Rising foreclosures fuel scam surge

Another downside to swelling foreclosures: More scamsters, preying on people desperate to save their homes.

The N.C. Attorney General's Office handled 448 foreclosure-scam complaints last year, a jaw-dropping jump from 82 the previous year. In 2007, there were just seven.

Among the big offenders are firms charging upfront fees for so-called foreclosure-prevention help. That's been illegal in North Carolina since 2005, but people fearful of losing their homes and frustrated with the modification process continue plunking down their scarce cash in the hope of getting help.

Last year, the AG's Office issued 166 cease and desist orders to firms pedaling mortgage modifications or other foreclosure assistance. That's more than four times the 40 orders in the previous year.

Al Ripley, a lawyer with the N.C. Justice Center, sees too many sad cases of people who shelled out thousands for help and got nothing. Last fall, a Western N.C. man paid $1,000 to a firm saying it could get him a lower payment and prevent foreclosure. A few weeks later, the company asked for another $1,000. The man paid again and never heard anything, all too common an outcome, Ripley says. He ultimately lost his home, too.

"People are terrified," Ripley said. "They’re looking at potentially being made homeless and being financially devastated. They’re under a great deal of stress. They’re not sleeping. When approached, if there’s something they think they can do, they’re eager. It's a very vulnerable situation."

Working out a loan modification is time-consuming and frustrating. The main federal program is cumbersome. But there's a lot of free help. See www.fightncforeclosure.org to find a free foreclosure prevention counselor in your area. The site has contacts for other resources, too.

And remember: If you're facing foreclosure, we want to hear from you. We're looking this year at whether the $75 billion federal foreclosure-prevention program is really helping people. E-mail me at shopkins@charlotteobserver.com or call direct, 704-358-5173.

Coming Sunday in The Charlotte Observer's MoneyWise section: Read about an Iredell County couple, struggling to save their home, who almost shelled out big bucks to a firm pitching help with mortgage modifications.

Here are tips from the AG's Office to avoid foreclosure scams.

Beware of so-called foreclosure assistance or rescue companies that require upfront payment to help you. That's illegal in North Carolina.

Avoid companies that want you to make your mortgage payment to them or that tell you not to talk with your lender or an attorney.

Avoid companies or individuals who say they will pay off your mortgage if you sign your deed over to them.

Be alert for a scam if a company pressures you to sign paperwork, offers to fill out forms for you or refuses to put promises in writing.

To report a foreclosure scam, contact the Attorney General's consumer protection division at 877-5NO-SCAM (877-566-7226). Or file a complaint online at www.ncdoj.gov.