In 2012, the Federal Government reached a settlement agreement with 49 states and the nation’s five largest mortgage servicers, Ally Financial, Bank of America, Citibank, JP Morgan Chase, and Wells Fargo. These five banks agreed to pay $50 billion in combined gross relief in order to settle or avoid further disputes relating to mortgage services and foreclosures.
The National Mortgage Settlement provides consumer financial protection in that the settlement is allotted to homeowners who were wrongly foreclosed upon. The settlement is also provided to many homeowners who lost their homes between January 1, 2008 and December 31, 2011 and who took out loans by one of the five participating mortgage servicers. Eligibility for settlement money varies depending on the facts of your case, but people who believe they are eligible should directly contact their mortgage servicer directly.

What are Mortgage Settlement Scams?

Mortgage settlement scams are scams which are designed to prey on consumers who either are or believe they are eligible for the National Mortgage Settlement. Scammers’ goal is to obtain personal information (like your social security number), bank account information, or charge you a fee to help determine whether you qualify for relief.

What are the Most Common Mortgage Settlement Scams?

Criminals who commit fraud will do just about anything to get their hands on money, and with the passage of the settlement back in 2012, mortgage scams surged. Below is a non-exhaustive list of common types of mortgage settlement scams.

  • Websites that feature opportunities for access to Mortgage Settlements: Many websites try to obtain its users’ personal information by using the phrase “mortgage settlement.” Be wary of any websites that advertises accessibility to mortgage settlements, especially if it asks for your social security number, bank account information, etc. Instead, research to determine whether the website is legitimate.
  • Agent Requires Up-Front Fees: A common mortgage settlement scam is where the scammer poses as an agent, asking for fees in return for quick payouts of settlement money. However, eligible persons are not required to pay any fees to receive the settlement payouts.  
  • Fake Mediators: Beware of any communications (phone calls, emails, letters, etc.) from any person or company who claims to be mediators who will mediate the settlement between you and your mortgage company or bank. Do not give any private information to these people, including your bank account or tax information, as they may use this information against you. 
  • False Bank/Trust Accounts: Some scams involve the fraudster asking the homeowner to deposit their settlement funds into specific bank accounts or trust funds which the scammer has access to. If you are asked to deposit your settlement deposit into a certain account, contact your mortgage company or bank right away to determine whether you should make the deposit.
  • Requests for Participation in Settlement Program: This scam has perpetrators calling to offer homeowners participation in the national mortgage settlement. They ask for the owner’s bank account information, perhaps promising to hold money in escrow during the loan modification. As soon as the money or bank account information is shared with the scammer, the money is stolen.

Should I Hire a Lawyer?

If you believe that you have been a victim of a mortgage settlement scam, you may wish to contact a real estate lawyer for advice or representation in court. You may also wish to contact a lawyer for advice regarding your eligibility for a settlement payout. A knowledgeable attorney in your area can provide you with much-needed assistance regarding mortgages and foreclosures.