September 03, 2025 · Credit, Insurance, Real Estate, Security

12 Warning Signs of a Potential Foreclosure Assistance Scam

Black man and woman leaning on the railing of a house

This blog is intended for general informational purposes only and should not be construed as legal, financial, or housing counseling advice. Readers should consult with a qualified attorney, a U.S. Department of Housing and Urban Development (HUD)-approved housing counselor, or licensed financial professional before making decisions related to foreclosure or mortgage assistance.

Mention of third-party services, government agencies, or nonprofit organizations does not constitute an endorsement or partnership with Delta Community Credit Union.

What is home foreclosure and who might be able to help prevent it?

According to one U.S. government agency, “Foreclosure is when the lender takes back property when the homeowner fails to make payments on a mortgage.” Foreclosure includes not only commercial property, but also personal property such as an individual’s home.

A homeowner at risk of foreclosure is likely very worried about losing their home, especially if they've invested time, money and effort into maintaining or increasing its market value. Someone who may be facing what they consider to be a dire situation may apprehensively be searching for any possible help that could save their home.

State and federal agencies, along with non-profit organizations, may offer help to prevent home foreclosure at little or no cost. There are also legitimate businesses that offer experience and knowledge that could be very useful in trying to avoid foreclosure, but for a price—various fees, which can become significantly large. A homeowner should consider first using all the free assistance available to them before deciding that it’s necessary to spend money in their effort to save their home.

Homeowners should also be wary of scam companies offering unrealistic foreclosure assistance—especially those that make strong promises of quick, easy solutions to a complex problem that took time to develop and will take time to resolve. There are warning signs for foreclosure assistance companies that promise too much and then actually deliver very little to worried homeowners.

Warning signs of a potential foreclosure assistance scam

According to several U.S. and state government agencies, here are a few of the key signs of a potential foreclosure scam:

  1. A company promises it has the ability to stop a foreclosure immediately. Legal processes, including foreclosure, involve multiple actions that take time and may not happen very quickly. It is not realistic for another company to claim that it can instantly or even swiftly stop a mortgage lender’s foreclosure activities.
  2. The company claims it has “special relationships” with financial institutions or judges and that it knows and has experience with people involved in the foreclosure process—giving it a unique capability to successfully intervene to save the home in jeopardy of being lost. Financial institutions, attorneys and judges have to follow state and federal laws regardless of their personal relationships; also, attempting to request any form of preferential treatment may be unethical or illegal.
  3. The homeowner must pay up front for help before any work has been done for them or any positive results have occurred.
  4. 4The company guarantees it will get the terms of your mortgage changed. Any company should not promise an outcome based on activities it does not control, which include the mortgage lender’s decisions and actions.
  5. The company guarantees the loanee won’t lose their home, because again, the situation is mostly up to the lender who may decide foreclosure and sale of the home is its best option for the benefit of its operations and profitability.
  6. The homeowner is asked to sign over the property deed or title to their home or to sign other contractual documents that they don’t understand. The foreclosure prevention company may say that by signing over the home the homeowner can then lease the home back from the company and eventually regain ownership. By signing the home title over to another party, a homeowner has just legally given their home away at no (or very low) cost to someone else. Homeowners should not sign any legal document—including contracts for services—without reading and understanding all the terms, conditions and possible outcomes. It may be a good idea for a homeowner to also get professional advice from a variety of individuals. These advisors could include an attorney, an experienced housing real estate professional (including one that may work for a non-profit organization), a non-profit organization that assists with money or housing problems, or a government agency, such as HUD-approved housing counselors. Homeowners should not rely just on professional advice from any person connected to the foreclosure prevention company but should solicit information and opinions from independent experts.
  7. The loanee is instructed to send their payment to the foreclosure prevention company or some other business than their mortgage company or loan servicer. Financial transactions should generally be between the homeowner and lender without requiring any supplemental services from a third party acting as a middleman.
  8. The foreclosure recovery firm offers to do a “forensic audit” to try to uncover problems with the loan, the lender or the homeowner’s finances and accounts. A forensic audit often involves specially trained and experienced Certified Public Accountants (CPAs) and lawyers. These audits may include intensive reviews and analysis of financial accounts, transactions and communications, and audits are usually used to uncover illegal behavior such as collusion, deception, fraud, theft, embezzlement or other criminal activities. These types of audits are generally conducted as part of a lawsuit or criminal investigation rather than as an activity for a standard foreclosure proceeding.
  9. The recovery firm tells the homeowner to stop paying their mortgage, which is likely to only make the problem worse. Without any additional payments, the loan company may lose faith in the ability of the homeowner to afford the mortgage and then decide to pursue foreclosure instead of other options. Stopping payments is unlikely to give the homeowner any new official legal authority or coercive power to control the lender’s decisions and actions.
  10. The foreclosure prevention company claims, without independent validation, that they’re affiliated with the federal or state government, and they may use a logo that closely resembles a government seal or logo. To find any government-associated organization, start by contacting a government agency, such as HUD, the Consumer Financial Protection Bureau (CFPB) or Federal Housing Administration (FHA), which are mentioned below. Your state’s secretary of state’s office may also have a list of organizations that are confirmed to be officially affiliated with the state or national government; for example, the state may refer those in need to these organizations since they may provide services beyond what the government may offer.
  11. The foreclosure prevention-avoidance-recovery company says that it’s a non-profit, but still requires payment, potentially a hefty amount of money. While some non-profits may charge small fees for services that cost them money—like copying, mailing or notarizing documents—they generally should not charge large amounts to the consumers they’re helping. The organization should also be able to authenticate its legal non-profit status and be registered with some government agencies as a non-profit organization, such as a secretary of state’s office for a U.S. state and with the U.S. Internal Revenue Service.
  12. The foreclosure prevention company instructs the homeowner not to have any further contact with their lender, lawyer or credit or housing counselor because their involvement may complicate and hinder the company’s efforts to stop foreclosure efforts. A reputable company would more likely want to have its clients have as much experienced support as possible from any person or organization that is capable of helping them. Wouldn’t a foreclosure assistance company consider how it could coordinate or temporarily partner with another person, company or organization to help a homeowner?

