A number of firms advertise "sale and rent back" schemes
The Office of Fair Trading (OFT) is to study whether people facing repossession are adequately protected in so-called "mortgage rescue" schemes.
Householders in difficulty are offered a quick sale of their home at a discount by buy-to-let investors and in return become a tenant in the house.
Consumer groups have called for regulation of these schemes, also called "sale and rent back".
The OFT is aiming to report on the industry by September.
John Fingleton, OFT chief executive, said that they wanted to take "a good look" at whether consumers were adequately informed and protected.
"Sale and rent back schemes might be helpful for some consumers but there are a number of potential concerns including whether consumers in difficult circumstances are making well informed choices," he said.
The sale and rent back market is relatively new but has been growing quickly.
It could continue to rise in popularity with more people predicted to be facing repossession this year.
The Council of Mortgage Lenders predicts that there will be 45,000 repossessions in the UK in 2008, up from 27,100 in the previous year.
On 9 May, the Ministry of Justice said the number of orders made by the courts in England and Wales at an early stage of the repossession process rose 17% in the first quarter of 2008.
Calls for regulation
The OFT, which will collect evidence from ex-homeowners who took the sale and rent back option, said the study was "timely" given the current economic climate.
It could propose anything from a new industry code of practice, consumer education, action against companies found to be breaking existing consumer laws, or a full investigation by the Competition Commission.
Lenders predict a sharp rise in repossessions in 2008
In advertisements in the tabloid press and on the internet, people in financial trouble are attracted by headlines such as "Avoid Repossessions".
They are then offered a quick sale of their property, typically at a 20% discount, and stay in it by renting back.
The buyer then becomes the landlord and the seller becomes the tenant, often with an option of buying the property back at a later date if their financial position picks up.
There is no regulation of the schemes and no requirement for those who run them to register at Companies House.
Glen Ackroyd, director of one of the largest firms, a-quick-sale.co.uk, told the BBC's The Truth About Property programme that he estimated some 20,000 people now sold their homes to mortgage rescue companies every year.
He leads a trade association, the Property Buyers' Association, which - alongside charity Shelter and the Council of Mortgage Lenders - is calling for these schemes to be regulated.