Prevent Loan Scams

Tips on How to Avoid a Loan Scam

Scams are not always easy to spot - but it helps if you know the warning signs.  The list below includes red flags for homeowners that indicate you may be dealing with a loan modification scammer:


  • A company/person asks for a fee in advance to work with your lender to modify, refinance or reinstate your mortgage.

They may pocket your money and do little or nothing to help you save your home from foreclosure.  Free HUD-certified foreclosure assistance is available.  Click here to visit our Free Counseling page, which includes links to free counseling resources.

  • A company/person accepts payment only by cashier's check or wire transfer. 

Scammers often require that homeowners pay via cash, cashier's checks, or wire transfers so that they can quickly take your money and run. 

  • A company/person guarantees they can stop a foreclosure or get your loan modified.  

Nobody can guarantee to stop foreclosure or modify your loan.  Legitimate, trustworthy HUD-approved counseling agencies will only promise they will try their very best to help you.

  • A company/person advises you to stop paying your mortgage company and pay them instead.  

Despite what a scammer will tell you, you should never send a mortgage payment to anyone other than your mortgage lender.  The minute you have trouble making your monthly payment, contact your mortgage lender.

  • A company/person instructs you not to contact your lender, lawyer, or credit or housing counselor. 

When figuring out how to save your home, you should always speak directly to your lender and a HUD-certified housing counselor. 

  • A company pressures you to sign over the deed to your home or sign any paperwork that you have not had a chance to read or do not fully understand.  

A legitimate housing counselor would never pressure you to sign a document before you had a chance to read and understand it.

  • A company/person tells you to sign documents with blank lines and spaces. 

Scammers often add information later without your knowledge or approval.

  • A company/person offers to complete paperwork for you. 

You should always review and complete all paperwork impacting your mortgage. 

  • A company/person offers to buy your house for cash at a fixed price that is not set by the housing market at the time of sale. 

You should consult your lender or a HUD-certified counselor before you sell your home. 

  • A company/person encourages you to sign over your title in order to "lease" your home now and buy it back over time. 

Scammers deceive homeowners into signing over the deed to their home and tell them they will be able to remain in the house as a renter and eventually buy it back.  Usually, the terms of this scheme are so demanding that the buy-back becomes impossible.  Therefore, the homeowner gets evicted, and the "rescuer" walks off with most or all of the equity.

  • A company claims to offer "government-approved" or "official government" loan modifications. 

They may be scam artists posing as legitimate organizations approved by, or affiliated with, the government. Contact your mortgage lender first.  Your lender can tell you whether you qualify for any government programs to prevent foreclosure. And, remember, you do not have to pay to benefit from government-backed loan modification programs.

Also, if you want to contact a govern­ment agency, type the web address directly into your browser and look up any address you are not sure about. Use phone numbers listed on agency websites or in other reliable sources, like the Blue Pages in your phone directory. Do not click on links or open any attachments in unexpected emails. 

  • A company/person you do not know asks you to release personal financial information online or over the phone.

You should only give this type of information to companies that you know and trust, like your mortgage lender or a HUD-approved counseling agency.

  • A company/person offers to give you a "second opinion" on a denial of your loan modification application.

Never pay for a "second opinion" if you have been turned down for a loan modification. 



If you think that you have been scammed, report it! Help ensure other homeowners do not fall victim, call 1-888-995-HOPE or click here to submit a complaint online.

Click here to visit our Free Counseling page, which includes links to free counseling resources.

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