Avoiding Foreclosure Scams
The short answer
A demand for money up front to save the home, advice to stop talking to the lender, or a request to sign over the deed are all warning signs. Real help from a housing counselor is free.
What to do now
Never sign over the deed
Don't sign anything that transfers the home, even with a promise that you can stay or buy it back.
Never pay up front
Don't pay anyone who promises to stop a foreclosure. Housing counseling is free.
Check, then report
Ask a housing counselor about any offer, and report suspected scams to the Washington State Attorney General.
Three common schemes
Rent-to-buy: the owner signs the deed over and rents the home with a promise to buy it back later. The rent is often too high to keep up, and the buyback never happens.
Phantom help: someone charges large fees, claims to be negotiating with the lender, and tells the owner not to contact the lender, a lawyer or a counselor.
Bait and switch: the owner is told the papers are for a new loan, but they actually transfer ownership while the owner still owes the mortgage.
Why older homeowners are targeted
Foreclosure notices are public, and many older owners have large equity. Scammers mail, call and knock on doors as soon as a notice is recorded. Family members can help by watching the mail and asking about any offer that sounds too good.
Washington State's law against equity skimming
Washington State's Distressed Property Conveyances Act (chapter 61.34 RCW) regulates people who contact owners in or near foreclosure and offer to save their homes, and deals that transfer a distressed home. A homeowner who signed such a deal should talk to an attorney or the legal aid line, 1-800-606-4819, right away.
How to report a scam
File a complaint with the Washington State Attorney General's Office online at atg.wa.gov/file-complaint, or by mail. The housing counselor hotline, 1-877-894-HOME (4663), can also help check whether an offer is legitimate.
Professional Disclosure
Real Property Planning is an educational and connection hub. It does not provide legal, tax, accounting, financial, brokerage, or appraisal services. Professionals referenced on this site are independently licensed and operate through their own separate businesses. Real estate brokerage services are provided by David Stein, a licensed Washington broker, through eXp Realty. Appraisal services are provided by David Stein through Stein Appraisal. Read the full disclaimer.