Mortgage Assistance Relief Scams:

Another Potential Stress for Homeowners in Distress 

The possibility of losing your home to foreclosure can 

be terrifying. The reality that scam artists are preying 

on desperate homeowners is equally frightening. Many 

companies say they can get a change to your loan 

that will reduce your monthly 

mortgage payment or take 

other steps to save your 

home. Some claim that 

nearly all their customers 

get successful results 

and even offer a moneyback guarantee. Others 

say they’re affiliated with the 

government or your lender and still 

others promise the help of attorneys or real estate 

experts.

Unfortunately, many companies use half-truths 

and even outright lies to sell their services. They 

promise relief, but don’t deliver. In fact, many of these 

companies leave their homeowner customers in worse 

financial shape. 

The Federal Trade Commission (FTC), the nation’s 

consumer protection agency, has a Rule in place to 

protect homeowners. The Mortgage Assistance Relief 

Services (MARS) Rule makes it illegal for companies 

to collect any fees until a homeowner has actually 

received an offer of relief from his or her lender and 

accepted it. That means even if you agree to have a 

company help you, you don’t have to pay until it gets 

you the result you want.

If you’re struggling to make mortgage 

payments or facing foreclosure, the 

FTC wants you to know how to 

recognize a mortgage assistance 

relief scam and exercise your 

rights under the new Rule. 

And even if the foreclosure 

process has already begun, 

the FTC and its law enforcement 

partners want you to know that legitimate options are 

available to help save your home.

How the Scams Work

Fraudsters use a variety of tactics to find homeowners 

in distress. Some sift through public foreclosure 

notices in newspapers and on the internet or through 

public files at local government offices, and then 

send personalized letters to homeowners. Others 

take a broader approach through ads on the internet, 

on television or radio, or in newspapers; posters on 

telephone poles, median strips, and at bus stops; or 

February 2011
2 FTC Facts For Consumers

flyers, business cards, or people at your front door. The 

scam artists use simple – but potentially deceptive – 

messages, like: 

“Stop foreclosure now!” 

“Get a loan modification!”

“Over 90% of our customers get results.”

“We have special relationships with banks that 

can speed up the approval process.”

“100% Money Back Guarantee.”

“Keep Your Home. We know your home is 

scheduled to be sold. No Problem!”

Once they have your attention, they use a variety of 

tactics to get your money. By knowing how their scams 

work, the FTC says you’ll be better able to defend 

against fraud.

Phony Counseling or Phantom Help

The scam artists tell you that if you pay them a fee, 

they’ll negotiate a deal with your lender to reduce your 

mortgage payments or to save your home. They may 

claim to be attorneys or represent a law firm. They may 

tell you not to contact your lender, lawyer, or credit 

counselor. They promise to handle all the details once 

you pay them a fee. Then they stop returning your calls 

and take off with your money.

Sometimes, phony counselors insist you make your 

mortgage payments directly to them while they 

negotiate with the lender. They may collect a few 

months of payments – and then disappear.

The “Forensic Audit”

In exchange for an upfront fee, so-called forensic loan 

“auditors,” mortgage loan “auditors,” or foreclosure 

prevention “auditors” offer to have an attorney or 

other expert review your mortgage documents to 

determine if your lender complied with the law. 

The “auditors” say you can use their report to avoid 

foreclosure, speed the loan modification process, 

reduce what you owe, or even cancel your loan. In 

fact, there’s no evidence that forensic loan audits 

will help you get a loan modification or any other 

mortgage relief. 

Rent-to-Buy Schemes

Con artists who use the rent-to-buy scheme tell you 

to surrender the title to your house as part of a deal 

that allows you to stay there as a renter and buy it 

back later. They say that surrendering the title will let a 

borrower with a better credit rating get new financing 

and prevent the loss of the home. But the terms of 

these deals usually are so expensive that buying back 

your home becomes impossible. You lose the house 

and the scam artist walks off with the money you put 

into it. Worse, when the new borrower defaults on the 

loan, you’re the one who’s evicted.

In a variation, the scam artist raises the rent over 

time so you can’t afford it. After missing several rent 

payments, you’re evicted, leaving the “rescuer” free to 

sell the house.

In a similar equity-skimming scam, fraudsters offer to 

find a buyer for your home, but only if you sign over 

the deed and move out. They promise to pay you a 

portion of the profit when the home sells. Once you 

transfer the deed, they simply rent out the home and 

pocket the proceeds while your lender goes ahead 

with the foreclosure. The result: You lose your home 

– and you’re still responsible for the unpaid mortgage 

because transferring the deed does nothing to transfer 

what you owe on the mortgage.

Bait-and-Switch

In a bait-and-switch scam, con artists give you papers 

they claim you need to sign to get another loan to 

make your mortgage current. But buried in the stack is 

a document that surrenders the title to your house to 

the scammers in exchange for a “rescue” loan.
FTC Facts For Consumers 3

Know your Rights

The FTC’s MARS Rule gives you rights – and sets out 

requirements for people who sell mortgage assistance 

relief services:

You don’t have to pay any money until the 

company delivers the results you want. It’s 

illegal for a company to charge you a penny until: 

1 it’s given you a written offer for a loan 

modification or other relief from your lender; and 

2 you accept the offer. The company also must give 

you a document from your lender showing the 

changes to your loan if you decide to accept your 

lender’s offer. And the company must clearly tell 

you the total fee it will charge you for its services. 