There are federal government programs that might be able to help someone with foreclosure problems before the homeowner decides to hire a company for assistance

There are several U.S. government programs and housing counselors that may be able to assist homeowners in avoiding, delaying or stopping foreclosure and retaining their home, usually at a limited or no cost:

  • The federal government agency the U.S. Department of Housing and Urban Development (HUD) has advice on avoiding foreclosure and funds free or very low-cost housing counseling nationwide. Housing counselors can help homeowners understand the law and their options, organize their finances and, possibly, represent them in negotiations with their lender, if they need this assistance. HUD-approved housing counselors are available across the country, or homeowners can call 1-800-569-4287 or teletypewriter (TTY) 1-800-877-8339.
  • Another federal agency, the Consumer Financial Protection Bureau (CFPB), also has information on foreclosure and operates the HOPE™ Hotline, open 24 hours a day, seven days a week, at 1-888-995-HOPE (4673) to offer aid.
  • According to its website, the CFPB has also offered advice and accepted complaints about mortgages, so consumers could submit a complaint to the CFPB, and it should forward the complaint to the mortgage lending company and work to assist the homeowner in obtaining a response from the company. Consumers may submit a complaint by calling 1-855-411-2372 (CFPB) or by completing a complaint form at https://www.consumerfinance.gov/complaint/.
  • For Federal Housing Administration (FHA) loans, homeowners may call the FHA National Servicing Center at 1-877-622-8525 for help working with a lender to avoid foreclosure.

Delta Community has a Member Assistance Program that may be able to help members

Delta Community believes in helping its members whose income and/or employment status has been adversely affected. If a member is in a challenging financial situation because of an involuntary furlough, job change or layoff, voluntary leave of absence, severance or early retirement program, or some other circumstance that adversely affects their finances, then they may be eligible for the Credit Union’s Member Assistance Program, which could help with certain Delta Community loans, including mortgages.

If a member needs to take part in this program, they should call Delta Community at 800-544-3328. For assistance with first and second Mortgage Loans and Home Equity Lines of Credit, contact the Credit Union at 404-677-8688.

If you have questions about what the program offers, please read the Member Assistance Program FAQ for help answering them.

Free, confidential, personal financial advice is also available from BALANCE™

BALANCE™ is a financial education and counseling organization that offers free services to Delta Community members. Some of its services include credit report reviews, debt management and information on budgeting, money management and home buying.

Visit the BALANCE™ website to learn about their education and assistance programs. Members can also speak with certified credit and housing counselors to get personalized guidance.

Want to connect with a Financial Coach about your specific situation? Call 1-888-456-2227 to speak with a Financial Coach today.

Note that the services offered through BALANCE™ are separate and distinct from any business conducted with Delta Community and are not guaranteed by, nor are they obligations of, the Credit Union.

Delta Community has its own workshops, webinars and blog on managing money

Take advantage of the many free Delta Community Financial Education Center live workshops which are available to both Credit Union members and the general public. The Financial Education Center's Events & Seminars page has a registration form for its monthly, no-cost workshop and webinars with practical, actionable advice on managing personal finances, including saving and spending suggestions. The information provided in live presentations by the Financial Education Center reflects Delta Community’s mission to help both its members and others in the community achieve financial success throughout their lives.

Delta Community has some more timely advice and ideas on money and cybersecurity on its blog: