Minnesota Attorney General Keith Ellison issued a warning about how to spot and avoid mortgage assistance scams, citing increased reports of such scams to his Office’s Consumer Action Division.
The warning is part of Ellison’s monthly Scam Stopper, series, which aims to help protect Minnesota consumers from common scams.
He said homeowners needing mortgage assistance are sometimes preyed upon by scam artists who charge upfront fees and fail to deliver on promises to save a home from foreclosure or to modify a borrower’s loan terms. Homeowners should never pay up front fees for foreclosure assistance or prevention, he added. There are nonprofit organizations that provide mortgage assistance for free as part of their mission.
Scammers typically target a borrower whose mortgage is in default or who has concerns about their ability to continue making timely payments. Some organizations or individuals may represent themselves as counseling agencies but are actually only out to make a profit off the misfortune of others. Typically, these entities will ask for upfront fees in exchange for “counseling” services such as financial advice, negotiating payments or other solutions with the lender, or exploring the sale of the property. These are services that borrowers can do themselves and may be offered for free by reputable organizations, Ellison said.
Scam artists that collect upfront fees may not actually provide any of the services promised or may even disappear overnight. Under Minnesota law, a foreclosure consultant is prohibited from collecting a fee until after it has provided a service.
He said consumers should contact their lenders as soon as possible if they are having trouble making their mortgage payments.
Ellison asked that Minnesotans report scams to his office immediately. Many people feel embarrassed when a scam happens to them, but con artists and scammers are often professionals with years of experience. They are good at what they do, and they count on people feeling too embarrassed to protect others by speaking out. If a scam happens, consumers should report it right away: not only may the attorney general’s office be able to help them personally, they will help others by allowing the office to alert others.