Avoid Mortgage Loan Modification Scams

By Consumer Financial Protection Bureau

March 17, 2022

Millions of homeowners 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 loan modification scams are schemes to take your money – often by making a false promise of saving you from foreclosure. These so-called foreclosure or mortgage consultants 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 advertising, email, phone calls or in person.

Examples of scams related to mortgage modification and foreclosure prevention include, among others:

Foreclosure rescue and refinance fraud. Scam artists offer to act as intermediaries between homeowners and lenders to negotiate repayment plans or loan modifications. They may even "guarantee" to save your home from foreclosure. They tell you to make mortgage payments directly to them so they can forward payments to your lender. Instead, they may pocket your money and leave you in worse shape on your loan.

Fake "government" modification programs. Scam artists create websites that mimic federal websites and use business 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 fool you into thinking they are approved by, or affiliated with, the federal government.

Leaseback and rent-to-buy schemes. Con artists entice you to transfer your home title to them with promises of new and better financing. They say you can rent your home and eventually buy it back. But, if you do not comply with the terms of the rent-to-buy agreement, you can lose your money and your home. Scammers have no intention of selling your home back to you; they want your home and money.

Scammers may:
• Ask you to pay fees upfront to receive services
• Promise to get you a loan modification
• Ask you to sign over the title to your property
• Ask you to sign papers that you do not understand
• Say you should start making payments to someone other than your servicer or lender
• Tell you to stop making mortgage loan payments altogether

If you believe you have been contacted by a scammer or if you have been the victim of a mortgage scam, report the scam to the Federal Trade Commission ( https://reportfraud.ftc.gov/#/ ) or call the Florida State Attorney General Fraud Hotline 1-866-966-7226. Stop paying the scammer.

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 servicer. Learn the steps to take, relief options, and places to go to get help with your mortgage.

If you need more help, reach out to HUD-Approved Housing Counselors. The U.S. Department of Housing and Urban Development (HUD)-approved housing counselors https://www.consumerfinance.gov/find-a-housing-counselor/ can discuss options with you if you’re having trouble paying your mortgage loan or reverse mortgage loan. This may also include forbearance or a modified payment program. If you think you may have been a victim of a mortgage loan modification scam, you may also want to consult an attorney.