Attorney General Lawrence Wasden joined the Federal Trade Commission and 26 other state and federal regulatory agencies in "Operation Stolen Hope," a nationwide enforcement and consumer education effort to combat foreclosure rescue fraud.

"This year we've received more complaints about companies that offer mortgage modification services than any other type of business," Attorney General Wasden said.  "We are pursuing lawsuits against two of these companies and have opened investigations into others.  While these legal actions may provide some relief to homeowners who have been victimized, I hope Idahoans facing foreclosure will avoid these problems by reading the free publications available from my office."

Wasden recently filed a lawsuit against a Kootenai County mortgage modification company, APS Northwest Idaho LLC, for numerous violations of the Idaho Consumer Protection Act.  A similar lawsuit against Coeur d'Alene based Apply 2 Save is pending, although the now-closed company is in bankruptcy.  The Attorney General also reached a separate settlement with a former Apply 2 Save executive.

In addition, Wasden's Consumer Protection Division has ongoing investigations of other Idaho and out-of-state companies that have generated consumer complaints.  These companies typically advertise through direct mail solicitations or on the Internet and claim an ability to help a homeowner take advantage of special government programs, stop a pending foreclosure or modify a mortgage by lowering the homeowner's interest rate or payment.  Before these companies begin any work, they require payment of a large upfront fee.

Idaho law prohibits mortgage loan modifiers from charging certain upfront fees for their services.  The Idaho Department of Finance enforces the Idaho Residential Practices Act, which requires licensing of individuals who offer mortgage loan modification services.  The Department maintains a list of licensees on its website at http://finance.idaho.gov.

"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."

Wasden urged homeowners who are experiencing difficulties paying their mortgage to contact their mortgage servicer immediately.  The Attorney General added that homeowners who have difficulty negotiating a modification should consult a local nonprofit housing counselor without cost to the homeowner.  HUD-approved housing counselors are located throughout Idaho and provide free assistance to homeowners facing foreclosure.  The Attorney General also employs a part-time counselor to assist Idaho consumers with their mortgage-related questions.