How to spot and avoid foreclosure rescue scams
When you fall behind, the offers start arriving. Here are the warning signs and the laws that protect homeowners in Virginia and Maryland.
No obligation. No pressure. Takes about 2 minutes.
The short answer
The biggest red flags are upfront fees, pressure to sign over your deed, and being told to stop paying your servicer or to pay someone else instead. Under federal rules, a mortgage relief company can't charge you until you have a written offer from your lender and you accept it. Before you sign anything, talk to your servicer and a HUD-approved housing counselor.
Step by step
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1
Know the warning signs
The CFPB lists these: asking for fees upfront, promising to get you a loan modification, asking you to sign over your title, asking you to sign papers you don't understand, and telling you to stop paying your servicer or to pay someone else.
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2
Never pay upfront for mortgage relief
The FTC says it's illegal for a company to charge you anything until it gives you a written offer of relief from your lender and you accept it. A request for a wire transfer, cashier's check or payment app is another warning sign.
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3
Think hard before signing over the deed
Once you give up the deed, the other party controls the house and can sell it, and you may still owe the mortgage. In Virginia, a foreclosure rescue provider can't collect a fee before fully performing its services, or before settlement if the deal involves selling your home, and can't tell you that you'll be able to buy the home back unless a written contract sets out the terms and price.
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Maryland's extra protections
Maryland law bars foreclosure consultants from collecting any fee until they've fully performed every service they promised, lets you cancel a consulting contract at any time, and gives a homeowner in default 5 days to cancel a contract to sell or transfer the home.
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5
Report it
Report a scam to the FTC at ReportFraud.ftc.gov, to the CFPB at (855) 411-2372, or to your state attorney general.
Sources: FTC: Mortgage relief scams · CFPB: What are mortgage loan modification scams? · Code of Virginia § 59.1-200.1 (foreclosure rescue) · Maryland Real Property § 7-305 (cancelling a foreclosure consulting contract) · Maryland Real Property § 7-307 (foreclosure consultant prohibitions) · Maryland Real Property § 7-310 (right to rescind a sale of a residence in default)
This page explains general warning signs and laws. It isn't legal advice. If you think you've been targeted, talk to a HUD-approved housing counselor, an attorney or your state attorney general.
Cash offer vs listing
Example: a $250,000 home
| Offer | $205,000 |
|---|---|
| Repairs | $0 |
| Commissions | $0 |
| Closing costs | $0 |
| You walk away with | $205,000 |
| In 7 to 14 days | |
| Sale price | $250,000 |
|---|---|
| Repairs | about $8,000 |
| Commissions | about $13,800 |
| Closing and holding | about $6,000 |
| You walk away with | about $222,200 |
| In 60 to 90 days | |
Example only. Your numbers depend on your home and market.
A straight buyer puts the numbers in writing and charges no fees; we show the cash offer next to what listing could net, with no obligation.
Frequently asked questions
Can a company charge upfront to get me a loan modification?
No. Under the FTC's rule, a mortgage relief company can't charge you until you have a written offer from your lender and accept it.
Someone offered to take my deed and rent the house back to me. Is that safe?
Be very careful. Once you sign over the deed, the other party controls the house and can sell it, and you may still owe the mortgage. Talk to a housing counselor or attorney first.
Where do I report a foreclosure scam?
To the FTC at ReportFraud.ftc.gov, the CFPB, or your state attorney general's office.
Who are you?
We are real estate investors based in Baltimore, helping homeowners since 2016. We buy houses directly for cash. We are not a licensed real estate brokerage and do not list homes ourselves; if listing could get you more, we show you the math so you can choose.