If It’s Too Good to be True,It Probably Is

Beware of Foreclosure

Rescue and Loan

Modication Scams

To protect yourself from opportunity hunters and frauds: 

 • Contact your lender or mortgage loan servicer and try to

 negotiate a payment plan.

 • Work with reputable non-profit housing or financial

 counselors.  

 • Report suspicious activity.

Read more inside or go to the resources section on the back panel 

for whom to contact for immediate help.

General Resources

FDIC Foreclosure Prevention Website

www.fdic.gov/foreclosureprevention

(877) ASKFDIC or (877) 275-3342

Government-sponsored Mortgage Modification and Refinance Programs

 • Making Home Affordable

 www.makinghomeaffordable.gov/

 • HOPE for Homeowners (H4H)

 http://portal.hud.gov/

 (800) CALL-FHA or (800) 225-5342

Foreclosure Mitigation Assistance and Counseling

 • U.S. Department of Housing and Urban Development

 www. hud.gov/offices/hsg/sfh/hcc/fc/ or www.hud.gov

 (800) 569-4287

 • Homeownership Preservation Foundation

 www.995hope.org

 (888) 995-HOPE

 • NeighborWorks America

 www.findaforeclosurecounselor.org/ or www.nw.org/network/home.asp

Report Foreclosure Scams

 • Federal Trade Commission

 www.ftccomplaintassistant.gov/ or 

 www.ftc.gov/bcp/menus/consumer/credit/mortgage.shtm

 (877) FTC-HELP or (877) 382-4357

 • State Attorney General Contact List

 www.naag.org/attorneys_general.php

 • State, County and City Consumer Protection Offices

 www.consumeraction.gov/state.shtml

If you believe that you are the victim of criminal activity, such as 

forged documents being presented for your signature, you should 

contact your local law enforcement agency. 

Protect Yourself

Know with whom you are dealing. Before 

you hand over any money or provide any personal 

information, check out the company or person. You 

can check your local Better Business Bureau or state 

consumer protection office to see if the company or organization is 

legitimate and if any complaints have been filed. 

Contact reputable non-profit housing or financial counselors, 

such as those you can find by contacting the:

• U.S. Department of Housing and Urban Development 

 (HUD) at (800) 569-4287 or 

 www.hud.gov/offices/hsg/sfh/hcc/hccprof14.cfm

• Homeownership Preservation Foundation at 

 (888) 995-HOPE or www.995hope.org.

Know what you are signing. Read and understand every document you sign. If a document is too complex, seek advice from a lawyer 

or trusted financial counselor. Never sign documents with blank spaces 

that can be filled in later. Never sign a document that contains errors or 

false statements, even if someone promises to correct them later. 

Get promises in writing. Oral promises and agreements relating 

to your home are usually not legally binding. Protect your rights with a 

written document or contract signed by the person making the promise. Keep copies of all documents you sign. 

Make your mortgage payments directly to your lender or the 

mortgage servicer. Do not trust anyone else to make mortgage payments for you. 

Never sign over your deed until you clearly understand what 

will happen to your rights to your home. Foreclosure scams often 

require you to “temporarily” sign over ownership of your home to 

another claiming it would be only as a means to help you. Consult with 

a HUD-approved homeowner counseling agency.

Report suspicious activity to the Federal Trade Commission, your 

State Attorney General’s Office or your state and local consumer 

protection agencies. Reporting con artists and suspicious schemes 

helps prevent others from becoming victims.

Federal Deposit Insurance Corporation

www.fdic.gov/foreclosureprevention

05/09 • FDIC-026-2009
Warning Signs That You May Be Dealing 

With A Mortgage Foreclosure Scam Operator 

If The Company:

Demands a fee in advance. No legitimate organization that works with 

borrowers to avoid foreclosure will ever ask for money up front.

YZ

Offers to negotiate a loan modification for you for a fee.

YZ

Makes unsolicited offers or “lofty” advertisements, 

claiming they can help save your home.

YZ

Recommends you break off contact with the lender and any counselor that you 

may have been working with.

YZ

Advises you to stop making mortgage payments.

YZ

Tells you to send your mortgage payment to anyone other than your loan 

servicer. 

YZ

Instructs you to transfer ownership of your property. 

YZ

Makes verbal promises that aren’t put in writing. 

YZ

Asks you to sign a document that has blank lines or spaces. 

Beware of Unethical Mortgage Foreclosure 

Rescue and Loan Modification Operators

A fairly new and dangerous threat has arisen for homeowners who 

have fallen behind on their mortgage payments and may be at risk of 

foreclosure – opportunistic companies. They often refer to themselves as 

a “foreclosure consultant”, “mortgage consultant,” and market themselves 

as a “foreclosure service”, “foreclosure rescue agency” or “loan modification company”. They count on homeowners being vulnerable and 

desperate. 

