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.)
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 www.hud.gov 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:
These are the hallmarks of a foreclosure rescue scam.
The most common foreclosure rescue scams are:
To learn how these scams work, see Don't Lose Your Home to Foreclosure "Rescue" Scammers.
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 (www.bbb.org).
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):
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 www.ftc.gov/opa/2010/11/mars.shtm.