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Foreclosure Rescue and Loan Modification Scammers Still Prey on Stressed Homeowners: Our Latest Tips
As previously reported in FDIC Consumer News, many homeowners having difficulty making their monthly mortgage payments are being targeted by criminals who charge large upfront fees and falsely "guarantee" to rescue a home from foreclosure. In some of the worst cases, homeowners have become victims of identity theft or were tricked into signing away their ownership of a house. Because mortgage rescue scams continue to be a big problem, we offer our latest tips on how to protect yourself.
Try to deal only with lenders, businesses and other organizations you already know or that have been recommended. If you can't pay your mortgage, ask your lender or loan servicer (the company that collects payments and performs other work for the lender) about options for avoiding foreclosure that include lowering your monthly payment by reducing the interest rate, extending the term or adjusting the loan balance.
You don't need to pay a lot of money for help or information. If you think you need assistance working with your lender, get help from a trained, reputable housing counselor who can help you for no charge or a small fee. Find one through groups such as NeighborWorks America (www.nw.org) or by calling 1-888-995-HOPE (4673). Or, for a referral to a local counseling agency certified by the U.S. Department of Housing and Urban Development (HUD), visit www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm or call 1-800-569-4287.
Lenders, loan servicers and legitimate housing counseling services generally won't charge a fee to help with a loan modification. "But scam artists will demand a large upfront fee, often thousands of dollars, and they do very little to actually help the homeowner," said Robert W. Mooney, FDIC Deputy Director for Consumer Protection and Community Affairs.
Also look at the new U.S. government program for loan modifications and refinancings (see Making Your Home Affordable). There is no fee to get assistance or information about this program from your lender or a HUD-approved housing counselor.
Make your mortgage payments directly to your lender or the mortgage servicer. "Some scam artists claiming to offer foreclosure assistance will give some reason why you should send your mortgage payments to them instead of the lender," added Mooney. "Soon your money — and the scam artist — will be gone."
Be especially suspicious of unsolicited offers that arrive via phone, e-mail or a knock on your door. When in doubt, check out a company with your local Better Business Bureau or state consumer protection office.
"Some companies have falsely advertised or represented that they are part of a government-endorsed mortgage assistance network or they are affiliated with a lender," warned Michael Benardo, manager of the FDIC's Financial Crimes Section.
Be particularly wary of any organization that says it guarantees foreclosure relief or that it has a near-perfect success rate.
Read and understand any documents before you sign them. It may help to obtain advice from a lawyer or trusted financial counselor.
"Be on guard against someone who advises you against talking to your lender directly or getting a second opinion elsewhere," added Benardo. "Also be wary of anyone who promises to pay off your mortgage or repair your credit if you 'temporarily' sign over to them the deed to your home, because you may be permanently losing your home to a thief."
For more information, check out www.fdic.gov/foreclosureprevention, where you can find resources that include a new FDIC brochure on mortgage rescue scams. To order up to five paper copies of that brochure, call toll-free 1-877-ASK-FDIC (that's 1-877-275-3342) and select the option for FDIC publications. Also helpful is a Federal Trade Commission consumer fact sheet at www.ftc.gov/bcp/edu/pubs/consumer/credit/cre42.shtm.
Last Updated 5/26/2009