How to Identify a Foreclosure Rescue Scam

Learn about the common tactics used by foreclosure rescue scammers.

If you are facing foreclosure, you should be on the lookout for foreclosure rescue companies and mortgage assistance relief services firms that falsely claim they can help you save your home. Read on to learn about how to identify a foreclosure rescue scam, how a few of the latest scams work, and some of the laws that are designed to protect you from scammers.

(To learn more about foreclosure, including ways to avoid it, see our  Foreclosure  topic area.)

Identifying a Foreclosure Rescue Scam

Foreclosure rescue scammers often use public records to locate the names of homeowners facing foreclosure and then send them a letter or other form of advertisement offering to help.

If you have received an unsolicited offer of assistance to save your home, it is likely from a foreclosure rescue company. Legitimate housing counselors will not come looking for you; you must contact them first. (You can get free foreclosure prevention counseling from a HUD-approved housing counseling agency. Go to HUD's website at  or call 800-569-4287 for more information.)

Many foreclosure rescue companies make misleading or blatantly false claims in their communications with distressed homeowners. Some common tactics that foreclosure rescue scammers use include:

  • guaranteeing they can stop a foreclosure (even if the sale is imminent)
  • making you pay an upfront fee before providing any services
  • advising you to stop talking to your lender, attorney, or housing counselor
  • telling you to make your mortgage payments directly to them (instead of to your loan servicer)
  • offering to fill out loan modification or other loss mitigation paperwork for you, and/or
  • pressuring you into signing a contract you haven’t read or that you don’t understand.

These are the hallmarks of a foreclosure rescue scam.

Common Foreclosure Rescue Scams

The most common foreclosure rescue scams are:

  • sale/leaseback scams
  • charging high fees for little or no services, and
  • tricking homeowners into transferring title to the property to the company.

To learn how these scams work, see  Don't Lose Your Home to Foreclosure "Rescue" Scammers.

And to learn about some other types of scams, see  Mass Joinder Lawsuit Scams  and  Forensic Loan Audit Scams.

State Laws Regulate Foreclosure Rescue Companies

Some states have laws that govern the activity of foreclosure rescue companies.

In New Jersey, for example, the Foreclosure Rescue Fraud Prevention Act was designed to prevent foreclosure consultants from taking advantage of distressed homeowners in sale/leaseback arrangements and from tricking homeowners into giving up ownership of their homes with an option to repurchase at a later date. (Read more about  New Jersey’s Foreclosure Rescue Fraud Prevention Act.)

In California, there is a statute that requires foreclosure consultants to register with the Attorney General’s office and post a bond.

If you have been the victim of a foreclosure rescue scam, contact your state attorney general's office, the state district attorney, and/or the Better Business Bureau (

Federal Law Also Regulates Foreclosure Rescue Companies

In 2010, the Federal Trade Commission (FTC) promulgated federal rules regulating mortgage assistance relief services (MARS) in an effort to protect homeowners from foreclosure rescue scams. Among other things, the MARS rule (now known as Regulation O):

  • requires MARS providers to make certain disclosures about their services
  • prohibits advance fees, and
  • bans certain misleading advertising claims.

The FTC enforces the MARS regulation. To lodge a complaint with the FTC in English or Spanish call 1-877-FTC-HELP (1-877-382-4357). To learn more, see our article  Federal Law Protecting Homeowners from Foreclosure Scams  or go to go to

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