AG Warns of Foreclosure Help Fraud

There's a word of warning about companies promising to save a foreclosed home. The Attorney General's office and some local non-profits are seeing homeowners get scammed after paying an upfront fee, and then the company takes the money and disappears. So far, the AG has sued 12 out of state companies who charged an upfront fee and promised they could keep a person in their home, but didn't deliver.

Minnesota passed a law that a company can not charge an upfront fee and provide nothing. Attorney General Lori Swanson is pushing for this to become a federal law.

Cheryl Peterson with Habitat for Humanity has worked with nearly 1,000 people this year facing foreclosure. The non profit has helped saved 60 percent of the homes.

People have a six month redemption period when facing foreclosure and instead of finding legit free help, they waste time and thousands of dollars on scammers who ask for an upfront fee. "The homeowner will come to us and say I used my money I had been saving for mortage payment and spent it on this company and now say, 'What can you do for me?,'"

If you're looking for help, there are things you can do. First and most importantly find a reputable mortgage counselor that doesn't charge. Some things to try: Request a loan modification, ask for forbearance, set up a repayment plan with a lender and ask them to waive penalties.

Peterson stresses everyone's situation is totally different, so the solution will be different.