What are mortgage loan modification scams?

Short answer

Mortgage scams try to take money by falsely promising to stop a foreclosure or obtain a modification. The CFPB lists warning signs such as upfront fees, signing over title, or being told to stop paying your servicer. Relief companies generally cannot collect fees until you have a written offer you can reject at no charge.

Full explanation

These schemes often sell a false promise of saving the home. The CFPB says operators may demand money up front, promise a modification they cannot deliver, ask you to transfer title or sign papers you do not understand, tell you to pay someone other than your servicer, or tell you to stop paying altogether. Those requests are red flags. You can report the company to the CFPB.

Companies that offer mortgage relief are not allowed to collect fees until they have given you a written offer from your lender or servicer that you find acceptable, a written description of the key changes that would result, and a reminder that you may reject the offer without a charge.

If you are having trouble paying, start with the servicer. HUD-approved housing counselors can discuss options such as forbearance or a modified payment program. If you think you were targeted, consider an attorney, legal aid, or your state attorney general.

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