Mortgage rescue scam warning: Scammers targeting homeowners after a disaster

The deadly wildfires in Maui that have destroyed more than 2,200 structures are a devastating reflection of the damage left behind from natural disasters.

Now there is a new warning about fraudsters looking to cash-in on vulnerable homeowners after experiencing a disaster.

The Office of the Inspector General (OIG) for the U.S. Department of Housing and Urban Development (HUD) released a memo warning about the common tactics used by these scammers.

“Scammers often prey on homeowners who may be financially vulnerable after falling behind on mortgage payments by promising to “work with the bank” on a homeowner’s behalf to help the homeowner avoid foreclosure,” the memo said. “This tactic is often disguised as a “loan modification” or “mortgage modification.”

We spoke with Jeff Ostrowski, an analyst with Bankrate.

“These scammers really prey on fear,” said Ostrowski. “They prey on a lack of knowledge of the system… The first thing you should know as a homeowner is the foreclosure process takes months to unfold so you’re not going to be hit by a wildfire or a tornado or hurricane, miss one payment and suddenly lose your house. That’s just not how it works.”

Ostrowski says there are red flags to watch out for as a homeowner.

“Somebody who asks for money upfront,” said Ostrowski. “If they tell you not to talk to your lender directly. If they ask you to transfer the deed. Those are all things that you should not do.”

Ostrowski said if you are a homeowner who experienced a disaster and you’re having trouble keeping up with mortgage payments, you should contact your lender directly to discuss options.

That can include applying for a forbearance to temporarily pause or reduce payments.

“If you’ve been affected by one of these natural disasters, I would say losing your property to foreclosure should be way down at the bottom of your list of concerns,” said Ostrowski. “You can afford to focus on getting your home repaired, getting temporary housing.”

Homeowners receiving HUD assistance can also review this guide when having difficulty making mortgage payments.

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