Mortgage scams are on the rise, and many of the newest schemes target homeowners who are already in financial distress. The federal government has launched a new effort to stop these schemes, but borrowers also can take steps to protect themselves.
"We will take every measure we can to educate and protect consumers and homeowners," said Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development (HUD).
Protect yourself from loan fraud
The Federal Trade Commission has published "A Message to Homeowners," which offers some good tips for borrowers. Here's a recap of what to watch out for:
1. Be wary of inflated claims. Promises like "guaranteed to save your home," "we can stop your foreclosure" or "get a second opinion" on a loan modification are signs of a likely scam. Homeowners are advised to steer clear of anyone who offers a seemingly easy way out of a difficult situation.
2. Don't pay fees for promises. So-called "foreclosure rescue companies" frequently take the homeowner's money and then just disappear. The FTC advises homeowners to cut off all dealings if someone insists on a fee.
3. Send payments to your servicer. Never make a mortgage payment to anyone other than the company that services your mortgage. The name of your loan servicer should be on your monthly mortgage loan statement. If you need assistance with your loan, call the servicer.
4. Don't be fooled. Many frauds are perpetrated by companies that seem legitimate and may have phony names that sound like government agencies or reputable companies. Look up telephone numbers and website addresses. Be suspicious of unsolicited offers of help that arrive by e-mail, telephone or U.S. Mail.
Where to find help
If you need help with your mortgage loan, call your loan servicer or a nonprofit HUD-certified housing counselor. To find a housing counselor, call the Homeowner's HOPE Hotline at (888) 995-HOPE. This hotline is a free service that's operated 24 hours a day, seven days a week.
For more information, read the FTC's Facts for Consumers: Foreclosure Rescue Scams