Foreclosure Rescue Scams: How Homeowners Get Tricked
Foreclosure rescue scams target homeowners in crisis with upfront fees and title transfers. Learn the red flags and where to get free help.
When you’re facing foreclosure, “We can save your home” sounds like a lifeline. Scammers know that, and they design their pitch around your fear. Here’s how these schemes work and how to stay safe.
Common foreclosure scam types
- Upfront-fee “rescue.” They demand a fee to negotiate with your lender — then do little or nothing.
- Phony loan modification. They charge for a modification you could pursue for free, or tell you to stop paying your mortgage and pay them instead.
- Bait-and-switch / title transfer. Buried paperwork actually signs your home’s title over to the scammer.
- Leaseback schemes. You “sell” and rent back, then get evicted while losing your equity.
✗ Red flags
- A guarantee to stop foreclosure for an upfront fee.
- Instructions to stop paying your mortgage or to send payments to them instead of your lender.
- Pressure to sign documents you haven’t read or don’t understand.
- Telling you to stop talking to your lender or a housing counselor.
- Requests to sign over your deed or title.
Never sign away your deed under pressure
Read every document, and never transfer your home’s title to a company promising to “hold” it for you. If you don’t understand a document, have a HUD-approved housing counselor or attorney review it first.
✓ Where to get free help
HUD-approved housing counseling agencies offer free or low-cost help, and you can contact your mortgage servicer directly about loss-mitigation and modification options. You typically don’t need to pay a third party to apply.
Frequently asked questions
What is a foreclosure rescue scam?
It’s a scheme that targets homeowners in financial trouble, promising to stop foreclosure in exchange for upfront fees or control of the property, then failing to help — sometimes taking the home’s title or equity.
Should I pay a company to stop my foreclosure?
Be very cautious. HUD-approved housing counselors offer free help, and you can contact your servicer directly about modifications. Demands for upfront fees and instructions to stop paying your lender are major red flags.
Is it safe to transfer my home’s title to a rescue company?
No. Never sign over your deed or title to a company promising to save your home. That’s a common way homeowners lose their property and equity in these scams.