Mortgage Fraud and Foreclosure Rescue Scams

Michigan ranks in the top 5 states in the country for mortgage fraud and foreclosure rescue scams. To combat these crimes, the Michigan Foreclosure Task Force secured funding to launch Scam Alert awareness campaigns. The campaigns consist of spreading a wide range of public education materials produced by NeighborWorks® as part of a national Scam Alert Campaign.  If your community is interested in purchasing material, you can view the price list here (pdf).

Basic Scams

  • A “Foreclosure Prevention Specialist” Scam: Involves someone taking the homeowners money up front to work with the lender and “save” their home. They will look professional but take the homeowners money and do nothing to save the home.
  • The Lease/Buy Back Scam: In this scam, homeowners are tricked into signing over the deed to their home based on promises that they can stay in the home as a renter and buy it back later. Generally, the terms of the lease are so difficult that homeowners are rarely, if ever, able to repurchase their homes.
  • Bait-and-Switch Scam: In this scam, a homeowner unwittingly signs over the deed to the home thinking s/he is merely refinancing it to provide income. A typical target for this scam is elderly widowed women many of whom end up being evicted from a home they have owned outright and lived in for years.

Scam Prevention

In order to prevent being victimized by a foreclosure or mortgage scam:

  • Never pay anyone up front to help you work with your lender;
  • Never trust anyone who guarantees they can save your home;
  • Neversign anything you haven’t read or don’t fully understand;
  • Always seek the help of a FREE HUD or MSHDA-certified foreclosure counselor.

 Scam Reporting

If you think you’ve been the victim of a foreclosure scam, report it by contacting the Michigan State Attorney General’s Office or calling 877.765.8388. If you would like to register a complaint about a licensed mortgage broker or lender contact the Office of Financial and Insurance Services or call 877.999.6442

Ingham County Residents Only – Ingham County Foreclosure Fraud Hotline ( 517) 676-7210

Scam Prosecution

Michigan State’s Attorney General’s office has made the prosecution of mortgage fraud and foreclosure rescue scams a high priority. However, in order to prosecute scam artists, it is important to know the law.

In the state of Michigan, laws are in place that make it illegal to require payment for a service before the service is rendered. As almost all scams will ask for money up front, they are able to be prosecuted.

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