Companies must disclose key information. 

The Rule requires companies to spell out important 

information in their advertisements and telemarketing 

calls, including that: 

Q They’re not associated with the government, 

and their services have not been approved 

by the government or your lender; 

Q Your lender may not agree to change your loan;

Q If a company tells you to stop paying 

your mortgage, it also has to warn you 

that doing so could result in your losing 

your home and damaging your credit.

Q Companies can’t tell you to stop talking to your 

lender. You should always feel free to contact 

your lender directly to see whether they can 

offer you additional options. Companies that 

tell you otherwise are breaking the law.

If a company doesn’t follow these rules, it could be 

trying to scam you.

Getting Help from 

a Lawyer

Some lawyers may offer to help you get a loan 

modification or other mortgage relief. Under the 

MARS Rule, lawyers can require you to pay an 

upfront fee, but only if:

Q They’re licensed to practice law in the state 

where you live or your house is located; 

Q They’re providing you with real legal services;

Q They’re complying with state ethics 

requirements for attorneys; and

Q They place the money in a client trust account, 

withdraw fees only as they complete actual legal 

services, and notify you of each withdrawal.

Unfortunately, some people advertising mortgage 

assistance relief services falsely claim to be getting 

you help from lawyers. So before you hire someone 

who claims to be an attorney or claims to work with 

attorneys, do your homework: 

Q Get the name of each attorney who’ll be 

helping you, the state or states where the 

attorney is licensed, and the attorney’s license 

number in each state. Your state has a licensing 

organization – or “bar” – that monitors 

attorney conduct. Call your state bar or check 

its website to see if an attorney you’re thinking 

of hiring has gotten into trouble. The National 

Organization of Bar Counsel has links to your 

state bar: www.nobc.org/Bar_Associations_

and_Disciplinary_Authorities.aspx

Q Ask relatives, friends, and others you trust for 

the name of an attorney with a proven record of 

getting help for homeowners facing foreclosure.

Q Beware of attorneys who make bold promises 

or try to pressure you into hiring them.

Warning Signs

If you’re looking for a loan modification or other help 

to save your home, avoid any business that: 

Q guarantees to get you a loan modification 

or stop the foreclosure process – no 

matter what your circumstances;

Q tells you not to contact your lender, 

lawyer, or housing counselor;
4 FTC Facts For Consumers

For The Consumer Federal Trade Commission

ftc.gov 1-877-ftc-help

Q claims that all or most of its customers get loan 

modifications or mortgage relief;

Q asks for an upfront fee before providing you with 

any services (unless it’s a lawyer you’ve checked out 

thoroughly);

Q accepts payment only by cashier’s check or wire 

transfer;

Q encourages you to lease your home so you can buy 

it back over time;

Q tells you to make your mortgage payments directly 

to it, rather than your lender;

Q tells you to transfer your property deed or title 

to it;

Q offers to buy your house for cash for much lower 

than the selling price of similar houses in your 

neighborhood; or

Q pressures you to sign papers you haven’t 

had a chance to read thoroughly or that you 

don’t understand. 

Where to Find 

Legitimate Help

If you’re having trouble paying your mortgage or 

have gotten a foreclosure notice, contact your lender 

immediately. You may be able to negotiate a new 

repayment schedule. 

Other foreclosure prevention options, including 

reinstatement and forbearance, are explained in 

Mortgage Payments Sending You Reeling? Here’s 

What to Do, a publication from the FTC. Find it 

at ftc.gov/yourhome.

You also may contact a credit counselor through the 

Homeownership Preservation Foundation (HPF), 

a nonprofit organization that operates the national 

24/7 toll-free hotline (1.888.995.HOPE) with free, 

bilingual, personalized assistance to help at-risk 

homeowners avoid foreclosure. HPF is a member of 

the HOPE NOW Alliance of mortgage servicers, 

mortgage market participants and counselors. More 

information about HOPE NOW is at hopenow.com.

Report Fraud

If you think you’ve been the victim of foreclosure 

fraud, contact the Federal Trade Commission, ftc.gov, 

or your state Attorney General’s office, naag.org or the 

Better Business Bureau, bbb.org.

For More Information

To learn more about mortgages and other creditrelated issues, visit ftc.gov/credit and MyMoney.gov, 

the U.S. government’s portal to financial education.

The FTC works to prevent fraudulent, deceptive 

and unfair business practices in the marketplace 

and to provide information to help consumers spot, 

stop and avoid them. To file a complaint or get free 

information on consumer issues, visit ftc.gov or call 

toll-free, 1-877-FTC-HELP (1-877-382-4357); 

TTY: 1-866-653-4261. Watch a new video, 

How to File a Complaint, at ftc.gov/video to learn 

more. The FTC enters consumer complaints into 

the Consumer Sentinel Network, a secure online 

database and investigative tool used by hundreds of 

civil and criminal law enforcement agencies in the U.S. 

and abroad.

Federal Trade Commission

Bureau of Consumer Protection

Division of Consumer and Business Education