Answers about Mortgages

What are some warning signs of Mortgage Modification Scams and Foreclosure Rescue Scams?

The following might act as warning signs:

• "Pay us $1,000, and we'll save your home." Some legitimate housing counselors may charge small fees, but fees that amount to thousands of dollars are likely a sign of potential fraud. Companies cannot collect fees until you have a written, acceptable offer from your lender or servicer and a written description of the key changes to your mortgage.
• "I guarantee I will save your home-trust me." Beware of guarantees that a person or company can stop foreclosure and allow you to remain in your house. Unrealistic promises are a sign that the person making them will not consider your particular circumstances and is unlikely to provide services that will actually help you. Providers must give you realistic evidence for any claims they make.
• "Sign over your home, and we'll let you stay in it." Beware of anyone offering to make mortgage payments for you and rent your home back to you in exchange for the title to your home. Signing over the deed to a person gives that person the power to evict you, to raise your rent, or to sell your house. Although you will no longer own your home, you still will be legally responsible for paying the mortgage.
• "Stop paying your mortgage." Do not trust anyone who tells you to stop making payments to your lender or servicer, even if the person promises to make payments for you. If a company tells you this, it must also tell you that you may lose your home and damage your credit rating.
• "If your lender calls, don't talk to him or her." Companies are legally barred from telling you to stop communicating with your lender or servicer. Advice like this is a good sign of a scam.
• "Your lender never had the legal authority to make a loan." Do not listen to anyone who claims that "secret laws" can erase your debt and have your mortgage contract declared invalid. You are being conned if someone claims that you are not obligated to pay your mortgage.
• "Just sign this now; we'll fill in the blanks later." Take the time to read and understand anything you sign. Never let anyone else fill out paperwork for you. Don't let anyone pressure you into signing anything that you don't agree with or understand. Never sign documents with blank spaces that can be filled in later.
• "Call 1-800-Fed-Loan." Beware of providers that imitate official federal programs. Providers of mortgage relief services must tell you in their communications with you that they are not affiliated with the government. Keep in mind that assistance from a HUD-approved housing counselor is free and available by calling 1-888-995-HOPE (4673) or visiting makinghomeaffordable.gov. And, you can always work directly with your lender or mortgage servicer.
• "File for bankruptcy, and you can keep your home." Filing for bankruptcy stops foreclosure only temporarily. If you do not make your mortgage payments, the bankruptcy court will eventually allow your lender to foreclose. Beware that a scam artist can file for bankruptcy in your name, without your knowledge, to temporarily stop foreclosure and give you the impression that he or she has negotiated a new payment agreement with your lender on your behalf.
• "Why haven't you replied to our offer? Do you want to live on the streets?" High-pressure tactics signal trouble. If someone pressures you to work with him or her to stop foreclosure, do not work with that person. Legitimate housing counselors do not conduct business that way.

March 2011