1. The Rise of Foreclosure Rescue Scams
When financial pressure meets desperation, scams thrive.
California homeowners in default are bombarded with “legal rescue,” “loan modification,” and “stop foreclosure today” offers—many from unlicensed actors pretending to be Realtors, investors, or attorneys.
Even licensed agents can face discipline if they participate knowingly or appear complicit in these schemes.
The California Department of Real Estate (DRE) actively investigates such cases, often revoking licenses for “dishonest dealing” under Bus. & Prof. Code §10176(a–d).
KeepMyHouse.org urges Realtors to understand that your license is your brand—and your shield.
2. How the Scams Typically Work
Scammers often:
- Promise to stop or delay foreclosure for an upfront fee
- Have homeowners transfer title or sign a “leaseback” agreement
- Collect monthly “trial payments” while doing nothing
- Disguise investor flips as “legal rescues”
- Pressure homeowners to sign blank documents
These tactics violate both California Civil Code §2945 (Foreclosure Consultant Act) and AB 2424 (foreclosure solicitation restrictions).
3. The Realtor’s Red Flags
If any of the following appear in your professional circle, step back immediately:
- A “partner” or investor offering cash for leads or referral kickbacks
- Requests for you to sign marketing materials using vague language like “home rescue”
- Promises of guaranteed sale delays or “inside access” to lenders
- Involvement with out-of-state “foreclosure consultants” lacking DRE or DFPI registration
Participation—even passively—can be interpreted as aiding unlicensed activity.
4. How to Protect Yourself and Your License
- Verify partners: Confirm every investor, escrow, and vendor is properly licensed and bonded.
- Never collect or split upfront fees related to loan modification or foreclosure delay services.
- Use compliant language: Stick to terms like “property sale options,” not “foreclosure relief.”
- Provide written disclosures for all relationships and referrals.
- Educate homeowners about scams—refer them to org or official DFPI resources.
Example line for your clients:
“If anyone guarantees to stop your foreclosure for an upfront fee, that’s a red flag. You can verify licensed providers at dfpi.ca.gov or KeepMyHouse.org.”
5. How to Report Suspected Scams
Realtors have both an ethical and legal duty to report wrongdoing.
If you suspect fraud or unlicensed activity:
- File a complaint with the California Department of Real Estate (dre.ca.gov)
- Notify the Department of Financial Protection and Innovation (DFPI)
- Alert your broker of record in writing
- Keep documentation of all communications
Your integrity—and your paper trail—are your best defense.
Foreclosure scams thrive in silence. Realtors who educate, disclose, and report don’t just protect their licenses—they protect homeowners, their industry, and their own reputation.
Not sure what the next step should be?
We help homeowners and Realtors understand available options.
