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Foreclosure Scams

The thought of losing your home can be devastating. Unfortunately, some scam artists use the fear of foreclosure to prey on unsuspecting or uninformed homeowners. Often, these criminals will convince you to give them your mortgage payments and make empty promises to help you get out of debt.

Some scam artists offer so-called "money-back guarantees" to save your home from foreclosure. Others promise help from experienced real estate attorneys. The scam artists then pocket the money and do nothing to help your mortgage.

Why Scammers Target Foreclosure Cases

It's easy for a con artist to go after homeowners facing foreclosure. When you're about to lose your home, you're already feeling vulnerable. The stress and distraction of foreclosure can open you up to all kinds of targets. Scammers know that borrowers who are late on their mortgage payments might be desperate. They'll use every trick in the book to make you think they'll come to your rescue.

Common ways that scammers might approach foreclosure victims include:

  • Fake Sales: A con artist might offer to send you a wire transfer in exchange for a quick handover of the deed to your home. They might ask you to pay them upfront fees to expedite the process. When all is said and done, it turns out to be a bait-and-switch operation. Since they know you're at risk of foreclosure, swindlers either lowball you or fail to pay altogether. This type of scam could involve falsification of loan documents and the sale of your property way below market value.
  • Identity Theft: A thief can get your personal information, such as your Social Security number. They might create a fake deed using your signature and other private data. Using the fake deed, they can dupe another buyer into paying them for your home. Buyers might think they're getting a good deal on a foreclosed home. But in the end, the scammer walks away with the money while the actual owner and the duped buyer are left to fight with each other.
  • Fake Legal Services: Some foreclosure scammers will pretend to find loopholes to fault your mortgage company. They'll either commit mortgage fraud to falsify records, or they'll lie about your mortgage servicer's legal rights. They might promise their lawyers can sue your mortgage loan service provider to stop foreclosure. Financial institutions do make mistakes, and technicalities like a defect in a foreclosure notice could play to your advantage. But scammers will exaggerate just how often this can happen, so don't be fooled.
  • Solicitations for Loan Modification or Refinance Opportunities: Scammers pretend to be foreclosure consultants. They promise they can delay or completely effectuate foreclosure prevention by redoing or refinancing your loan. But they'll offer absurdly low interest rates or low payment plans that are too good to be true.

Scammer Intimidation Tactics

The intimidation of facing foreclosure can increase your vulnerability. Look out for warning signs and red flags when someone is too aggressive. Based on the list above, a foreclosure scammer could pretend to be:

  • A buyer
  • An intermediary
  • A consultant or legal service
  • A broker or mortgage servicer

When the scammer confronts in any of the above capacities, they might be aggressive. If they threaten you over the phone, they're likely not who they claim to be. Federal laws require most legal aspects of foreclosure and sales to be done in writing. If someone pretending to be an authority figure calls you and threatens you with jail time and fines, don't be fooled.

Similarly, if they keep warning that you'll be left homeless and broke, think twice. A bank or mortgage representative will usually sound much more professional than that. Also, mortgage lenders and servicers can change over time. So, double-check if you're talking to the right person.

If someone calls you or knocks on your door, ask for identification. Ask for legal documentation and compare it to the paperwork you signed when you first got your loan. Go online and see if they have a profile with popular rating platforms like the Better Business Bureau.

How To Get Legal Help

If you've been a victim of a foreclosure scam, don't lose hope. Not every fraudulent transaction is set in stone. Some may be reversible. Even if the damage is done, a professional can help you minimize future harm and limit your suffering. In short, you can get legal help if a scam messed up your home or financial situation. You can start by looking at government resources, including:

Ultimately, you might benefit from consulting with a foreclosure attorney. They can give you legal advice about your rights and help you explore protective options.

Learn More About Foreclosure Scams

The following articles are intended to help protect you from becoming a victim of foreclosure scams.

  • Avoiding Foreclosure: Legitimate options to stop foreclosure.
  • Watch Out for Foreclosure Scams: Solutions that sound too good to be true are often just that. This article explains how to spot common mortgage and foreclosure scams, like equity skimming, balloon payments, phoning counseling agencies, and more.
  • Protect Yourself From Foreclosure Rescue Scams: Foreclosure rescue scammers are people who purport to help overwhelmed homeowners but are actually only looking to make a profit. Learn how to spot and avoid foreclosure rescue scammers in this article.
  • Bankruptcy Foreclosure Scams: A bankruptcy filing will often stop a home foreclosure, but only temporarily. Some scam artists file bankruptcy in your name with the promise that it will solve your financial problems. Learn about bankruptcy scams.
  • 10 Tips to Avoid Foreclosure: A list of 10 tips to help you avoid foreclosure. Learn what you can do to keep your home, including contacting your lender with any issues, working with a housing counselor, knowing your mortgage rights, and more.
  • Protect Your Home From Foreclosure Rescue Scam Artists: Learn how to spot and avoid foreclosure scam artists.

Learn About Foreclosure Scams

You Don’t Have To Solve This on Your Own – Get a Lawyer’s Help

Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.

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