“You've already been approved for a loan modification.”
The letter has your servicer's logo on it. The caller knows your loan number. The email looks exactly like the ones your bank sends.
None of it is real. And this scam doesn't just take a fee from you — it can take months of mortgage payments, or your entire payoff.
The pitch comes dressed as someone you already trust:
"You've already been approved for a loan modification." Then they read you a phony "approval code" and quote your new, lower payment. One convicted crew told homeowners they were "underwriters," claimed a "98 percent past success rate," and handed out fake approval codes for a government program that was actually free.
Or: "Your loan has been sold. Send your payments to the new address below."
Or, near a closing: "The wire instructions have changed. Send the payoff to this account today."
First, they find you. Your foreclosure notice is a public record. The moment it's filed, your name, address, and trouble are out there for anyone to see. That includes people who make a living pretending to be your bank.
Then they dress up. Fake letters use your real servicer's logo. Phone calls show spoofed caller ID. Emails copy the look of HUD, your lender, or a law firm. One outfit even named itself "HOPE" — on purpose — to ride on the real, free Homeowner's HOPE Hotline.
Then comes the redirect. Whatever the costume, the goal is the same: get your money flowing to them instead of where it belongs. A fake "trial payment plan." A fake "new payment address." A fake settlement you must "wire today."
Here's the part that hurts most. While you faithfully send payments to the impostor, your real servicer gets nothing. Your loan falls further behind. The foreclosure speeds up — and you don't find out until the real late notices arrive.
The wire version is the most brutal. When crooks fake payoff instructions at a closing, the typical loss isn't hundreds of dollars. Industry data puts the median loss in mortgage payoff wire fraud at $389,125. One bad wire, and the loan you thought you paid off is still there.
Christopher S. Godfrey and Dennis Fischer ran a Florida company called Home Owners Protection Economics, Inc. — "HOPE" for short. The name was the con. It was built to be confused with the real, free Homeowner's HOPE Hotline.
Their telemarketers told struggling homeowners across the country that they were already approved for a loan modification. They gave out phony approval codes. They quoted made-up new mortgage terms and due dates. They claimed to be underwriters connected to the homeowners' own mortgage companies.
The price for this "approved" modification: $400 to $2,000, paid up front. What homeowners actually got was a do-it-yourself application packet for a federal program that was free to everyone. The crew took more than $4 million from thousands of homeowners.
A jury convicted Godfrey and Fischer in 2013 — including for misusing a government seal. In February 2014, each was sentenced to 84 months in federal prison.
One habit defeats almost this entire scam: never use the contact information the message gave you. Hang up. Set the letter down. Then call your servicer at the number printed on your monthly statement or your servicer's official website. Ask: "Did you send this?"
Sending a payoff or closing wire? Call the title company or servicer at a number you found yourself — not the one in the email. Confirm the instructions by voice before any money moves.
For real help with your mortgage, you don't need anyone who calls you. Call a HUD-approved housing counselor at 888-995-HOPE (4673) — free, 24/7, and it's the genuine article the scammers imitate. Then ask your servicer's loss mitigation department what options you qualify for.
And know your rights: a federal rule (12 CFR §1024.41) can pause your foreclosure when you file a complete application for help more than 37 days before the sale. That protection is free and built into the law — no "underwriter" with an approval code required.
If someone posed as your servicer or a government agency, report it to the FTC at reportfraud.ftc.gov and your state attorney general. A 2024 federal rule made posing as a business or government agency a violation in itself. That helps get victims paid back.
This is a cousin of the loan modification fee scam and the phantom-help scam — see those guides too. The costume changes; the upfront-money grab doesn't.
Colorado: Colorado's Foreclosure Protection Act bans upfront fees by foreclosure consultants, on top of the federal rule. If you're behind on payments, the free Colorado Foreclosure Hotline is 1-877-601-HOPE (4673).
Arizona: Arizona law also bans foreclosure consultants from collecting any fee before finishing every promised service, and gives you 3 business days to cancel a consultant contract. Free state helpline: 1-877-448-1211.
California: California bans advance fees for loan modification work — and unlike the federal rule, the ban covers attorneys too. A "law firm" charging upfront for a loan mod is breaking California law.
Nevada: Nevada requires foreclosure and loan modification consultants to be licensed by the state Division of Mortgage Lending. No license, no legitimacy — and Nevada homeowners can request free state-run foreclosure mediation after a Notice of Default.
Florida: Florida's foreclosure-rescue law bans collecting any payment before all promised services are done. Report impostors to the Florida AG at 1-866-9-NO-SCAM.
This guide is educational information, not legal advice. For advice about your specific case, talk to a HUD-approved housing counselor (free) or a licensed attorney.
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