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Foreclosure-related scams

Learn how to avoid common foreclosure and loan modification scams

Homeowners facing foreclosure are often targeted by foreclosure-related scams. Scammers understand that distressed homeowners are unsure of their options and use that distress and doubt to target homeowners. Remember, if something sounds too good to be true, it usually is.

Deed transfer scams

Homeowners facing foreclosure may be targeted by companies promising to save the home from foreclosure if the homeowner sells or transfers the deed to the property. These types of scams are referred to as deed transfer scams or foreclosure rescue transactions. In these transactions, the homeowner transfers title to the rescuer but keeps future interests, such as a lease interest or right to buy back the home. Most often homeowners who fall victim to these schemes end up losing their home to the rescuer or to the bank.

Predatory foreclosure rescue transactions are another type of scam. These scams usually start by a business or a professional offering to help a homeowner facing foreclosure. They can offer to help by promising new financing. They could also promise “creative” transactions to save the family home. These schemes may try to take over ownership of your home. They may try to take it for an amount far below fair market value, or, as part of a complex refinancing arrangement. Instead of saving the home from foreclosure, the scheme transfers title of the home from the owner to the scammer or a “straw” purchaser arranged by the scammer. The straw purchasers then get mortgage loans. The individuals facing foreclosure continue to live in their property for a limited time, and the scammer promises that later they'll be able to buy back the home. Often, the promises of maintaining home ownership are deceptive. In the end, homeowners face the loss of their home to the so-called “rescuer.” Be wary of responding to advertisements such as "We Buy Houses for Cash" or "Avoid Foreclosure."

In 2007, the Attorney General issued regulations under the Consumer Protection Act (M.G.L. c. 93A), prohibiting predatory, for-profit foreclosure rescue transactions. 

Loan modification scams

Homeowners facing foreclosure should also be aware of loan modification scams. For-profit loan modification companies advertise guaranteed loan modifications and false success rates, promising they can to help avoid foreclosure or get a loan modification. No one can guarantee success on a loan modification, only your mortgage servicer can determine whether or not you qualify.

After catching your attention with these false promises of guaranteed loan modification, these companies often demand an upfront fee for their services. The Attorney General's regulations prohibit charging uprfront fees for loan modification assistance.

Have you been the victim of a foreclosure rescue scam or loan modification scam? You should immediately file a complaint with the Federal Trade Commission at 1-877-382-4357.  You can also file a complaint with the Consumer Financial Protection Bureau at 855-411-2372. 

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