What is Foreclosure Fraud? Foreclosure fraud refers to deceptive practices targeting homeowners facing mortgage default or foreclosure, often exploiting their financial distress. These scams typically promise relief—such as stopping the foreclosure process, modifying loans, or “rescuing” the home—but ultimately result in the scammer stealing money, equity, or the property itself. It’s a persistent issue, with federal agencies like the FBI, FTC, and HUD issuing ongoing warnings, especially amid economic pressures like job losses or medical emergencies. fbi.gov +1 Recent reports indicate a rise in such schemes, with multi-agency crackdowns announced as recently as 2024.
fincen.gov This differs from broader “mortgage fraud” (e.g., falsified loan applications during origination) by focusing on post-default exploitation.
occ.gov Common Types of Foreclosure Fraud Schemes. Scammers often pose as legitimate consultants, attorneys, or brokers. Here’s a breakdown of prevalent tactics:
| Scheme Type | Description | Red Flags |
|---|---|---|
| Foreclosure Rescue | Scammers convince homeowners to deed the property to them for a fee, promising rent-back options or buyback rights. They pocket payments instead of forwarding them to lenders, leading to eviction. fbi.gov +1 | Upfront fees; guarantees of stopping foreclosure; pressure to sign documents quickly. |
| Loan Modification Fraud | Fraudsters charge for “guaranteed” lower payments or principal reductions, submitting fake applications or doing nothing. They may impersonate lenders. home.treasury.gov +1 | Advance payments (illegal in many states); unsolicited offers; claims of insider lender access. |
| Phantom Help or Bait-and-Switch | Minimal services (e.g., basic paperwork) for high fees, or switching to worse loan terms. Includes fake “forensic audits” of loan documents. ag.nv.gov +1 | No verifiable track record; vague promises; demands for fees before results. |
| Equity Theft or Sale/Lease-Back | Homeowners are tricked into selling at a loss or leasing back under unfair terms, stripping built-up equity. dfs.ny.gov | Offers far below market value; complex contracts you don’t understand. |
| Bankruptcy Foreclosure Scams | Fraudsters file bankruptcies in your name to delay foreclosure temporarily, charging fees without follow-through, leading to case dismissal and home loss. justice.gov | Bankruptcy filed without your active involvement; high fees for “automatic stays.” |
These schemes often target vulnerable groups, including seniors, immigrants, and those hit by life events like illness or unemployment.
hudoig.gov Historical Context: The 2008 Financial Crisis Foreclosure fraud exploded during the subprime mortgage meltdown, with “robo-signing” (mass falsification of foreclosure documents by banks like Countrywide) affecting millions. This led to widespread illegal evictions and a 2012 $25 billion national settlement with major lenders.
@BethProfeta314 While reforms followed, echoes persist in ongoing cases of forged documents and dual-tracking (pursuing foreclosure while modification applications pend).
Recent Developments (as of October 2025)
- Ongoing Enforcement: The U.S. Department of Justice and state AGs continue prosecuting cases, including a 2025 Oregon DOJ focus on “mortgage rescue” under the Fraud Prevention Act. doj.state.or.us A former loan officer was sentenced in October 2025 for a reverse mortgage fraud scheme involving elder victims.
- Public Reports: On AAF and X (formerly Twitter), homeowners are sharing stories of alleged bank fraud, such as counterfeit promissory notes by Countrywide leading to unconstitutional evictions, and threats from staff despite valid notices. Advocacy groups like Americans Against Foreclosures ( AAF ) highlight forged deeds in places like Wisconsin and Connecticut.
- Economic Triggers: Rising foreclosures due to inflation and post-COVID debt have renewed scam activity, with FinCEN issuing “red flag” alerts for financial institutions. fincen.gov
How to Protect Yourself
- Contact Your Lender Directly: Negotiate modifications through official channels—never third parties charging upfront fees (banned federally since 2010). home.treasury.gov
- Seek Free Help: Use HUD-approved counselors (find via hud.gov) or nonprofits like the National Foundation for Credit Counseling. Avoid “auditors” or unsolicited offers. occ.gov +1
- Verify Legitimacy: Check for state licensing (e.g., via California’s DRE). dre.ca.gov Read all contracts; consult a real attorney if needed.
- Monitor Your Credit: Get free reports at AnnualCreditReport.com to spot unauthorized activity. occ.gov
- Report Suspicious Activity: File with the FTC (ftc.gov/complaint), FBI (tips.fbi.gov), your state AG, or HUD OIG hotline (1-800-347-3735). fbi.gov +1
If you’ve been victimized, act fast—many states offer recovery options, and federal law may allow refunds of illegal fees. For personalized advice, reach out to local legal aid.
In 2011, then-California Attorney General Kamala Harris created the Mortgage Fraud Strike Force to investigate and prosecute mortgage-related fraud, including foreclosure scams, predatory lending, and improper servicing practices. The Strike Force operated out of Los Angeles, Fresno, San Francisco, and Sacramento, targeting consumer scams, criminal fraud, and corporate misconduct involving mortgage-backed securities. For more information join Americans Against Foreclosures ( AAF ) www.axj.news
Since 2011 the DOJ and FBI have been and now the FBI investigates all mortgage fraud as part of its white-collar crime efforts and considers it a priority crime due to its significant impact on the housing and financial markets. The FBI works with other federal, state, and local law enforcement agencies through joint task forces and working groups to investigate these cases, which can involve various schemes like fraud for profit or fraud for housing.
Lender-Trustee-Court conspiracy and collusion is the worse type of corruption existing today in the United States DOJ and still unchecked and investigated by the FBI. In the case below the Homeowner is attempting to enforce his Constitutional Rights to own property, and to let a Jury decide the facts of the case, and not the Courts. Unfortunately, this District Court has denied his right and he has to Appeal by filing for a Writ of Mandamus.
(PS) Gilbert v. Clear Recon Corp et al
| California Eastern District Court | |
| Judge: | Dena M Coggins |
| Referred: | Carolyn K Delaney |
| Case #: | 2:24-cv-02308 |
| Nature of Suit | 220 Real Property – Foreclosure |
| Cause | 28:1332 Diversity-Property Damage |
| Case Filed: | Aug 26, 2024 |
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