Beware of Foreclosure Rescue Scams

Due to the pandemic, the federal government enacted legislation that stipulated that banks and financial institutions could not initiate foreclosure proceedings against individuals.  That law expired on June 30, 2021.  With the end of the moratorium on foreclosures, a Harvard study estimates that 2.1 million households are behind on their mortgage payments. 

The study goes on to state that minority households were hit the hardest by the pandemic.  The study found that in early 2021, 17% of Black, 16% of Hispanic, and 16% of Asian-American homeowners were behind on mortgage payments.  White homeowners only accounted for 7% of those behind.  Wage and education inequality may account for these differences. 

Earlier this year, President Biden passed the American Rescue Plan Act of 2021, which may provide relief for some households.  The Act called for almost $10 billion to be distributed to states, territories and tribes to provide relief for homeowners’ mortgage payments, and $21.6 billion for rental payment assistance. In addition, there was $5 billion in emergency housing vouchers for homeless people; $100 million in rural housing assistance in paying mortgages; and $100 million to be used for counseling for those facing housing instability.

If you have taken part of the relief program and have gotten caught up on your mortgage, then that is great news.  If you didn’t qualify for payments or they weren’t enough and you are still behind on your mortgage, there are a few scams out there that you need to be aware of.

Fictional Help

Foreclosure scams can come in the form of fictional help. The scammer will promise they can stop the foreclosure or negotiate a loan modification on your behalf.  Some scammers do no work at all; some will achieve a loan modification but with such stringent terms that you could never comply.  In any case, the result is that you lose your home. 

Fraudulent Transfer

In another scam, you transfer your home to the scammer unknowingly.  The scammer tells you that you are signing documents that will stop the foreclosure or that will result in a refinance transaction.  Instead, you are actually signing papers that are transferring your home to the scammer.  In rarer cases, the deed is forged by the scammer.

False Bailout

In this scam, you are told by the scammer that you are signing a transfer deed.  But you are led to believe that you will regain ownership of the home in the future.  What actually happens is that you become a tenant in your own home and are later evicted.  Or, the scammer sells the house and takes off with the proceeds. 

“We Buy Houses” Scams

You have probably seen a “We Buy Ugly Houses” or “Sell your Home for Cash” sign.  Companies like these usually give a price for the home that is far below fair market value. For some folks, it is worth it to get rid of their home quickly. But some companies hold high pressure seminars or visit the homeowner unannounced.  Then, that scammer strong-arms you into signing over your home to them for a price that isn’t fair. To get you to agree to the lower price, the scammer may tell you that the real estate market is weak, tell you that your home is worth less than it actually is, falsely tell you that your home will be lost to foreclosure, or tell you that you would have to engage in major repairs before a realtor would list the property for you. 

How to Protect Yourself Against Scams

How can you tell between a scam and a legitimate business opportunity?  How can you decrease your odds of being scammed?

  • Be wary of uninvited door-to-door salespeople.  Not all that come knocking are scammers, but you are often put on the spot for an answer.  Tell the person to come back on another day, after you can do some research, talk about it to others, and fully understand their offer.
  • Never tell anyone your personal information unless you know they are from a reputable business and the information is necessary to carry out a business transaction that you initiated.
  • Do your research!  With the internet at your hands, you can look up customer reviews and visit websites such as the Better Business Bureau or Trust Pilot.  Ensure the company has a good reputation and that their product or service is legit.
  • Talk to loved one’s about your decision.  See if they have any insight on that particular product or service. 
  • Contact your local elder law attorney, especially if you will be signing a contract, deed, or other legal document. 

What are Some Other Senior Scams to Watch Out for?

Another common scam that you need to be aware of involves pulling at your heart strings.  This could be a romance scam, where the scammer poses as a potential love interest.  Or the criminal could pose as a family member or other loved one that you don’t have frequent contact with.  The scammer, of course, then asks for money. 

A lottery scam happens when the scammer claims that you have won a lottery or sweepstakes.  But before you can collect your winnings, you must pay a fee.  How ridiculous!

A criminal could also call you up and claim to be from a government agency, such as the Internal Revenue Service (IRS).  The scammer will tell you that you are going to jail or will lose you home if you don’t pay them money.  Be aware that if you owe taxes, the IRS will always send you written notices in the mail.  If you have received no such correspondence, then you might be dealing with a scammer.  Call the IRS directly to see what the truth is.

Finally, and sadly, many scammers are family members or caretakers of the victim.  Some signs that a family member might be taking advantage of you are that you seem to be short on money even though you thought you had enough, the suspect seems to have new things or is taking expensive trips even though you thought they couldn’t afford it, or other people in your life suspect financial abuse.  


Seniors are susceptible to foreclosure and home help scams in particular.  This is because most seniors have lived in their homes for quite a while and so they have amassed equity.  Also, many seniors are on a fixed budget, so they may be equity rich but cash poor.  This might lead them to consider how to access their equity or lead them to make a quick decision.  And finally, some seniors have declined mental health that detracts from their full understanding of the arrangement or situation.

The Federal Bureau of Investigation reports that elder fraud results in $3 billion in losses for seniors each year.  However, this number could be even higher because seniors are apt not to report being scammed.  This is because they may be ashamed that someone pulled the wool over their eyes, they feel bad for the scammer, or they are scared they might be put in a nursing home.  If you or someone you love has been scammed, it is important to report the situation to the proper authorities.  You don’t want this to happen to someone else!  You can call the National Elder Fraud Hotline at 833-372-8311.  You can also contact your local police department or elder law attorney.


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