1. How Mortgage Relief Scams Work
Scammers target distressed homeowners by pretending to be lenders, attorneys, or “foreclosure experts.” They promise to negotiate with your bank, stop foreclosure, or reduce your loan—but only if you pay upfront. Once you send money, they disappear, and your foreclosure continues unchecked. California cracked down on this practice with the Mortgage Foreclosure Consultant Act and Civil Code § 2944.7, which makes it illegal to collect any advance fees for mortgage relief services.
2. Common Red Flags
Beware of anyone who:
- Guarantees to stop foreclosure or “save your home”
- Tells you to stop communicating with your lender
- Requests payment via wire, gift card, or Zelle
- Promises results before reviewing your loan documents
- Asks you to sign over your deed or transfer title
Legitimate professionals will always use written contracts, escrow accounts for funds, and official company information you can verify.
3. The “Rent-Back” or “Title Transfer” Scam
One of the most dangerous scams involves tricking homeowners into deeding their property to an investor with the promise they can rent it back and repurchase it later. In reality, once you transfer the deed, you lose ownership immediately. Under Cal. Civ. Code § 1695, “equity purchasers” must provide written disclosures, cancellation rights, and fair terms—or risk civil and criminal penalties.
4. Who You Can Trust
Only work with:
- Your loan servicer or its designated trustee
- HUD-approved housing counselors (visit HUD.gov/housingcounseling)
- Licensed attorneys in good standing with the California State Bar
- Nonprofit foreclosure-prevention agencies verified by DFPI
If you’re unsure about a company, verify its license or complaint history at dfpi.ca.gov or nmlsconsumeraccess.org.
5. How to Report a Scam
Report fraudulent activity immediately to:
- California Department of Financial Protection and Innovation (DFPI): dfpi.ca.gov/file-a-complaint
- Federal Trade Commission (FTC): reportfraud.ftc.gov
- Consumer Financial Protection Bureau (CFPB): consumerfinance.gov/complaint
- Your local District Attorney’s Real Estate Fraud Unit
Provide as much documentation as possible—emails, contracts, and payment receipts—to help investigators take action. Scammers thrive in silence. By staying alert, reporting fraud, and sharing what you know, you protect not only your home—but countless others facing the same fight.
Not sure what the next step should be?
We help homeowners and Realtors understand available options.
