When people fall behind on their mortgage payments and fear losing their homes, they can be vulnerable to crooks who pretend to offer a helping hand. The COVID-19 pandemic gave fraudsters even greater leverage to exploit worried homeowners with phony promises to ease their debt burden and forestall foreclosure.
The Federal Trade Commission (FTC) recently shut down a criminal ring in California posing as mortgage relief agencies and using names like Home Matters USA and Academy Home Services. They promised distressed homeowners help with refinancing, sometimes suggesting that they were affiliated with government relief programs, and “regularly misled consumers, saying they had a track record of success and were able to ‘beat the system,’ ” according to the FTC.
Mortgage relief scammers like these seek out targets in various ways. Some advertise legal or financial counseling services via online ads, posters tacked to telephone poles, or flyers slipped under doors. Others comb through local government property files or peruse notices in newspapers to identify homeowners facing foreclosure. They’ll use logos, letterheads or “spoofed” caller ID numbers to suggest they have ties to legitimate lenders, nonprofit organizations or the government-chartered mortgage companies Fannie Mae and Freddie Mac.
- A mortgage relief service guarantees that it can prevent a foreclosure or get your loan modified, regardless of your financial situation.
- The company demands an upfront fee for help renegotiating your loan. That’s illegal under the federal Mortgage Assistance Relief Services (MARS) Rule.
- You’re told not to contact your mortgage lender or servicer, housing counselor or your own attorney.
- A promised loan modification is characterized as “government-approved.” Scammers often pretend to be affiliated with government agencies.