the loan. That’s not true.

Never pay in advance. A loan modification service should not ask you to pay them in advance.

If you’ve fallen behind on your mortgage payments, legitimate housing counselors and other resources are available at no or low cost to help you. Contrary to what those committing mortgage loan fraud would have you believe, you should not have to pay hundreds or thousands of dollars for assistance.

It’s important to work only with a nonprofit counselor that’s approved by the U.S. Department of Housing and Urban Development (HUD). For a list of certified counselors, visit HUD or call 877-HUD-1515 (877-483-1515). If the organization which you are considering working with is not on the list, switch to one that is.

If you believe you are a victim of foreclosure fraud, trust your instincts and ask for help. Report suspicious schemes to the Consumer Financial Protection Bureau.

[Any reference to a specific company, commercial product, process or service does not constitute or imply an endorsement or recommendation by the National Endowment for Financial Education.]