With the coronavirus (COVID-19) national emergency limiting many people’s ability to work and earn a paycheck, you might be among the thousands finding it difficult or impossible to keep up with your mortgage payments. Or maybe you were already facing a foreclosure when the crisis hit. If you find yourself in this situation, you should explore different ways to get mortgage relief and foreclosure avoidance options.
Some sources of mortgage assistance and foreclosure help that you’ll probably hear about are legitimate. The federal Coronavirus Aid, Relief, and Economic Security (CARES) Act, for example, gives many homeowners the right to get a forbearance on mortgage payments for as long as 360 days, as well as a foreclosure moratorium for 60 days starting on March 18, 2020. But with financial stability becoming an uncertainty for many, scammers are also increasingly targeting homeowners who’re having difficulty paying their mortgages, in default, or already in foreclosure. Unfortunately, there's almost no limit to the number of scammer companies willing to defraud you. Foreclosure rescue scams come in many different forms, like asking you to pay for counseling services (that you can get for free) or getting you to fork over an exorbitant fee for loan modification services.
In this article, you’ll learn about different mortgage relief and foreclosure rescue scams you’re likely to encounter while the coronavirus is wreaking havoc on the economy and what you can do to avoid them.
Foreclosure rescue companies often send emails or letters (though they might call or text, too) that promise to save your home from foreclosure. The communication will probably say something like "Stop Foreclosure Now," "Get a Loan Modification," or "Save Your Home From Creditors." If you’re behind on your mortgage payments, these letters might sound like a lifeline. But this kind of scammer uses lies, exaggeration, misinformation, and pressure to get you to sign up for rescue services. The following scams vary a bit, but pretty much result in the same thing—the con artist pockets your cash and you end up no better, and maybe even worse, off than you were before.
When you call the company, a friendly representative will tell you about the company's modification services and amazing results. The representative might claim that they have special skills to get your loan modified and, perhaps, that the company is "affiliated" with attorneys. Once the agent gains your trust, you’ll be pushed into paying an expensive fee—maybe thousands of dollars—to the company to negotiate a loan modification with your loan servicer for you. The company might even tell you to pay for their help, rather than paying your mortgage bill.
But once you’ve paid the company’s fee, they’ll do little or nothing to assist you in the modification process. (They're busy signing up more and more people for their fraudulent services.) While you think the company is busy working out a deal for you, you’ll get further behind in your monthly payments. Eventually, the company quits taking your phone calls, answering your emails, and disappears. By the time you realize you’ve been duped, you’re facing an imminent foreclosure or, perhaps, you've already lost your home to a foreclosure sale.
While modification companies might tell you that they’re experts at convincing your lender to give you a modification, it’s not true. There's very little negotiating that happens in the process. Lenders have specific eligibility requirements that borrowers have to meet to get a modification. If you meet them—and follow all required steps in the process—you'll get one. While most people can handle the loan modification process on their own, in some circumstances, though, it's wise to hire a lawyer to assist you.
With a forensic audit, an auditor supposedly reviews your mortgage documentation to determine whether the lender complied with the law when you got the loan. The foreclosure scammer will claim that most audits come up with all kinds of violations and that you can use those results as leverage to get a modification. But that’s not really what will happen.
Most companies simply plug your loan information into a compliance software program, and the program churns out a very basic report. Usually, the report shows no errors or just minor ones. Even if the report finds serious legal violations, merely telling the lender about it won’t result in a modification. You'd have to raise the legal violations in an answer to a foreclosure lawsuit or file your own suit to have any effect.
Foreclosure rescue scammers sometimes try to get you to pay for foreclosure information or housing counseling that you can find online for free or get from a HUD-approved housing counselor at no cost.
Scammers might approach you in a number of different ways, like via regular mail, email, phone calls, social media, or texts.
Mailings that foreclosure rescue companies send often look official, even though they aren’t. The name of the company might sound like the government has endorsed the program, or the mailing might refer to official U.S. government programs. Typically, scammer mailings claim you can “Stop foreclosure now!” or “Over 90% of our customers get a loan modification.” If you get this kind of letter from a foreclosure consultant, toss it in the trash.
Be extra careful if you receive an email with a coronavirus-related subject line. Scammers might send you messages advertising assistance with your mortgage that have malicious attachments or links to fraudulent websites designed to trick you into revealing sensitive information. Avoid clicking on links in unsolicited emails and don't open email attachments. Any email from a sender you don't know, or any message that looks odd—even if it's from someone you know—should be deleted without opening.
If you get a call from an unknown number, let it go to voicemail. Even if the area code looks familiar, it’s best to ignore the call. Spoofers can make their caller ID look like a local number. If you inadvertently answer one of these calls, hang up right away. You should also ignore texts from numbers you don’t recognize and be wary of attempts to contact you through social media.
Should someone manage to contact you through any of these channels, don’t give out personal or financial information, like your name, credit card number, Social Security number, password, PIN, or any account information, and definitely don’t sign up for any foreclosure rescue services.
If you suspect you're a victim of a foreclosure rescue scam, contact:
By reporting a foreclosure rescue scam, you might be able to help someone else avoid becoming a victim.