Getting a home loan is sometimes complicated. That is why mortgages are so attractive to would-be scammers. Learn how to spot and avoid different types of mortgage scams.
If you have a mortgage-related complaint or think you have been the subject of one of the mortgage scams below, you have several ways of reporting your experience:
- File a complaint with us
- Contact the Bureau of Consumer Financial Protection (formerly known as the Consumer Financial Protection Bureau or CFPB)
- Contact the Federal Trade Commission (FTC)
- Contact the U.S. Department of Housing and Urban Development (HUD)
- Contact the Office of the Comptroller of the Currency (OCC)
- Contact the Texas Department of Savings and Mortgage Lending
The Bureau is charged with overseeing most banks, credit unions, lenders, and mortgage servicers. If your lender or mortgage servicer is state licensed, you can also contact the Texas Department of Savings and Mortgage Lending. Alternatively, if your lender or mortgage servicer is a national bank, you can contact the OCC.
If you are unsure who regulates your lender or mortgage servicer, the Texas Department of Banking may be able to help.
Foreclosure Rescue and Mortgage Modification Scams
These two types of scams could cost you thousands of dollars and, potentially, your home.
Scammers will portray themselves as mortgage relief service providers to target homeowners who are at risk of foreclosure. The scammers typically guarantee that they can save your home from foreclosure and/or lower your monthly mortgage payments in exchange for large fees. Instead of protecting your home from foreclosure, they may actually speed up the foreclosure process by encouraging you to stop communicating with your lender and mortgage servicer.
Federal law prohibits mortgage relief service providers from requesting or receiving payment of any fees (or other consideration) for obtaining mortgage assistance before a mortgage modification or other agreement has been executed with your lender/mortgage servicer.
Among other requirements, mortgage assistance relief service providers must provide you with:
- A copy of your lender/mortgage servicers written offer; and
- A notice that describes the offer's terms, conditions, and limitations
You may accept or reject the offer. If you reject the offer, you do not have to pay the mortgage relief service provider at all.
To protect yourself from scammers:
- Always maintain personal contact with your lender/mortgage servicer.
- Never sign a document that you do not fully understand.
- Consider receiving professional advice from an attorney or a housing counselor approved by the U.S. Department of Housing and Urban Development (HUD).
Were You a Victim?
If you believe you have become the victim of a foreclosure rescue or mortgage modification scam, cut off all communication with the scammer and file a complaint with us.
At Risk of Foreclosure?
Consider one or more of the steps below:
- Contact your lender/mortgage servicer immediately for assistance with foreclosure prevention options. Your lender or mortgage servicer can help you avoid foreclosure. However, it is critical that you contact your lender or mortgage servicer early to ensure that all of your foreclosure prevention options are preserved.
- Contact a HUD-approved housing counseling agency by calling (800) 569-4287, or visiting HUD’s website for free or low-cost foreclosure counseling services.
- Contact the Homeowner's HOPE Hotline at (888) 995-HOPE (4673).
- Consider hiring an attorney to assist you with your foreclosure process. You can view a list of legal clinics that offer free legal assistance on this website, or you can contact the Office of the Texas Attorney General at (800) 252-8011 for a list of legal clinics.
Understanding Reverse Mortgages
A reverse mortgage is a loan issued to homeowners age 62 or older who have sufficient equity in their home. A reverse mortgage loan allows certain homeowners to access a portion of their home equity as cash and defer payment of the loan until they pass away or sell or move out of their home. Borrowers, however, are still responsible for paying property taxes and homeowner’s insurance during the term of the reverse mortgage loan.
A reverse mortgage loan is secured by a lien on the home and is typically paid off when the home is sold. Although payment of principal and interest may not be required under a reverse mortgage loan until the entire loan becomes due and payable, interest will continue to accrue during the term of the loan. In addition, reverse mortgage loans have closing costs which may be financed as part of the loan.
Risks of Reverse Mortgages
Reverse mortgages can be attractive—especially to seniors who want or need to supplement their income. But be very careful before signing a reverse mortgage loan. And do not sign any document that you do not fully understand.
- Scammers who imply that a reverse mortgage is a government benefit, when it is actually a loan that must be paid off eventually.
- Scammers who offer investment opportunities and foreclosure/refinance assistance. Reverse mortgage scams are engineered by unscrupulous individuals through a multitude of real estate and financial services related companies to steal the equity from the property of unsuspecting senior citizens.
Know Your Options
Before deciding whether a reverse mortgage loan makes sense for you, you should fully understand the terms of the loan and what other options you might have.
Contact the U.S. Department of Housing and Urban Development (HUD) at (800) 569-4287, or visit HUD’s website. HUD can provide a list of HUD-approved reverse mortgage counseling agencies who can provide information to you for free or at a low-cost.