Mortgage Loan Relief Scams

For many people, owning a home represents the ultimate achievement of the American Dream. And more often than not, this achievement is made possible with the help of a mortgage loan. This type of loan allows an individual to be able to purchase a home when they don’t have the cash on hand to cover the full price of the property.

As with any type of loan, however, with mortgages sometimes borrowers can get a bit in over their heads, and it’s when this happens that people start looking for mortgage relief. Businesses purveying this service generally offer to negotiate with mortgage lenders to modify loans and make them more affordable for borrowers, or take other steps to help people facing difficulties that could ultimately lead to them losing their home.

Although there are certainly legitimate mortgage relief providers out there, unfortunately there are also many mortgage relief scammers lurking about. These operators prey on desperate homeowners struggling to make mortgage payments or facing foreclosure, and they utilize a variety of tricky tactics to make them part with their money while delivering little or no relief in return.

One common and fairly straightforward scam involves the scammer acting as a phony counselor, telling you that if you pay them an upfront fee, they’ll work out a deal with your mortgage lender to reduce your payments or save your home. Once you’ve paid them, they stop returning your phone calls and take off with your money.

The “bait-and-switch” mortgage relief scam is also well established. Here, the scam artist will give you documents they say you need to sign to get another loan to make your mortgage current. Buried in the stack, however, is a document that effectively surrenders the title to your home to the scammer in exchange for a “rescue” loan.

To avoid fraudsters when you are seeking mortgage relief, there are a number of red flags to watch out for. Avoid any business that does any of the following:

  • Guarantees that it will get you a loan modification or stop the foreclosure process — no matter what your circumstances are
  • Tells you not to contact your lender, lawyer or housing counselor
  • Asks for an upfront fee before providing you with any services (unless it’s a lawyer you’ve thoroughly checked out)
  • Tells you to make your mortgage payments directly to it, rather than your lender

Even though valid mortgage relief services exist, to help limit the possibility of falling into a fraudster’s trap, the first thing you should actually do if you’re experiencing mortgage-related difficulties is simply contact your lender right away. You may be able to negotiate a new repayment schedule with them, or perhaps get a loan reinstatement or forbearance.

If you have already attempted to get help from a mortgage relief provider and believe you’ve been the victim of fraud, contact the Federal Trade Commission at or the Better Business Bureau at