Avoid Foreclosure Rescue Scams

Foreclosures provide scam artists with an opportunity to prey on desperate homeowners. Many foreclosure assistance or rescue companies claim they can help for a fee. Fraudulent foreclosure professionals use half truths and lies to sell services that promise relief and fail to deliver. Their goal is to make a quick profit from you through fees or mortgage payments.

Our housing specialists regularly see clients who have paid anywhere from $1,000 to $4,000 to such companies, only to have their money disappear and their calls ignored. Once the client is victimized, he or she has little recourse except to lodge a formal complaint with the Federal Trade Commission (FTC), a nationwide consumer protection agency, or their state’s Attorney General. The FTC is bombarded with this type of complaint and is only able to go after a small number of companies for false advertising.

How the scams work

Foreclosure rescue companies find homeowners in distress though various means—public foreclosure notices in newspapers, on the Internet, through files at local government offices, or by direct mail to homeowners. Some even advertise on television or with signs on highway signs and telephone poles.

Common come-ons are: “We can save your home. Guaranteed.” “Free consultation” “Stop Foreclosure Now” “We buy houses.” “Stop Foreclosure!”

Phony counseling

The scammer tells you that, for a fee, he can negotiate a deal with your lender to save your home. You may be told not to contact your lender, lawyer or credit counselor, but to let him handle the details. Then he takes off with your down payment—usually in the thousands of dollars.


The scam artist encourages you to sign documents for a new loan that will bring your mortgage current. But, the papers actually transfer the title of your house to him.

Rent-to-buy scheme

You’re told that if you surrender the title of your house, you can rent it until you are able to buy it back in a couple years. Some homeowners are told that doing so will allow them to improve their credit to get a new loan at better interest rates. The terms, however, are burdensome and buying back the home isn’t possible. Then the scammer raises the rent until the former owner can’t afford it and the “rescuer” sells the house.

Equity skimming

Similarly, the scam artist can offer to buy the home if you sign over the deed and move out. He promises to pay you a portion of the profit when the home sells. At that point, the scammer rents the home and keeps the money while your lender forecloses. Then you’ve lost your home and, since transferring the deed doesn’t transfer the mortgage obligation, you’re still responsible for the balance of the mortgage.

Bankruptcy foreclosure

The foreclosure professional promises to negotiate with your lender or seek refinancing for an upfront fee. Instead, he files a bankruptcy case in your name. A bankruptcy filing will stop a foreclosure temporarily, but the process is expensive, complicated and risky. If you miss one meeting with the creditors, the judge will dismiss the case and the foreclosure will continue. Then you may lose the fee you paid and your home. A bankruptcy will stay on your credit report for 10 years and could make it hard for you in the short run to obtain credit, buy another home, get life insurance or find a job.

How to get legitimate help

If you’re facing default or foreclosure, contact your lender immediately. See if you can negotiate a new repayment schedule. The lenders are usually more willing to work out a deal if you’re behind on your mortgage and if you can show a major change in your circumstances (from when you applied for the mortgage) such as a job loss, death in the family, or divorce. Most lenders would prefer not to foreclose—especially if your home is in a part of the country with a high foreclosure rate where foreclosed homes flood the market.

You may also investigate other foreclosure prevention options like a reinstatement or forbearance.

Mortgage default and foreclosure counseling is available at no cost from Housing and Urban Development (HUD)-approved housing counseling agencies such as Clearpoint. Confidential, one-on-one counseling can help you to review your current financial situation and develop a plan to meet your needs. Our counselor will review your income and your expenses and help you to develop a budget. He or she will then discuss your options for curing your delinquency and, if possible, avoiding foreclosure.

You will learn about the foreclosure timeline and the appropriate steps to take to avoid foreclosure. Our counselor will review all the options for bringing your mortgage current. Call Clearpoint at 877.412.2227 to schedule an appointment with an experienced housing counselor and take the first steps toward resolving your delinquency.

Save Your Home

Work with a housing counselor to explore your options.

Call 800.750.2227