How to Spot Foreclosure Rescue Scams

Distressed homeowners are targets for scammers. Here are the red flags to watch for and the federal law that protects you.

The MARS Rule: Federal protection

The Mortgage Assistance Relief Services Rule (MARS Rule, 16 CFR Part 322) makes it illegal for any company offering foreclosure help to:

• Charge upfront fees — they can only collect payment AFTER they deliver written results you've agreed to
• Tell you to stop talking to your lender — your lender is required by law to work with you, and any company that tells you otherwise is scamming you
• Misrepresent any material aspect of services — guarantees, terms, costs all have to be truthful

Companies that violate the MARS Rule can be sued by the FTC, CFPB, and state attorneys general. You can report them.

The 10 biggest red flags

1. They ask for upfront fees

Federal law (MARS Rule) prohibits this. ANY company asking for an "application fee," "consultation fee," or "retainer" before delivering results is operating illegally.

2. They guarantee specific outcomes

"We guarantee we'll save your home." "We guarantee a loan modification." These are sales pitches. No legitimate company can guarantee outcomes that depend on your lender's decisions.

3. They tell you to stop paying your mortgage

Some scams say "don't pay your lender, pay us instead, we'll negotiate for you." This destroys your finances faster and often results in foreclosure happening anyway — while they take your money.

4. They ask you to sign over your title

A common scam: "Sign your house over to us temporarily; we'll help you save it, then sign it back." They never sign it back. They sell your house, keep the money, and you're left with nothing.

5. They tell you not to talk to your lender or an attorney

Any company that doesn't want you talking to your lender, your attorney, or a HUD counselor is hiding something.

6. They contact you out of the blue with "good news"

Unsolicited calls claiming you "qualify for a special program" or "have a settlement waiting" are usually scams. Real assistance programs require you to apply, not the other way around.

7. They use high-pressure tactics

"This offer is only good today." "If you don't act now, you'll lose your house tomorrow." Real help doesn't disappear in 24 hours. Pressure is a scam tactic.

8. They have no physical office or won't say where they're located

Many scams operate from anywhere with no real presence. Always verify a physical address and check it against state business registrations.

9. They want payment by wire transfer, gift cards, or cryptocurrency

Legitimate companies accept checks and credit cards. Wire transfers, gift cards, and crypto are favored by scammers because they're hard to reverse or trace.

10. They impersonate government agencies

Letters that look like they're from HUD, the FTC, or your county. Always check the letterhead carefully. When in doubt, call the agency directly using a number from their official website.

How to verify a company

Before working with any foreclosure-help company:

1. Search their name + "scam" or "complaint" on Google
2. Check the Better Business Bureau (bbb.org) for complaints
3. Check your state attorney general's office for any actions against them
4. If they claim to be HUD-approved, verify on HUD's official site (hud.gov)
5. Ask for their business registration number and verify with your state
6. Talk to a real HUD-approved counselor first (free) — they often know which companies in your area are legit

How to report a scam

• FTC: ReportFraud.ftc.gov or 1-877-382-4357
• CFPB: consumerfinance.gov/complaint or 855-411-2372
• State Attorney General: Look up your state's AG office online
• HUD OIG (for HUD-related fraud): 1-800-347-3735

How HomePath Options is different

• We never charge you anything, ever
• We tell you to call your lender
• We connect you to free HUD counselors first if appropriate
• We don't ask you to sign anything before being matched
• You can walk away anytime

If anyone — including a buyer matched through us — does ANY of the red flag behaviors above, please tell us immediately. Buyers in our network who do this are removed.