The possibility of losing your home to foreclosure can be terrifying, and the enormous financial stress may affect your decision making. Unfortunately, there are people or companies that actively target those researching foreclosure or who have just went through a foreclosure. It is important to be on the watch for scam.
How the Scams Work
Fraudsters use a variety of tactics to find homeowners in distress. The Federal Trade Commission (FTC) says that some will sift through public foreclosure notices in newspapers and on the internet or take a broader approach through ads on the internet, telephone, radio or newspapers. 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 artist tells 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. Once you pay them the fee, they stop returning your calls and take off with your money.
The “Forensic Audit”
In exchange for an upfront fee, so-called Auditors will offer to have an attorney or other expert review your mortgage documents to determine if your lender complied with the law.
The con artist tells 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 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.
A con artist gives 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.
National Mortgage Settlement
The Attorney General recently announced that the federal government and 49 states had reached a settlement agreement with the nation’s five largest mortgage servicers to address mortgage servicing, foreclosure, and bankruptcy abuses (the “National Mortgage Settlement”). On April 4, 2012, the United States District Court for the District of Columbia entered orders approving the settlement.
The National Mortgage Settlement is the largest consumer financial protection settlement in United States history, and settles certain state and federal investigations relating to mortgage servicing abuses, including abuses in the bankruptcy process. The settlement will provide as much as $25 billion in relief to distressed borrowers and direct payments to states and the federal government.
To permit borrowers to determine whether their loans are affected by this settlement, the timeline for relief, and other eligibility questions, this office and the other governmental offices involved in the settlement have posted information on several websites.
Published by the Federal Trade Commission (FTC), a consumer protection agency.
- The United States Trustee Program’s website concerning the National Mortgage Settlement, which includes Frequently Asked Questions: justice.gov/ust/eo/public_affairs/consumer_info/nms/index.htm
- The website of the Office of Mortgage Settlement Oversight
- The website of the Executive Committee of the state attorneys general: nationalmortgagesettlement.com/
Contact Us & Get Started
Our experienced HUD-certified, nonprofit housing counselors offer free, nonjudgmental and confidential support and guidance so that you can understand your options and rights to prevent foreclosure or foreclose with a plan.
Our free and confidential services are available nationwide by phone or virtually. For in-person appointments view our office locations to find a location near you!
We have counselors who are fluent in English, Spanish and Hmong. Interpretation, Telecommunications Device for the Deaf (TDD), and TeleTYpe (TYY) services are available as needed.
Phone, Virtual or In-Person Appointment
Call 888.577.2227 to schedule a phone or virtual appointment at a time convenient for you. Or set up an in-person appointment at one of our Minnesota locations.
Please note: to limit the spread of the coronavirus, we are currently offering phone, virtual and online appointments only. We will reintroduce in-person appointments at a later date.
Please note: we do not provide retirement planning services or investment advice.