Joe Wilson's Silicon Valley Real Estate Blog

According to the U.S. Government Accountability Office (GAO), the two most common foreclosure scams are advance-fee loan modification schemes and sales-leaseback schemes, with advance-fee schemes.

In an advance-fee scheme, someone charges the homeowner a fee in advance to negotiate a deal with the mortgage lender. They may even offer a money-back guarantee, but the usual outcome is that they take the money (the average is about $3,000), provide little or no service, and then refuse to refund the fee.

In a sales-leaseback scheme, the scammer persuades the homeowner to transfer the deed to them by offering to assume payments and let the homeowner pay rent while the “rescuer” gets the house’s affairs in order. The scammer generally promises to sell back the property to the homeowner once the homeowner’s financial situation improves, but they don't. Often they take out another loan on the home or even sell it out from under the homeowner.