How to Avoid Mortgage Repair and Rescue Scams

During the boom times, one of the biggest dangers for consumers were the shady mortgage companies that offered mortgages that were bad for homeowners but very good for the mortgage companies.

Scammers are targeting people having trouble paying their mortgages. Some claim to be able to “rescue” homeowners from foreclosures, while others promise loan modifications for a fee. If you get this kind of a pitch, watch out.

What does a scam look like?
Every scam is different, but most have some kind of of promise that sounds too good to be true, like the following:

“We can stop your foreclosure!”
“97% success rate!”
“Guaranteed to save your home!”

Scams often involve you paying an up front fee for a promise of saving you more money later. Don't believe it. Don’t pay any business, organization, or person who promises to prevent foreclosure or get you a new mortgage. Some might give you sweet sales pitch and after you pay up they stop returning your phone calls. Others may string you along before disclosing their charges. Bottom line, if they ask for a fee, walk away.

Deal with your mortgage servicer directly
Some scammers offer to handle financial arrangements for you, but then just pocket your payment. Send your mortgage payments ONLY to your mortgage servicer.

Don’t Pay for a Second Opinion
Have you applied for a loan modification and been turned down? Never pay for a second opinion. Instead, look for options that don't involve you paying someone to look for a solution for you

Make sure you deal only with official organizations
If you are looking for help or advice from a local, regional, or national government organization or nonprofit group. Make sure that you are dealing with a real one and not a fake. Some con artists use names, phone numbers, and website addresses to make it look like they’re part of the government or of a nonprofit. If you want to contact a government agency or a nonprofit, don't follow any links in an unexpected email or on a suspicious looking web site. Type the web address directly into your browser and double check any address you're not sure about. Use phone numbers listed on agency websites or in other reliable sources, like the Blue Pages in your phone directory. Don’t click on links or open any attachments in unexpected emails.

The federal government also wants to take these scam companies out. Check out this interview with the Federal Trade Commission from early February 2010.