Protecting Yourself from Mortgage Scams

The mortgage crisis has left millions of Americans on the verge of losing their homes. Many of them have turned to foreclosure rescue companies for help -- only to realize they've been scammed.

"Early Show" consumer correspondent Susan Koeppen says some shady companies are offering what consumers want to hear -- that their homes can be saved.

And the federal government warns some of these companies are preying on consumers and the number of foreclosure rescue scams are on the rise.

Koeppen shared the story of Stephanie Baxter and her husband who started having trouble paying their mortgage. They turned to the Federal Loan Modification Law Center for help.

"FedMod" -- as it was known, had plenty of advertisements offering consumers help with their mortgages.

Baxter said, "We saw it on a commercial, and I talked to my husband about it."

Baxter told CBS News FedMod told her it had a 90 percent rate of getting loans modified. So she paid the company almost $4,000.

"I immediately faxed them the paperwork over. I kind of felt like a sense of relief that 'OK I had somebody working on it for me,'" Baxter said.

But her relief was short-lived.

"My daughter said, 'Mom there's somebody at the door they need you to sign for (something). It was a foreclosure notice they were going to sell my house."

After the knock on the door, Baxter says her mortgage company told her FedMod had never contacted them, and she had a hard time getting in touch with FedMod herself.

Baxter said, "They took my money and wouldn't answer phone calls, wouldn't answer e-mails."

A former FedMod sales representative who wished to remain anonymous told CBS News, "It was very similar to that boiler room-esque type of environment."

"It's a sales operation," the man said. "It's not really -- you know, a law firm where there's lawyers and attorneys walking around. I -- that's just not the case."

Jon Leibowitz, Federal Trade Commission chairman, said, "Thousands of people were scammed by FedMod, and very few were helped."

The FTC has filed a suit against FedMod, accusing the company of deceptive acts or practices.

Leibowitz said, "If you're a consumer and you paid FedMod $3,500, or $2,500, to try to help you out of foreclosure, and they didn't help you because they were overwhelmed, well, you know, they've, they're in violation of the law."

In a statement, FedMod chief executive officer Bill Anz told CBS News, "We have continued to reject any characterizations that attempt to portray the company as an improper or unscrupulous business."

However, Baxter is still angry.

Baxter said, "Don't pretend like you're doing something then months later I get blindsided and now I don't know what to do."

Baxter is now working with her mortgage company to save her home, and using some of the free resources that are out there and available to homeowners.

But what should homeowners do if they're facing the possibility of losing their home?

Koeppen said you should call your lender to try and work something out. She added you can also seek free help and guidance on Web sites, such as Hope Now.

Be wary, Koeppen said of any company that guarantees it can save your house, and tells you not to contact your lender about your mortgage.

To write to Susan, click here