07/24/2014 12:08 pm ET Updated Sep 23, 2014

Learn to Recognize Mortgage Relief Scams

If you are having difficulty making your mortgage payments or possibly facing foreclosure on your home, you're not alone. And unfortunately, there are some opportunists who know it and may try to take advantage of you.

Have you seen ads or received a telephone call from someone promising to save your home from foreclosure, by working with your lender to modify the terms of your loan? The caller might promise you a dramatically lower interest rate, or a reduced principal loan amount. The caller might claim to be with a company affiliated with the government, or that has a special relationship with your bank, or that has a high success rate in getting mortgage modifications. But beware that many of these promises ring hollow.

When you should be suspicious?

First, watch out for any offers that require you to pay upfront for help. Under the FTC's Mortgage Assistance Relief Services Rule, it is illegal for a company to collect any fees until you have actually received an offer of relief from your lender and accepted it. That means even if you agree to have a company help you, you don't have to pay until it gets you the result you want. So even if the company offers a money back guarantee, don't pay a fee upfront to get help with your mortgage.

Second, be wary of any offer of help that includes instructions to stop paying your mortgage or stop communicating with your lender. Doing this can make the problem worse, by getting you further behind on payments, damaging your credit, and even causing you to fall into foreclosure.

Third, watch out for any company that says it can guarantee you a mortgage modification, that asks you to transfer the title of your home over to the company, or that pressures you to sign papers that you don't understand or haven't had a chance to review.

If you need help with your mortgage, contact your lender immediately. You may be able to negotiate a new repayment schedule. You can also call a legitimate credit counselor through the Homeownership Preservation Foundation (HPF), a nonprofit organization that operates a national 24/7 toll-free hotline (1-888-995-HOPE) with free, bilingual, personalized assistance to help at-risk homeowners avoid foreclosure.

The FTC has shut down many types of mortgage modification scams, including many that charged consumers thousands of dollars of up-front fees and did nothing to help save their homes. The agency just announced six more law enforcement actions as part of a federal-state sweep that also includes actions brought by the Consumer Financial Protection Bureau and 15 state attorneys general and other state agencies. Visit our consumer site for more information on mortgages and report mortgage modification scams if you suspect one.

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