Main Content

Beware, Mortgage Relief Scams Continue to Climb – Here’s What You Need to Know

Beware, Mortgage Relief Scams Continue to Climb – Here’s What You Need to Know

Real-Ativity May 10, 2022 16 hours ago
665 0




Mortgage relief scams have been increasing at an alarming rate since the dawn of the COVID-19 Pandemic.  According to a study done by OnePoll with the National Association of REALTORS®, around 81%, or 8 out of 10 American homeowners, have unexpected financial distress caused by the COVID-19 pandemic.  An unreasonable acceleration of financial strain on the pulse of so many homeowners has created a desperate environment where criminals are wreaking havoc.  According to a recent survey by the American Psychological Association and The Harris Poll, out of around 3,000 U.S. citizen participants 18 and over, 87% noted inflation in everyday items as a significant source of stress.  This extra burden has made it extremely tough for some homeowners to keep up on their mortgage payments.  Not to mention those who are still trying to catch up from a loss of work or layoffs during the initial onset of the pandemic.

This magnitude of pressure tends to ignite emotional responses, making homeowners extremely vulnerable to mortgage relief scams.  If you are a homeowner struggling or unable to meet your loan obligations, we want to help you avoid being scammed.  We'll go over types of mortgage relief scams, red flags/warning signs, legalities, where to find help, and frequently asked questions.  It's important to work with housing experts and your lender to find a solution, today.  Don’t wait until you fall behind to seek help.  Acting quickly may help you keep your home and the money you have already invested into it.  Keep in mind that these types of scams can also pertain to homeowners who are behind on real estate taxes or HOA dues and assessments.





This is when a scammer says they will help prevent foreclosure through a "Rescue Loan" in order to make your mortgage current.  Oftentimes, the perpetrator will provide the homeowner with an enormous stack of papers, and put pressure on the timeliness to sign.  The urgency would prevent the homeowner from thoroughly reading through the papers, missing sections, and any areas that don't make sense.  That paperwork could give the scammer the deed to your home in a trade-off for the rescue loan.  Rather than signing new mortgage documents, a homeowner could very well be signing over the deed to their home.  From there the scammer can sell the home, keeping any profits from the sale, and they can also evict the former owner.  Remember, if there is pressure, urgency, or demands, it is likely a mortgage relief scam!  Meanwhile, the former owner is still obligated to pay back the original mortgage, and the foreclosure will proceed.


In this con, a homeowner is swindled to give up the deed.  In return, the scammer will provide financing to prevent foreclosure, and allow the former owner to rent the home, many times ensuring a portion of that rent will go towards buying the home back from them later.  If a homeowner gives up the deed, they no longer have any control over what happens to it.  Transferring the deed does NOT transfer the mortgage, and the former homeowner will still be committed and owe payments on the original loan.  The criminal can easily raise the rent, to the point where the former owner cannot pay, and then start the eviction process.  Again, as in the Rescue loan scheme, the scammer can assume the money a homeowner has already paid, or equity, plus any profits from a sale.


In this type of mortgage relief scam, a con artist skims or steals the equity of a homeowner facing foreclosure.  In the numerous twists of this con, a homeowner is promised the mortgage will be brought current, and that they will get the house back once they are more financially stable.  The scammer could get a homeowner to sell them the home for cash, far less than market value, then pledge to find a buyer and share the sale profits.  As long as the homeowner signs over the deed, the scammer can convince the homeowner to move out, then rent it out to someone else, and steal the rent.  Or they could allow the former homeowner to stay and pay rent.  Then the con artist could raise rent to the point where the former homeowner cannot pay, and the scammer evicts them.  Meanwhile, the mortgage is still the former owner's obligation.  Once the fake "investor", "buyer",  or"lender" manipulates the owner to transfer the deed, they can take any rental payments for personal use, rather than applying them as mortgage payments, and the foreclosure will still proceed.


Scammers pretend to be some sort of an authoritative entity, such as a mortgage loan auditor, a lawyer, or a foreclosure prevention specialist.  These types of scammers require a look at your mortgage paperwork to confirm the lender is compliant with the law.  These criminals are filled with false promises like the rest, such as lowering monthly mortgage payments, canceling a loan, or anything that will make a homeowner believe they can avoid foreclosure.  A forensic loan audit is not a guarantee for mortgage relief or modifications.  If there are mistakes found in your lending documents, there is Federal legislation that allows you to sue your lender, however, winning doesn't alter the fact that the borrower has to pay the loan.  This won't change the amount of the mortgage payment or give the homeowner any more time to pay.  If the mortgage is canceled, all of the money borrowed will be due immediately, and the homeowner will likely lose the home.


