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Spot a Housing Scam

Mortgage and rental scams aren't always easy to see. That’s why it’s important to know the warning signs and stay alert. Below are five red flags that indicate you may be dealing with a scammer.

  1. A company/person asks for a fee in advance.

    Don’t pay for a service before you receive it. It is illegal for a company/individual to charge fees in advance for mortgage assistance services. Note: Attorneys are allowed to charge fees in advance if they meet certain requirements and place fees in a client trust account.

  2. A company/person promises they can stop a
    foreclosure or eviction.

    Nobody can make this guarantee. Scammers use fear and the promise of security to trick people in need. Legitimate, trustworthy HUD-approved counseling agencies will only promise they will try their very best to help you.

  3. A company/person advises you to stop paying your
    mortgage lender or landlord and pay them instead.

    Despite what a scammer will tell you, you should never send a payment to anyone other than your mortgage company or landlord. The minute you have trouble making your monthly payment, contact your lender, landlord or a HUD-approved housing counselor.

  4. A company/person claims to be a part of a
    reputable agency.

    Ask for credentials and research the organization and phone number, checking for bad reviews or claims of scams. Scammers often pose as “government-approved” or an “official government” service. If you can’t confirm the identity of who you are talking to, contact your landlord or mortgage company, or find a local HUD-approved counseling agency.

  5. A company/person asks for identifiable, personal or
    financial information.

    Your information is your greatest value and security. Scammers may pressure you to sign off on something quickly. Never give out your address, deed, billing info, social security number, bank account or related information.

Common Scams

Housing scams come in many different forms for homeowners and renters. Here are some of the most common you may encounter. 

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    Phony Counseling or Foreclosure/
    Eviction Rescue Scams

    The scam artist poses as a counselor and tells you they can negotiate a deal with your mortgage company to modify your loan — if you pay a fee first. The fee may be called a processing fee or administrative fee. The scammer may tell you not to contact your lender, lawyer or housing counselor — that they'll handle all the details. They may even insist that you make all payments directly to them while they negotiate. Once you pay the fee, or a few monthly payments, the scammer disappears with your money.

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    Bankruptcy to Avoid Foreclosure or Eviction

    The scammer may promise to negotiate with your lender or landlord or get refinancing on your behalf if you pay a fee up front. Instead of doing so, they pocket the fee and run or file a bankruptcy case in your name — sometimes without your knowledge. If you're struggling to pay your mortgage or are facing foreclosure, visit our mortgage relief resources to find help. 

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    Rent-to-Own or Leaseback Scheme

    A scammer urges you to surrender the title or deed of your home as part of a deal that will let you stay in your home as a renter and then buy it back in a few years. They may tell you that surrendering the title will eventually keep you from losing your home; however, the scammer may have no intention of ever selling the home back to you. The terms of these deals usually make buying back your home impossible. Worse yet, when the new borrower defaults on the loan, you're evicted.

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    Mass Joinder Lawsuit

    The scammer, usually a lawyer, law firm or a marketing partner, will promise that they can force your mortgage company to modify your loan. They will tell you that by joining other homeowners in a mass joinder lawsuit against a particular mortgage company, you will be able to stop foreclosure, reduce your loan balance or interest rate, receive monetary damages, or even receive a title to your house free and clear. This is not true.

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    False Rental Listing

    Using ads or the internet, the scammer takes advantage of your search for a cheaper rental property. The rent may be significantly lower than other similar properties, and the listing may have many errors in it. The scammer often asks for a deposit quickly due to a high volume of interest in the property. If a person does not allow you to see the property in person or through a live virtual tour, do not pay them until you can see it.

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    Eviction Rescue Scams

    The scammer may promise to help you pay your rent if you’re facing eviction due to late payments or months of unpaid rent. They may ask you to pay a fee to work with your landlord or leasing company to develop a rent repayment plan that includes their payment assistance. The scammer will usually ask you to wire money or send it through another electronic payment method. If you're facing eviction, read our eviction prevention tips to find help.

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    Mass Joinder Lawsuit

    The scammer, usually a lawyer, law firm or a marketing partner, will promise that they can force your landlord to stop eviction. They will tell you that by joining other renters in a mass joinder lawsuit against a particular landlord, you will be able to stop eviction or receive monetary damages. This is not true.

Disasters and Severe Weather

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Contractor Scams

You receive unexpected and unsolicited calls or text messages to complete repairs to your home. Scammers take advantage of homeowners and renters looking to repair their homes and will try to force you to act immediately. Scammers will try to rush you into signing documents without giving you enough time to review it. Scammers will also demand payment up front – or demand cash. Do your own research and make sure the contractor is licensed in your state.

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Claims to be FEMA Certified

Scammers will claim to be from a government official or FEMA certified. There is no such thing as a FEMA certification, there is no fee required to apply to get disaster help, and federal disaster assistance agencies do not call or text asking you for financial account information. Anyone who claims to be a government official and asks for money is a scammer.

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Insurance Scams

Scammers will call or text about an insurance claim or policy. Some will even try to say they're a contractor or home improvement company that's partnered with your insurance provider. Do not share any personal information, your insurance policy number or coverage details until you're certain the call or text is from your insurance company. It's best to hang up and call the number listed on your insurance policy.

IF YOU MAY HAVE IDENTIFIED A SCAM, take a moment to report it to the proper authorities and help protect yourself and your community.

HUD-approved housing counseling agencies have the training and expertise to assist you with foreclosure and eviction prevention, federal and local relief programs, and help you determine a solution that is best for you.

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