Following the recent wildfires in Southern California, the Department of Financial Protection and Innovation (DFPI) urges consumers and investors to be alert to scams and unlawful activities in investments and other financial services. The DFPI encourages consumers and investors to carefully investigate any potential financial relief proposal or investment opportunity at a time when unscrupulous actors will likely try to exploit heightened economic anxieties. Consumers and investors may submit complaints to the DFPI at dfpi.ca.gov/submit-a-complaint.
A list of resources for impacted residents and homeowners is posted to the DFPI website.
Loan Modification and Foreclosure Scams
Homeowners facing foreclosure should be aware of these common scams:
- Deed-Transferring to Third Party – Scammers may tell homeowners that by transferring the deed to their home to a third party, they will no longer be responsible for their mortgage payments. This is NOT true. Transferring a title does not relieve a borrower of their mortgage payments. Scam artists often ask for up-front fees to make the deed transfer and promise to rent the house back to the homeowner until the homeowner can afford to buy the house back. If you are facing foreclosure, investigate payment options with your mortgage servicer and do NOT sign your property away.
- Intentional Default – Scam artists urge homeowners not to pay their mortgage in order to get a loan modification. While there is no right to a loan modification, the terms and standards for a loan modification are always determined by the mortgage loan servicer and no one else. If you are having difficulty making mortgage payments, you should contact your mortgage servicer directly or contact a HUD certified counselor (888-995-4673) for help.
Banks, credit unions, and mortgage lenders and servicers may agree to allow homeowners impacted by the Los Angeles wildfires to delay or reduce their mortgage payments for up to three months. Borrowers should contact their servicer for details.
Lending Scams
- Advance Fee Scams – The DFPI encourages consumers in need of cash to avoid advance fee scams in which fraudulent companies promise loan modifications if a consumer pays a substantial up-front fee first. Do NOT pay anyone asking for upfront/advance fees for loan modification services or mortgage forbearance services. Contact the DFPI immediately at 866-275-2677 or at [email protected]. Advance fees for loan modifications are NOT legal in California.
Check Before You Borrow or Invest
Before borrowing or investing, ask questions about the risks and fees involved. Conduct your own independent research or seek the opinion of a financial professional who is registered with your local securities regulator.
The Department of Financial Protection and Innovation encourages consumers to check the licensing status of companies prior to transacting business. California consumers should contact the Department to check on the licensing of companies offering loans, investments, or other financial services. This can be done by visiting the Licensee search on the DFPI website or calling the Department’s Consumer Services Office at (866) 275-2677.