Mortgage-help scams grow

State attorneys general in Idaho and Washington are warning of mortgage foreclosure rescue scams that target homeowners struggling to pay their mortgages by offering to help if they pay large upfront fees.

Idaho Attorney General Lawrence Wasden said such scams are now the top source of consumer complaints to his office. Washington Attorney General Rob McKenna dubbed the perpetrators “crooks” and “fraudsters who claim to offer mortgage relief.”

Both said homeowners having trouble paying their mortgages should contact their lender directly; help in that process is available free of charge from nonprofit, HUD-certified counselors.

Wasden has two lawsuits pending against Kootenai County mortgage modification services and several other investigations ongoing statewide. McKenna’s office has filed nine such lawsuits since 2007.

“Really, you need to be wary of anybody that asks you for money upfront, because those are the types of organizations that we believe just really aren’t on the up and up,” said Kristin Alexander, spokeswoman for McKenna. “You can get assistance for free.”

Wasden’s office has a free brochure for Idaho residents called “Foreclosure Prevention and Foreclosure Scams: How to Tell the Difference.” It’s available online at www.ag.idaho.gov or by calling (800) 432-3545 within Idaho.

McKenna’s office has a foreclosure and mortgage assistance Web page for Washington residents at www.atg.wa.gov/fore closure.aspx. Washington residents also can visit www.home ownership.wa.gov or call the state’s homeownership information hot line at (877) 894-4663. That hot line also provides information for Washington homeowners in need of legal help who can’t afford a lawyer through a partnership of the Washington State Bar Association and the Northwest Justice Project called the Home Foreclosure Legal Aid Project.

Wasden recently filed suit against APS Northwest Idaho LLC, a Kootenai County mortgage modification company, alleging numerous violations of the Idaho Consumer Protection Act. He’d earlier filed a similar suit against Coeur d’Alene-based Apply 2 Save, which is in bankruptcy, and reached a separate settlement with a former Apply 2 Save executive.

“Most of the time, the people operating modification companies are unqualified and unlicensed, with no experience in the mortgage industry,” Wasden said. “Even if their initial intentions are noble, they soon discover they cannot fulfill the promises they made to consumers. Inevitably, the company closes or files bankruptcy, and homeowners are left in a worse position than before they contacted the company.”

This week, the Federal Trade Commission announced Operation Stolen Hope, a nationwide effort to target foreclosure rescue and loan modification scams, which it said are a growing concern nationwide.

“These operators targeted consumers who were on the brink of financial disaster, and instead of holding them back, they pushed them over,” FTC Chairman Jon Liebowitz said. “If you’re worried about keeping your home, avoid any company that asks for a large fee in advance, guarantees that they’ll stop a foreclosure or modify a loan, or tells you to stop paying your mortgage company and to pay them instead.”