These companies claim they can assist homeowners facing foreclosure with options that allow them to keep their property, refinance or 

modify an existing mortgage, repair credit or help “buy more time.” In 

reality, these “options” are intended to convince you to take the wrong 

steps so they can take your money and possibly your home. 

Remember the old saying, “If it’s too good to be true, it probably is.” 

Be safe. It is important that you take action by contacting your mortgage lender – or any legitimate financial counselor – to find real options 

to avoid foreclosure. A number of agencies provide free counseling 

services to homeowners who are having trouble making ends meet (see 

the “Protect Yourself and Resources Sections”). These agencies can help 

you explore your options, which may range from modifying your loan to 

refinancing your loan to selling your home and using any equity to start 

over.

Watch Out for the Common 

Foreclosure Rescue and Loan

Modification Scams 

Lease-Back or Repurchase Scams – In this scenario, a promise is 

made to pay off your delinquent mortgage, repair your credit and possibly pay off credit cards and other debt. However, in order to do this, you 

must “temporarily” sign your deed over to a “third party” investor. You are 

allowed to stay in the home as a renter with the option to purchase the 

home back after a certain amount of time has passed or your financial 

situation improves. The trouble is once you have signed away your rights 

in your property, you may not be able to repurchase the property later, 

even if you can and want to. After the new owner takes ownership of 

your property, the new owner can evict you. Furthermore, the scammer is under no obligation to sell the house back to you. Typically, after 

the deed is signed away, the property changes hands numerous times. 

The scammer may have taken a new mortgage out on your home for 

hundreds of thousands of dollars more than your mortgage, making it 

impossible for you to buy back your home.

Partial Interest Bankruptcy Scams – The scam operator asks you 

to give a partial interest in your home to one or more persons. You then 

make mortgage payments to the scam operator in lieu of paying the 

delinquent mortgage. However, the scam operator does not pay the 

existing mortgage or seek new financing. Each holder of a partial interest 

then files bankruptcy, one after another, without your knowledge. The 

bankruptcy court will issue a “stay” order each time to stop foreclosure 

temporarily. However, the stay does not excuse you from making payments or from repaying the full amount of your loan. This complicates 

and delays foreclosure, while allowing the scam operator to maintain a 

stream of income by collecting payments from you, the victim. Bankruptcy laws provide important protections to consumers. This scam can only 

temporarily delay foreclosure, and may keep you from using bankruptcy 

laws legitimately to address your financial problems.  

Refinance Scams – While there are legitimate refinancing programs 

available, look out for people posing as mortgage brokers or lenders 

offering to refinance your loan so you can afford the payments. The 

scammer presents you with “foreclosure rescue” loan documents to sign. 

You are told that the documents are for a refinance loan that will bring 

the mortgage current. What you don’t realize is that you are surrendering 

ownership of your home. The “loan” documents are actually deed transfer 

documents, and the scammer counts on your not actually reading the 

paperwork. Once the deed transfer is executed, you believe your home 

has been rescued from foreclosure for months or even years until you 

receive an eviction notice and discover you no longer own your home. At 

that point, it is often too late to do anything about the deed transfer. 

Internet and Phone Scams - Some scam lenders convince you to apply for a low-interest mortgage loan on the phone or Internet. They then 

extract vital information, such as your social security and bank account 

numbers. In this scam, the loan is immediately accepted, after which you 

start faxing the documents and sending wire transfer payments to the 

phony company without even meeting the lender. Unfortunately, this 

scam will put you in twice as much trouble--your personal details have 

been stolen or sold, putting you at risk of identity theft, and your home is 

still at risk of foreclosure.

Phantom Help Scams - The scam operator presents himself as 

someone who is able to help a homeowner out of foreclosure or qualify 

for a government loan modification or refinance program. In exchange 

for his or her “services,” outrageous fees are charged and grand promises 

are made for robust representation, which never occurs. The “services” 

performed entail light paperwork or occasional phone calls that you 

could easily have made yourself. In the end, you are worse off than before, because you have little or no time to save your home, or seek other 

assistance.

Caught in a Foreclosure or Loan Modification 

Scam?

If you get caught in one of these scams, it is imperative that you contact a lawyer right away. An attorney can assist you as you 

navigate your way through the process. Lower income individuals may 

be able to find free legal services; see 

http://www.findlegalhelp.org.

Tips for Avoiding Mortgage Foreclosure 

Rescue and Loan Modification Scams