Mortgage Rate Reduction Scams
Americans lost $12.5 billion to fraud in 2024, according to the FTC.
Quick Answer
Mortgage rate reduction and loan modification scams deceive homeowners with false promises of lower payments, with monthly mortgage scam reports growing 407% since 2022.
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How It Works
1
Scammers target homeowners, often those in financial distress, through unsolicited mail, email, or phone calls. They use official-sounding names and may illegally pretend to be affiliated with a government agency or the homeowner's actual lender.
2
They guarantee to lower mortgage interest rates or monthly payments, stop foreclosure, or provide other mortgage relief. To do this, they demand large upfront fees, which is illegal for mortgage assistance relief services to do before providing results.
3
After the homeowner pays the fee, the scammers provide no services, leaving the homeowner in a worse financial position. In some versions of the scam, they instruct the homeowner to stop paying their mortgage and instead send the payments directly to the scam company, leading to foreclosure.
4
In more extreme cases, scammers trick homeowners into signing documents that transfer the property's title or deed to a third party, under the guise of a temporary arrangement to save the home. This ultimately leads to the victim being evicted and losing their home entirely.
Red Flags
- Guarantees of stopping foreclosure or modifying your loan.
- Demands for upfront fees before any services are provided.
- Instructions to stop paying your mortgage lender.
- Pressure to sign paperwork you don't understand or that transfers property ownership.
- Claims of a special relationship with your bank or a government agency.
- Advising you to cut off communication with your lender or a housing counselor.
- Offers that arrive via unsolicited mail, email, or phone calls.
What to Do If Targeted
- Contact your actual mortgage lender or servicer directly using the number on your statement to discuss your options.
- Do not pay any upfront fees for mortgage assistance; it is illegal for companies to charge you before they have helped you.
- Never sign over the deed to your property or sign documents you do not fully understand.
- Do not stop making mortgage payments unless specifically instructed to by your lender.
- Seek help from a legitimate, HUD-approved housing counseling agency.
- Report suspicious offers to the authorities immediately.
How to Report It
- FTC — File a fraud report with the Federal Trade Commission if you encounter a mortgage relief scam.
- FBI IC3 — Report any internet-based crime, including online mortgage scams, to the FBI's Internet Crime Complaint Center.
- CFPB — Submit a complaint with the Consumer Financial Protection Bureau if you have an issue with a financial product or service.
- FCC — File a complaint about phone scams, robocalls, or unwanted calls with the Federal Communications Commission.
- AARP Fraud Helpline — Call 877-908-3360 for free support from trained fraud specialists. Available to anyone, not just AARP members.
Key Statistics
- Monthly reports of mortgage scams surged by 407% between 2022 and 2025. — BackOffice Pro / BBB Scam Tracker 2025
- The average financial loss for victims of mortgage scams is $16,829. — BackOffice Pro / BBB Scam Tracker 2025
- Mortgage fraud due to fraudulent 'scams' increased by 51% in 2023. — LexisNexis 2024
- A federal court ordered the operators of the Home Matters USA mortgage relief scam to turn over $19 million. — FTC 2024
- The FTC is sending more than $222,000 in refunds to consumers harmed by a deceptive mortgage relief operation known as Lanier Law. — FTC 2024
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Frequently Asked Questions
No, it is illegal for mortgage assistance relief companies to collect any fees until they have provided you with a written offer from your lender and you have accepted it. The FTC's Mortgage Assistance Relief Services (MARS) Rule explicitly prohibits this practice.
You should never stop paying your mortgage based on advice from a third-party company. Scammers use this tactic to make you more desperate and to collect payments for themselves. Always communicate directly with your lender or a HUD-approved housing counselor about your payment options.
The U.S. Department of Housing and Urban Development (HUD) sponsors free or low-cost housing counseling services across the country. You can find a HUD-approved housing counselor in your area by visiting their website or calling them. These counselors can help you understand your options and work with your lender.
No legitimate company can guarantee a loan modification or a specific lower rate. Scammers often use false guarantees to lure victims into paying upfront fees. The final decision always rests with your mortgage lender or servicer.
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