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.
The Consumer Financial Protection Bureau wants to make people aware that mortgage loan modification scams are schemes to take people’s money – often by making a false promise to save them 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 advertising, emails or phone calls, or in person.
Here are some examples of mortgage modification and foreclosure prevention scams:
In foreclosure rescue and refinance fraud, scammers offer to act as middlemen between homeowners and lenders to negotiate repayment plans or loan modifications. They can even “guarantee” to save a home from foreclosure. They tell a person to make the mortgage payments directly to them so they can pass the payments on to the lender. Instead, they can pocket that money and leave the individual worse off with a loan.
Scammers create fake “government” modification program 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 people into thinking they are endorsed or affiliated with the federal government.
In sell-leaseback and rent-to-own schemes, scammers trick people into transferring title to them by promising new and better financing. They say people can rent out their house and eventually buy it back. But, if they don’t follow the terms of what’s known as the ‘lease-to-own’ agreement, people can lose their money and their homes. Scammers have no intention of reselling a house to people. They want their house and their money.
- Ask people to pay a fee up front to receive services
- Promise to get people loan modification
- Ask people to sign the title of their property
- Ask people to sign papers they don’t understand
- Saying people should start making payments to someone other than their manager or lender
- Tell people to stop making mortgage payments altogether
Anyone who thinks they have been contacted by a scammer or believes they have been the victim of a mortgage scam should report the scam to the Federal Trade Commission or the Delaware Attorney General. Stop paying the scammer. Individuals can also seek the help of a lawyer.
There are options for those who can’t pay their mortgage or are worried about missing a mortgage payment. The first thing people should do is call their mortgage agent and learn the steps to take, the relief options, and where to go for help with their mortgage.
For more help, contact HUD-certified housing counselors. Housing counselors licensed by the US Department of Housing and Urban Development can discuss options with people if they are having difficulty paying off their mortgage or reverse mortgage. It may also include forbearance or a modified payment schedule.
People who think they have been the victim of a mortgage loan modification scam can also consult a lawyer. There may be resources to help people through the local bar association or legal aid, or for service members, their local legal aid offices. People can contact the Delaware Attorney General’s Office for more information about state protections and file a complaint.
For more information, visit the Consumer Financial Protection Bureau’s website at consumerfinance.gov.