As the number of housing foreclosures across the nation continue to rise, something else is on the upswing, too: loan-modification scams.

The scammers target homeowners who have fallen behind in their mortgage payments or those who are facing foreclosure. They promise to modify these homeowners' mortgage loans. But they end up doing nothing, or next to nothing, for the money they're paid.

The East Valley Tribune in Phoenix recently ran a story highlighting the growing number of loan-related scam artists trying to squeeze money out of desperate homeowners.

According to the story, Arizona's attorney general has seen a 30 to 35 percent increase this year in complaints centering on loan-modification scams.

The most common of these scams usually involves people who promise struggling homeowners a lower mortgage interest rate through either a reduction in a loan's principal or a reduction in a homeowner's monthly payment. These scammers take an advance fee, and then do nothing to actually lower the homeowners' interest rates.

The East Valley Tribune story points to the case of Bobby John Herrera, who victimized 47 homeowners in the Phoenix area through such a scam. Herrera was recently sentenced to five years in prison.

The key to avoiding these scams is to do one of two things: First, work directly with your mortgage lending company to forge a solution to your mortgage-payment problems. If you're uncomfortable doing this, or if you haven't received any satisfaction from your lending company, contact one of the many non-profit counseling agencies available to homeowners. You can find a list of these agencies at the HUD Web site.


Don't ever, though, work with a company that charges you an advance fee for foreclosure help. That's the sure sign of a scam artist at work.