Mortgage Reduction Scams

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    Details

    • Once a homeowner defaults on a mortgage, that information becomes public record. Scammers check public records, then call homeowners in trouble offering help. They also knock on doors, sometimes falsely claiming to represent the homeowner's lender.

    Warning Signs

    • Scammers will ask for a fee and promise to end homeowners' mortgage problems. Sometimes they work with attorneys who are in on the scam. After they get their money, there are endless excuses and delays as to why nothing's happened. Homeowners also have been tricked into signing away ownership of their homes, especially immigrants who speak little to no English.

    Significance

    • Law enforcement authorities are cracking down (link below) on mortgage reduction scams around the country. Homeowners are being tricked into paying hundreds or thousands of dollars in upfront fees, without any results. Some scammers are asking homeowners to hand over their monthly mortgage payments, leaving homeowners in default with their lender and at risk of foreclosure.

    Help

    • While not all companies who charge a fee are out to scam homeowners, officials in law enforcement, government and real estate say the best option is to look for free alternatives first. There is free, nonprofit and government-sponsored help available. Neighborhood Housing Services of America (link below) is a respected nonprofit organization that can help with financial planning and mortgage modification options. The Department of Housing and Urban Development (link below) offers references to foreclosure prevention counselors, as does the HOPE NOW Alliance (link below). Homeowners also can ask for references from their local government housing office.

    Law Enforcement

    • Homeowners who suspect they are victims of a scam can report fraud to the Federal Trade Commission at 1-877-FTC-HELP or at its website (link below).

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