What We’re Learning: Foreclosure Scams

What We’re Learning presents timely information on important developments from the community foundation’s grantee cohorts, groups of subject matter experts and practitioners from each of our grantmaking strategies.

An ongoing concern for members of our foreclosure prevention counseling cohort, part of our grantmaking focus on economic security, is fraudulent activity perpetrated against homeowners trying to save their homes. Our grantees provide housing counseling services and legal assistance to at-risk homeowners as well as tenants at risk of eviction and homelessness. The grantees see first-hand how abusive practices impact the people who most need help to recover from the housing crisis. Maeve Elise Brown, a legal services attorney and leader in the field of foreclosure mitigation, reports from the front lines.


By Maeve Elise Brown, executive director and a founder of Housing and Economic Rights Advocates

We may all be exhausted from foreclosures – who doesn’t want this to be over? – but in all likelihood, the foreclosure crisis will continue through 2015. Along with the great losses and suffering that foreclosures are causing homeowners have come foreclosure rescue scams. Some are complex, while other perpetrators simply convince homeowners they can get them a loan modification for a fee of $2,500 to $5,000 (or more in some cases).

Collecting upfront fees for loan modification work has been outlawed in California, but this has not slowed scammers down. State and federal regulators have taken action to put bad actors out of business but are overwhelmed by the volume of fraudulent activity aimed at homeowners. 

Why do homeowners fall for these false offers of help? Many have tried for years to get a modification to their mortgage to make the payments affordable and have faced monumental hurdles.

For example, Eva and her family fell behind on the mortgage when her husband was laid off. She tried calling her lender repeatedly but was unsuccessful in trying to work out a plan to reduce her mortgage. In desperation, she responded to a commercial on a Tagalog language television show targeting Filipinos and promising to obtain loan modifications for homeowners in distress. Eva paid $3,000 to the operation, which was a scam.

The good news is that one of Silicon Valley Community Foundation’s grantees filed a fair housing complaint and was able to get Eva’s money back. The bad news is that many homeowners are victimized and do not know where to get help to get their money back or undo the other damage caused by the scammers.

Esperanza, a 73 year-old homeowner living on a fixed income, was approached by a woman who said a special program for seniors would allow Esperanza to pay just one-fourth of her existing mortgage loan and that the government would pay off the rest. All Esperanza had to do was put up $24,900 to participate. Since Esperanza did not have that kind of cash, the scammers offered to finance the amount for her and allow her to repay it at $150 per month. She paid some additional upfront money as well.

Esperanza wound up with a deed of trust recorded against her home for the $24,900. A social service provider referred her to a community foundation grantee for help. She received pro bono legal assistance to file suit to remove the lien, but will probably never see the cash that she paid the scammers. One of the masterminds behind this scam has since been indicted for mortgage fraud and other related charges.

Clearly, more effort is needed to stop this kind of fraud. The community foundation’s grantees have been working to mitigate this problem, both individually and collectively. Two grantee organizations are collaborating on an outreach campaign that includes purchasing bus ads, placing banners in central thoroughfares and hosting lunchtime discussions with leaders in the faith community. Such efforts are intended to raise awareness of these abusive practices and give vulnerable homeowners the assistance they need and deserve.


SVCF grants related to foreclosure prevention have helped more the 2,500 homeowners and renters in our local communities. To learn more about our focus on this work and to find a full list of grantees, visit www.siliconvalleycf.org/economic-security.