# How To Spot Mortgage Assistance Scams—as FTC Releases $3 Million in Refunds to Victims
The Federal Trade Commission has distributed $3 million in refunds to victims of mortgage assistance scams, a reminder that foreclosure relief fraud remains rampant across the U.S. housing market.
Ashley F. Morgan, a debt and bankruptcy lawyer based in Chantilly, Virginia, confirms that these scams target distressed homeowners with particular aggression. Scammers prey on borrowers facing foreclosure by promising loan modifications, payment reductions, or refinancing options that never materialize. Victims typically pay upfront fees ranging from $500 to $3,000, only to receive worthless paperwork or no service at all.
The mechanics are simple but effective. Fraudsters contact struggling homeowners via phone, email, or direct mail, using official-sounding company names and claiming direct connections to lenders or government agencies. They promise to stop foreclosure within weeks or months. Many charge fees before any work begins, a major red flag since legitimate mortgage assistance programs rarely demand upfront payment.
Red flags include pressure to act immediately, requests for payment before results, guarantees of loan modifications, and demands that homeowners stop communicating with their lenders. Legitimate options exist through HUD-approved housing counselors, servicers' own loan modification programs, and nonprofit credit counseling agencies. These services cost little to nothing.
Homeowners facing foreclosure should contact their loan servicer directly, consult HUD-approved nonprofit counselors (find them at HUD.gov), or speak with a licensed attorney. The Consumer Financial Protection Bureau and FTC also provide free resources on legitimate assistance options.
The $3 million in FTC refunds reflects only a fraction of actual losses. Many victims never report scams due to embarrassment or distrust