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What are some of the common foreclosure and mortgage rescue scams?

Examples of scams related to mortgage modification and foreclosure prevention include:

  • Foreclosure rescue and refinance fraud. Scam artists offer to act as intermediaries between homeowners and lenders and to negotiate repayment plans or loan modifications. The scammer may even "guarantee" to save your home from foreclosure. They tell you to make mortgage payments directly to them so they can forward payments to your lender. In reality, the scammer may pocket your money and leave you in worse shape on your loan.
  • Fake “government” modification programs. Scam artists create websites that mimic federal websites and use business names similar to those used by government agencies. They may use terms like “federal,” “TARP,” “CARES Act,” “stimulus,” or other words, acronyms, and abbreviations commonly associated with official government programs. These tactics are designed to fool you into thinking they are approved by, or affiliated with, the federal government.
  • Leaseback and rent-to-buy schemes. Con artists may try to entice you to transfer the title of your home to them with promises of new and better financing. They say you can rent your home and eventually buy it back. But, if you do not comply with the terms of the rent-to-buy agreement, you can lose your money and your home. The agreement may be written in a way that makes it very hard for you to comply. In fact, the con artists have no intention of ever selling your home back to you. They want your home and your money.
  • Bankruptcy scams. Scam artists may claim bankruptcy will solve your problems. But, filing for bankruptcy is rarely a permanent solution to prevent foreclosure. Filing for bankruptcy brings an "automatic stay" into effect that stops any collection and foreclosure action while the bankruptcy court administers the case. But, eventually you must make payments on your mortgage or the lender has the right to foreclose. In addition, bankruptcy lowers your credit score and remains on your credit report for 10 years.
  • Debt-elimination schemes. Scam artists may use illegitimate legal arguments to persuade you that they can "eliminate" your debt and that you are not obligated to pay back your mortgage. They may make inaccurate claims about applicable laws and finance, such as "secret laws" that allow you to erase your debts or that imply that banks do not have the authority to lend money and therefore you do not have to pay them back.

Last Reviewed: October 2020

Please note: The terms "bank" and "banks" used in these answers generally refer to national banks, federal savings associations, and federal branches or agencies of foreign banking organizations that are regulated by the Office of the Comptroller of the Currency (OCC). Find out if the OCC regulates your bank. Information provided on HelpWithMyBank.gov should not be construed as legal advice or a legal opinion of the OCC.

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