Foreclosure Scams Are Up 407%. Here's How to Protect Yourself.
Scammers target homeowners in distress because they're desperate, ashamed, and making decisions under extreme stress. $98 million lost to mortgage scams in recent years. Every scam below has a free, legitimate alternative.
The 5 Red Flags
- They ask for upfront fees. Legitimate HUD counselors are free. ALWAYS. If someone charges you to “negotiate with your lender” or “process your modification,” it's a scam.
- They tell you to stop paying your mortgage. No legitimate advisor tells you to stop paying. Scammers do this to accelerate foreclosure while collecting your money.
- They ask you to sign over your deed. This is the lease-back scam — they take your home, promise you can rent it back, then evict you. You lose everything.
- They guarantee they can stop your foreclosure. Nobody can guarantee this. If someone promises a specific outcome, they're lying.
- They pressure you to act immediately without reading documents. Legitimate help gives you time to review. Scammers create artificial urgency.
The 4 Most Common Scams
1. Loan Modification Fee Scam
A company charges $1,500-$5,000 to “negotiate a loan modification with your lender.” They collect the fee, do little or nothing, and you lose both the money and the time you could have spent getting free help.
Free alternative: HUD-approved counselors do this for free. Call 888-995-HOPE.
2. Lease-Back / Deed Transfer Scam
Someone offers to “save your home” by having you sign the deed over to them. They promise you can stay as a renter and buy it back later. In reality, they take ownership, extract equity (refinance or sell), and evict you.
Rule: NEVER sign your deed over to anyone as a “rescue” arrangement.
3. Forensic Audit Scam
A company offers a “forensic mortgage audit” for $500-$2,000, claiming they'll find legal violations that will force your lender to modify your loan. These audits rarely find actionable violations and have no legal standing with servicers.
Free alternative: If you suspect lender violations, consult a legal aid attorney (free) or file a CFPB complaint.
4. Fake Government Agency Scam
Mail or calls from companies with official-sounding names (“National Mortgage Relief Center,” “Federal Housing Assistance Bureau”) that charge fees for services the real government provides free. They use logos and language designed to look like HUD or the CFPB.
Rule: The real HUD, CFPB, and VA NEVER charge fees. Real programs are at .gov websites only.
Where to Get FREE Legitimate Help
HUD Housing Counselor Hotline
Free, confidential, 24/7
888-995-HOPE
CFPB Complaint Line
File a complaint if your servicer won't cooperate
855-411-2372
FTC Scam Reporting
Report mortgage scams
877-382-4357
State Attorney General
Report fraud in your state
Search “[state] attorney general consumer complaint”
If you've already been scammed: Report to the FTC (877-382-4357), your state attorney general, and the CFPB. If you signed documents, consult a legal aid attorney immediately — some transfers can be reversed. You are not at fault. Scammers are professionals who exploit people in crisis.