Foreclosure Rescue Scams and Deed Theft in New York: How to Protect Your Home

When you are behind on your mortgage, you may suddenly get letters, calls and even visits from people promising to “save” your home. Some are legitimate. Many are not. Foreclosure rescue scams and deed theft have cost New York families their homes and their life savings, especially in Brooklyn, Queens and the Bronx.

This guide explains the most common scams, the warning signs, and the protections New York law gives you.

What is a foreclosure rescue scam?

A foreclosure rescue scam is when someone takes your money, your home or both by promising to stop your foreclosure. Scammers often target homeowners who are scared, short on time and listed in public foreclosure filings.

Common versions include:

• Upfront fee scams: A “consultant” charges you a fee to negotiate with your lender, then does little or nothing.
• Loan modification scams: Someone promises a guaranteed modification and tells you to stop paying your lender and pay them instead.
• Sale-leaseback scams: You are told to sign your home over to a “rescuer” who will let you rent it and buy it back later. In reality, you lose ownership, and often your equity.
• Fake government or lender programs: Scammers use official-looking logos and names to seem like your bank or a government agency.

What is deed theft?

Deed theft is when someone transfers ownership of your home to themselves without your real, informed consent. It can happen through a forged signature, a fake power of attorney, or by tricking an owner into signing papers they do not understand, such as documents described as a “loan application” or “help program.”

Older homeowners, families who inherited a home, and owners in fast-rising neighborhoods are frequent targets.

Warning signs of a scam

Be very careful if anyone:

• Asks for a fee before doing any work
• Guarantees they can stop your foreclosure
• Tells you to stop paying your mortgage or to stop talking to your lender, lawyer or housing counselor
• Asks you to sign over your deed or give them power of attorney
• Pressures you to sign right away, or will not let you take documents home to review
• Asks you to sign blank or incomplete papers
• Contacts you out of the blue after your name appears in a foreclosure filing

Your rights under New York law

New York has some of the strongest homeowner protections in the country.

Distressed property consultants cannot charge upfront fees. Under Real Property Law § 265-b, a foreclosure consultant may not charge or accept any payment until all services are fully completed, and may not take your deed or a power of attorney from you. You can cancel a consulting contract without penalty until midnight of the fifth business day after you sign it. A court can void an illegal contract, and the Attorney General can seek penalties of up to $10,000 per violation (NY Senate).

Stronger deed theft protections. In November 2023, Governor Hochul signed a law that lets the Attorney General and district attorneys ask courts to pause foreclosures, evictions and ownership disputes while a deed theft investigation is underway. It also lets the Attorney General ask a court to void fraudulent deeds (Governor’s office).

How to protect yourself

• Never sign anything you do not understand. Take it to a housing counselor or attorney first.
• Never sign over your deed to someone promising to help you keep your home.
• Keep paying your lender unless your lender or a legitimate counselor tells you otherwise in writing.
• Check your property records. In New York City, you can search documents recorded on your property in ACRIS and sign up for the Department of Finance’s free Notice of Recorded Document program, which alerts you when a document is recorded on your property.
• Work only with nonprofits and licensed attorneys. Legitimate housing counselors and nonprofits do not charge upfront fees.

What to do if you think you have been scammed

1. Stop paying the person or company.
2. Keep every document, text, email and receipt.
3. Report it to the New York State Attorney General and your local district attorney.
4. Get free legal help right away, especially if a deed was transferred. Acting quickly gives you the best chance of undoing it.

Get help from a nonprofit you can trust

Abraxas Foundation is a New York nonprofit. We never charge fees, never ask for your deed and never guarantee outcomes. We help homeowners understand their real options, from loan modification to the foreclosure settlement conference, and connect them with free legal help.

Call (929) 346-5734 or contact us for a free, confidential review.

Helpful official resources: NY Courts CourtHelp: Foreclosure and NY DFS Foreclosure Consumer Bill of Rights.

This article is general information, not legal advice. If you believe you are a victim of fraud, contact law enforcement and an attorney.