Loan Modification and Foreclosure Scams

Homeowners facing foreclosure should be aware of these common scams:

Deed-Transferring to Third Party – Scammers have told homeowners that by transferring the deed to their home to a third party, they will no longer be responsible for their mortgage payments. This is NOT true. Transferring a title does not relieve a borrower from their mortgage payments. Scammers often ask for up-front fees to make the deed transfer and promise to rent the house back to the homeowner until the homeowner can afford to buy the house back. If you are facing foreclosure, investigate payment options with your mortgage servicer and do NOT sign your property away.

Intentional Default – Scammers urge homeowners to not pay their mortgage in order to get a loan modification. While there is no right to a loan modification, the terms and standards for a loan modification are always determined by the mortgage loan servicer – no one else. If you are having difficulty making mortgage payments, you should contact your mortgage servicer directly or contact a HUD certified counselor (888-995-4673) for help.

Lending Scams

Advance Fee Scams –Consumers in need of cash are urged to avoid advance fee scams in which fraudulent companies promise loans if a consumer pays a substantial up-front fee first. Do NOT pay anyone asking for upfront/advance fees for loan modification services or mortgage forbearance services. Contact the California Department of Real Estate (DRE) immediately at 877-373-4542. Advance fees for loan modifications are NOT legal in California. In addition, collecting late fees is prohibited while a loan modification application is under review, a denial is being appealed, or a borrower is making timely payments.

Investment Related Scams

Investors are encouraged to be wary of investment schemes promoting cures in connection with the current public health emergency, or other investment opportunities related to the economic downturn. Schemes may attempt to convince investors to liquidate their savings or sell their current holdings to purchase overvalued assets, assets that come with very high fees or assets of uncertain or questionable value, such as cryptocurrencies or precious metals.

Pension Advance Scams - The scam involves investors who provide funds to make cash advances and pensioners who are willing to turn over future pension payments in exchange for an immediate lump sum cash payment.

Check Before You Invest

Consumers are encouraged to check the licensing status of companies prior to transacting business. California consumers should contact the Department of Business Oversight (DBO) to check on the licensing of companies offering loans, investments, or other financial services. This can be done by visiting the Licensee listing on the DBO website or calling the toll-free Consumer Services Office at (866) 275-2677.

How to Protect Yourself:

• Before investing in any investment, ask questions about the risks and fees involved. Conduct your own independent research or seek the opinion of a financial professional who is registered with your local securities regulator.


• Never invest in something you don’t fully understand. Do not agree to participate in a general partnership or joint venture if you have no specific experience, knowledge or education in the type of business and would have to rely on others’ expertise.


• Beware of sales techniques that include repeated phone calls, cold calls, or high-pressure sales pitches hyping the profitability of the deal or promising a sure thing.

Do not be fooled by professional-looking websites boasting current productivity levels and profits and featuring photos of new production sites.

Consumers and investors can submit complaints to the DBO.

Stimulus Payment Scams

Congress has recently passed a large COVID-19 relief and stimulus package. As with other aspects of the COVID-19 pandemic, fraudsters are exploiting the relief and stimulus to victimize the public.

How to Identify Threat:

Scammers are using a variety of means to contact potential victims. In one instance, the scammers are using spoofed email addresses posing as U.S. Treasury officials requesting that the victim provide personal identifying information, so that they can receive their share of the stimulus.

How to Protect Against This Threat:

Individuals seeking information about the stimulus/relief program should contact the specific government agency via its website for guidance. Individuals should follow protocols published by those government websites. During this time, it is stressed that the public maintain an increased vigilance when providing any personal identifying information or other privileged and protected information.

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