Source: Alejandro Lazo, L.A.Times ( Free Registration )

A national housing nonprofit has launched an education campaign in Southern California to combat scams targeting homeowners in peril of foreclosure.

Loan modification fraud is on the rise, costing troubled homeowners thousands of dollars up front for mediation and counseling services that are provided free by federally approved nonprofits, Eileen Fitzgerald, chief operating officer of NeighborWorks America, said Monday at a news conference on the steps of Los Angeles City Hall. NeighborWorks is starting its yearlong national education effort in Southern California because the region has been hit particularly hard by the foreclosure crisis, she said.

Troubled borrowers often pay fees ranging from $1,500 to $3,000 for help in reducing their mortgage payments, Fitzgerald said. The companies, in turn, promise to negotiate with their lenders on their behalf. In some cases the companies promise that loan amounts will be modified, a result that is difficult and rare, she said.

Read Full Article: Target: mortgage modification scams