A growing number of California homeowners who hire someone to delay their foreclosure are being left with unknown entities, people who have filed for bankruptcy, or other unrelated parties listed on their home’s title, according to a recent consumer alert from Lawyers Realty Group. This comes after a recent report from ATTOM, which states that U.S. foreclosure filings increased by 21% during the first six months of 2026 compared to the same time frame in 2025. As foreclosure rates continue to rise, Lawyers Realty Group believes more distressed homeowners will likely be targeted by unlicensed or fraudulent rescuers claiming they can put off a trustee’s sale.
The alert was issued by Derik N. Lewis, a lawyer and real estate broker at Lawyers Realty Group, whose office is in Irvine. According to Lewis, the typical version of the scam works by transferring a small fractional interest in the homeowner’s property into the name of an unrelated person who has filed for bankruptcy. That recorded deed and the unrelated bankruptcy case are then presented to the foreclosing lender, which is told an automatic-stay issue exists and that the foreclosure must be temporarily delayed.
The named bankruptcy debtor is often a complete stranger to the homeowner and may not even know an interest in the property was recorded under their name. Lewis said the foreclosure sale may get postponed, but the recorded deed doesn’t simply disappear. Homeowners frequently discover the damage much later, he said, when a title company refuses to insure a refinance, reverse mortgage, trust transfer or sale.
Federal authorities have prosecuted foreclosure-rescue schemes across the country involving distressed homeowners, recurring fees, fraudulent bankruptcy filings and fractional-interest deeds. In one Southern California prosecution, prosecutors alleged that more than 1,000 distressed property owners were promised their foreclosure sales could be postponed indefinitely.
The U.S. Trustee Program warns that bankruptcy and mortgage-rescue operators may ask homeowners to transfer a deed or ownership interest, and the California Department of Justice specifically cautions against transferring title to a foreclosure rescuer.
How the Title Problem Can Happen
The scheme usually starts after a Notice of Default or Notice of Trustee’s Sale becomes public, according to Lewis. A homeowner may then get urgent calls, mailers, texts or in-person pitches promising to stop the foreclosure, sometimes from operators claiming to be nonprofits. The operators typically require upfront fees, monthly payments and repeated signatures on paperwork described as temporary transfers, trust papers, authorizations, grant deeds or quitclaim deeds, which keeps money flowing to the operator and away from the homeowner.
A fractional ownership interest, sometimes as small as one one-hundredth, may then be recorded in the name of someone tied to an unrelated bankruptcy case. When one bankruptcy ends, another debtor can be added to the title to buy another postponement. Months or years later, a preliminary title report can turn up multiple unfamiliar owners, and those recorded deeds stay in the public chain of title until they are cleared in a way a title insurer will accept, even when the named individuals received no money and knew nothing about the transfers.
What Homeowners Can Watch Out For
Lewis said homeowners should look into their title promptly when certain signs appear. Those include a title report listing people, trusts, or entities they don’t recognize; recorded deeds transferring very small percentages of ownership; and a postponement company that required new documents every time a bankruptcy case ended. Paying recurring fees to delay a trustee’s sale, being told a title transfer was temporary or harmless, and a company demanding extra payment to remove names it placed on the title are also warning signs.
The Consumer Financial Protection Bureau lists requests for advance fees, guarantees of foreclosure relief, pressure to sign unexplained documents, and requests to sign over title as common signs of a foreclosure-relief scam. Transferring title to another person does not erase the homeowner’s mortgage obligation. Lewis said clearing the problem usually means reconstructing the full deed and bankruptcy history tied to the property, and that simply recording another deed without first coordinating with the title insurer may not fix it, since the goal is to restore a clean, insurable title rather than just add another document to the record.