Mortgage Relief Scams


The FTC and California's Attorney General are cracking down on mortgage adjustment scams.


FTC crackdown on mortgage relief fraud. Image of the Federal Trade Commission building in Washington DC.February 24, 2011:  The FTC is seeking to halt the proliferation of mortgage relief scams – which target distressed and vulnerable consumers who are delinquent or facing foreclosure – through increased law enforcement, consumer outreach, and close coordination with federal, state, and non-profit partners.

“These agencies take the money, promise to stave off foreclosure, and then do virtually nothing,” complains Sacramento bankruptcy attorney Julius J. Cherry. “Not only does the homeowner lose whatever fees were paid; this often delays using other resources such as state grants or bankruptcy reorganization to save the family home.”

California’s Attorney General has Five Tips to Avoid Being Scammed:

  1. Don't pay up-front fees. Foreclosure consultants are prohibited by law from collecting money before services are performed.
  2. Don't ignore letters from your lender or loan servicer. Responding to those letters is your best bet for saving your house.
  3. Don't transfer title or sell your house to a "foreclosure rescuer." Beware! This is a scam to convince homeowners they can stay in the home as renters and buy their home back later. It might also be part of a fraudulent bankruptcy filing. Either way, a scammer can then evict the victim and take the home.
  4. Don't pay your mortgage payments to anyone other than your lender or loan servicer. Mortgage consultants often keep the money for themselves.
  5. Never sign any documents without reading them first. Many homeowners think that they are signing documents for a loan modification or for a new loan to pay off the mortgage they are behind on. Later, they discover that they actually transferred ownership of their home to someone who is now trying to evict them.

Anyone who believes they have been a victim of mortgage relief fraud should contact the Bureau of Consumer Affairs of the FTC at 1-877-FTC-HELP or the California Attorney General at 1-800-952-5252.