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FORECLOSURE RESCUE SCAMS & HOME EQUITY THEFT: How they work and how to avoid them

If you have fallen behind on your mortgage payments and your home is in foreclosure or default, be aware that you and your home may become targets for home equity theft or foreclosure rescue fraud scams.

The perpetrators of these scams claim they can solve your debt problems and stop your foreclosure.  They then use deceptive tactics to obtain ownership of your home for a fraction of its market value, and leave you homeless yet still the holder of the mortgage that is still in foreclosure. 

If you are having problems making your mortgage payments or are in default or foreclosure, contact your lender immediately.  Lenders generally prefer to work out a new payment plan, than actually go through the complex process of foreclosure. 

If you are facing foreclosure, you should know your rights under the law and be aware of the signs that someone is attempting to take advantage of you.

How the scammer finds you

When your home enters foreclosure, your lender files a record of foreclosure—called a “lis pendens”—with the local county clerk’s office. The county clerk’s office publishes a list of all recorded foreclosures in the county, including the address, on a weekly basis in local newspapers.  Scammers obtain these lists to find vulnerable homeowners. 

The scammer will contact you by mail, by telephone or even by knocking on your door, and offer you some sort of financial solution to your foreclosure or default.  Sometimes these scammers will target entire neighborhoods or cities by posting advertisements and fliers marketing their services.  In these offers, they claim to be able to “stop foreclosure”, “save your home” or get you “quick cash for your home.” 

How the scammer deceives you

These predators try to convince you that they want to “rescue” you from foreclosure and offer you one of any number of fraudulent “solutions”, including:

Once you agree to one of these “solutions”, the scammer then steals your home or your equity by using deceiving practices such as:

Ultimately, the scammer has either bought your home for a fraction of its legitimate price or has actually stolen the deed to your home without a penny of payment, leaving you homeless but still responsible for the mortgage, which is still in foreclosure!   In some cases you might keep ownership of your home, but pay so many fees or so much interest that you are broke and have no money for future payments.

How to avoid being scammed

Never do business with anyone who calls you, mails you, or knocks on your door with offers to help fix your foreclosure or default.  Do not respond to advertisements and fliers making similar offers.

If you are having problems making your mortgage payments or are in default or foreclosure, contact your lender immediately.  Lenders often prefer to work out a new payment plan, rather than go through the foreclosure process.

If you are facing foreclosure, contact a certified housing counselor. Housing counselors can help you and, unlike scammers, they can give you advice on your options and resources, help you find free legal services, and help you negotiate better financing for your loan.

To find an approved not-for-profit housing counselor in your area visit DHCR.

Homeowners seeking counseling or advice can also call the 24-hour toll free HOPE NOW HOTLINE at 888-995-HOPE (888-995-4673). HOPE NOW is an alliance of HUD approved counseling agents, servicers, investors and mortgage lenders that provide free foreclosure prevention assistance.

If you live in New York City, you can also call the Center for New York City Neighborhoods (CNYCN) at 311 or 646-786-0888. CNYCN partners with more than 50 agencies and coordinates foreclosure prevention and intervention services in all five boroughs. CNYCN can help you find the right services for your needs.

Never sign any papers or contracts and never enter into any agreement without first consulting your own lawyer—not a lawyer provided by the individual offering to “help.”  If you do not have a lawyer, call the New York State Bar Association's Lawyer Referral Program at (800) 342-3661 to find one. If you do not think you can afford a lawyer you can call us for assistance in locating free legal services in your area, call the Legal Aid office in your area or visit Law Help.

If you think you have been scammed, contact the Department of Financial Services to file a complaint at

Department of Financial Services


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