In this type of fraud, a scammer pretends to be some sort of expert or authoritative housing counsel to make a deal with the lender to lower payments or save a homeowner from foreclosure.  They pretend to be the government, lawyers, or representatives from a financial institution or law firm.  These con artists will be adamant that the homeowner does not contact their lender or creditor directly.  Oftentimes the fraudulent counsel will insist mortgage payments should go directly to them, and a transfer of deed.  The loan still goes into default because the homeowner's lender never receives the payments.  The criminal steals as much money from the homeowner as possible, then stops communication.

alt = "a 55+ woman reviews her loan paperwork to avoid mortgage relief scams"


  • It is illegal to require payments or fees upfront based on a promise to help a homeowner with mortgage relief.  If a business, entity, or person tries to sell you mortgage assistance or relief but demands upfront payment - it's a scam!
    *NOTE: MARS Rule allows lawyers to request payment for services upfront, only if they are legitimately licensed to practice law in the state where the home is, they are providing real and ethical services in compliance with the state, and the money can only be deposited into a client trust account, taken out only as real services have been completed*
  • Pro-tip: Have a look at your state's division of corporations to verify that the business, person, or entity is whom they say they are.  Do this by searching "[Your State's name] Division of Corporations" be sure you get the correct website - generally a dot-gov at the end.
  • If someone asks for any payments with a cashier's check or wire transfer - beware!  If you get scammed, these forms of payment are more difficult to track to get your money back.
  • If it sounds too good to be true or too easy, it likely is!  Be wary of “Guaranteed approvals” or “no income verification required” regardless of the borrower’s current employment, credit history, and assets.
  • Be diligent with your paperwork and watch out for unethical document management.  Ethical lenders and brokers will never ask you to sign a blank document or a document dated before the date you sign.
  • If financial distress is caused by not being able to pay your association dues or assessments, and you've been given a lien notice, contact your HOA to confirm the lien is real and not fraudulent
  • Scammers may try to get you to give them power of attorney to act on your behalf - be careful!
  • Know your rights - you do not have to pay any money upfront until the company provides the services you want.  Critical information must be disclosed such as documentation of any changes to the loan, total fees/charges for services must be explicitly disclosed, and the repercussions of not paying your mortgage must be explained.
  • It is illegal for a company to tell you not to talk to your lender.
  • The company's marketing must clearly state they are not associated with or approved by the government.  Additionally, ads must disclaim that it is not a guarantee, your lender may not
  • Check out the Real-ativity article on Rental Scams for more verification methods to avoid being scammed.

Additionally, if you are working with a legitimate lender who, perhaps might not be a scam artist, but may not have your best interest at heart, keep an eye on the following:

  • Look out for large future costs!  High-risk adjustable rate mortgages where payment rises significantly after the "teaser rate" period are seldom appropriate for families who already have had problems repaying their loans.
  • Watch out for barriers to refinancing such as prepayment penalties that make it hard for a borrower to refinance in order to pay off a high-cost loan by taking advantage of a low-cost loan.
  • Question no down payment loans.  These loans may be split into two mortgages, with one having a much higher cost.  Homebuyers should be sure they can afford the payments.


The first step to avoiding a mortgage relief scam is to contact your lender or HOA as soon as you know you are having any financial troubles.  Communication is key, even if the foreclosure process has already begun, they may be able to help.  Try to manage your emotions and stick to logic.


How Do I Know if I'm Being Scammed?

If a business, entity, or person approaches you with any offer that seems too good to be true, it likely is.  If they ask for upfront payments or require cash, wire, or cashier checks for payment, beware.  Verify their identity through your state's division of corporations, and question everything.

How do Mortgage Relief Scams work?

Criminals either pretend to be someone they are not, have unethical practices at a legitimate business, or own a "shell" business where they make false promises to homeowners facing foreclosure or financial distress to make their mortgage current.  The scammer will get the homeowner to transfer them the deed or give them power of attorney.  Once this has happened, the former homeowner is helpless as a transfer of deed doesn't mean a transfer of the original mortgage.  The promises are empty and the scammer will steal any cash or equity possible, meanwhile, the mortgage payments are still not being made and the foreclosure process continues.

How can I protect myself from Mortgage Relief Scams?

Question everything.  Watch out for pressure sales, upfront payments, cash, gift card, or wire payment requests, and do your due diligence with paperwork.  Verify business licenses with your state's division of corporations.

Do loan companies ask for money upfront?

No, a loan company cannot legally ask for money upfront.  In some cases, a lawyer may, however, there are strict criteria for this and you should verify the lawyer is licensed to practice law in your state.

Skip to content