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Protect Yourself from Mortgage Fraud

The following post appears courtesy of the Civil Division's Consumer Protection Branch. The distressed condition of the national housing market, paired with high unemployment, has created a fertile environment for unscrupulous fraudsters seeking to take advantage of desperate homeowners.  Many homeowners who turn to loan modification or foreclosure “rescue” companies for help ultimately find that they have been scammed.  An emerging trend in recent months involves mortgage assistance relief scams.  These scams target homeowners with promises to save them from foreclosure, get them a reverse mortgage, or lower their mortgage payments—in exchange for an advance or monthly fee.  Sadly, many of these homeowners never get the relief they have been promised.  These scams use a variety of simple tactics to identify their financially-distressed victims.  Some scammers locate distressed borrowers from published foreclosure notices or other publicly-available sources; while others rely on mass-marketing techniques such as flyers, radio, television and Internet advertising to lure in distressed borrowers.  Still others deceptively suggest an affiliation with a government agency to quickly earn the trust of unwitting victims.         Because this fraud is so insidious, and preys on individuals who are at their most vulnerable point, the Consumer Protection Branch in the Justice Department’s Civil Division is committed to prosecuting these criminals and bringing justice to their victims.  But individuals are really on the front line in the battle against mortgage fraud.  Information is power, and you can protect yourself from mortgage fraud by keeping the following tips in mind:
  • Be wary of those that contact you through advertising such as flyers, radio/television or the Internet with promises to modify the terms of your mortgage; if their promises seem too good to be true, they usually are.
  • Be suspicious of loan modification services that require signing a contract or paying an up-front or monthly fee.  Advance fees are generally prohibited by law.  Loan counseling and modification services are generally provided free from your lender and/or a Department of Housing and Urban Development (HUD) counseling center.  Contact HUD’s toll-free 24 hour hotline at 888-995-HOPE (4673) to immediately speak to an expert advisor in more than 160 languages. 
  • Never transfer title of your property, make mortgage payments to someone other than your lender, or stop making mortgage payments altogether — these are guaranteed ways to put your financial investment at risk.
  • Carefully inspect the names, seals, logos and representations made by mortgage rescue companies.  They may be deliberately designed to deceive borrowers into believing an affiliation with a government agency exists.  The purpose of this is to trick borrowers into believing they are entitled to the benefit of a government program rather than committing to a loan that must be repaid.  A government agency will never require advance fees, or guarantee a specific result. 
  • Some scammers pushing reverse mortgage loans are in fact trying to unload other financial products on borrowers.  Be careful to avoid brokers that want you to obtain a loan in order to buy other products such as long-term care insurance, annuities, or other investments.
And, if you believe you may have been the victim of mortgage fraud, visit for more information.
Updated April 7, 2017