Millions of homeowners struggled to make their mortgage payments during the COVID-19 pandemic, and it’s important for all homeowners to know about mortgage loan modification scams and how to avoid them.
The Consumer Financial Protection Bureau wants to make people aware that mortgage loan modification scams are schemes to take people’s money – often by making a false promise of saving them from foreclosure. These so-called foreclosure or mortgage consultants often use public notices or lists of distressed borrowers purchased from private companies to find their targets. They may offer to “prevent” foreclosures or “rescue” desperate homeowners from foreclosure through advertising, email or phone calls, or in person.
Examples of scams related to mortgage modification and foreclosure prevention include, among others:
In foreclosure rescue and refinance fraud, scam artists offer to act as intermediaries between homeowners and lenders to negotiate repayment plans or loan modifications. They may even “guarantee” to save a home from foreclosure. They tell a person to make mortgage payments directly to them so they can forward payments to the lender. Instead, they may pocket that money and leave the individual in worse shape on a loan.
Scam artists create fake “government” modification program websites that mimic federal websites and use business names like those used by government agencies. They may use “federal,” “TARP” or other words, acronyms and abbreviations…
