Foreclosure relief scams explained

A foreclosure relief scam preys on homeowners already facing one of the most stressful financial situations possible. Here’s how to recognize false help and find the real kind.

What is a foreclosure relief scam?

A foreclosure relief scam targets homeowners at risk of losing their property, offering fake assistance, often for an upfront fee or in exchange for signing over the deed to the home, that ultimately leaves the homeowner worse off than before. According to the CFPB⁠(opens in new window), criminals often use mail or email designed to look like it’s from a government agency specifically to convince homeowners that the help being offered is legitimate and official.

How this scam typically works

A scammer may pose as a housing counselor, an attorney, or someone with special access to a lender, promising to negotiate a mortgage modification or stop foreclosure entirely, usually for a fee collected before any actual help is delivered. Some scams go further, convincing a homeowner to sign over the deed to their property, sometimes framed as a temporary measure to “protect” the home, after which the scammer either sells the property or collects rent while the original owner remains legally responsible for the unpaid mortgage. Others advertise a “rescue loan” that, buried in the paperwork, actually transfers the deed away from the homeowner entirely.

The clearest warning sign: being told to stop paying

One of the most telling signs of a foreclosure relief scam is being instructed to stop making mortgage payments, sometimes framed as a necessary step to qualify for assistance. The CFPB is explicit that this advice can seriously damage credit and limit genuine options, and no legitimate housing counselor or government program requires falling further behind in order to receive help.

How Remitly protects you

Remitly’s role is limited to sending and receiving money safely and transparently, and it never offers mortgage assistance, foreclosure counseling, or any service involving property or its deed. If contact claiming to be affiliated with Remitly regarding a mortgage or foreclosure matter ever arises, that contact did not come from Remitly.

Red flags to watch for

• Charges an upfront fee before providing any actual mortgage relief. Federal law generally bans this practice for mortgage assistance and foreclosure relief.

• Tells you to stop making mortgage payments. This is never legitimate advice and typically worsens the situation.

• Asks for payments to someone other than the actual lender or loan servicer. Legitimate assistance never redirects mortgage payments this way.

• Pressures signing documents quickly, or asks for the property’s deed to be signed over. Take time to read everything, and never transfer a deed as part of a “rescue” arrangement.

• Claims a special relationship with a lender or the government that allows working faster than normal channels. No legitimate helper has this kind of unofficial access.

Why acting early matters so much

Foreclosure relief scams often succeed specifically because homeowners wait too long to seek help, either out of shame or a hope that the situation will resolve on its own, leaving them more vulnerable to a scammer’s promise of a fast, easy fix once the situation feels urgent. Reaching out to a mortgage servicer or a free, HUD-approved counselor at the very first sign of financial difficulty, rather than waiting until foreclosure feels imminent, gives access to more genuine options and considerably less vulnerability to a scam’s false promises.

Why a “rent to buy” pitch deserves particular scrutiny

Among the various foreclosure scam variations, an offer to buy a home with a promise it can be rented and bought back later once finances improve deserves particular scrutiny, since this arrangement transfers legal ownership away immediately while any promise to sell it back later is often unenforceable or simply abandoned once the scammer has control of the property. Consulting an independent attorney, not one recommended by the person making the offer, before signing away a deed under any such arrangement is essential.

What a legitimate mortgage modification offer actually looks like

A genuine mortgage modification comes directly from the actual lender or servicer, in writing, clearly describing the specific changes to loan terms, and it never requires payment before the offer has been reviewed and accepted. Comparing anything communicated against this standard quickly reveals whether an offer is following the legitimate process or deviating from it in a way that should raise concern.

Free counseling is not a lesser option

It’s worth directly addressing a common, understandable assumption: that a free HUD-approved counselor must offer less thorough help than a paid company promising fast results. In reality, these counselors are trained specifically for this exact situation and have no financial incentive pushing toward a particular outcome, which often makes their guidance more trustworthy, not less, than a paid alternative. For anyone who has already lost money to a scam of any kind, Remitly’s scam recovery guide⁠(opens in new window) covers the general recovery steps worth taking.

In Summary

A foreclosure relief scam exploits exactly the moment when a homeowner is most vulnerable, which is why knowing the clear warning signs, and knowing that genuine help is available for free, matters so much.

This publication is provided for general information purposes only and is not intended to cover all aspects of the topics discussed herein. This publication is not a substitute for seeking advice from an applicable specialist or professional. The content in this publication does not constitute legal, tax, or other professional advice from Remitly or any of its affiliates and should not be relied upon as such. While we strive to keep our posts up to date and accurate, we cannot represent, warrant, or otherwise guarantee that the content is accurate, complete, or up to date.