By Eileen AJ Connelly -- AP Personal Finance Writer
NEW YORK (AP) — The letter may look like a government form. The logo may seem official. The Web site address may sound like an agency that can help.
But there's a good chance it may all be a scam.
The ongoing mortgage foreclosure crisis has sparked a cottage industry of so-called "foreclosure rescue" companies. But advocates and government officials warn that a significant number are little more than fraudulent operations designed to separate distressed homeowners from their money, and sometimes their houses as well.
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"They prey upon the financially unsophisticated," said Gail Cunningham of the National Foundation for Credit Counseling. "Anyone can easily fall victim to such scams. When you're hurting, we may all become financially unsophisticated."
Many of these companies have popped up as the mortgage meltdown accelerated, said Gary Almond of the Better Business Bureau in Los Angeles, one of the areas hardest hit by the housing crisis. "As the degradation in the market progressed, more (companies) got on the bandwagon," he said.
Because of the role the mortgage industry plays in the nation's economy and the types of crimes mortgage fraud represents, these companies have even drawn scrutiny from the FBI. The feds currently have nearly 2,350 mortgage fraud cases, up almost 400 percent from five years ago.
"With people losing homes, you're at your most vulnerable," said Roscoe Howard, a Treasury Department spokesman. "It's a lot like being a poor swimmer and being thrown into a lake, you're going to reach for whatever you can."
Even for wary consumers, it may be hard to tell if the line being thrown by a company will sink you.
A letter sent out earlier this month by Bridgewater, N.J.-based Financial Solutions Today LLC is a good example of the difficulty assessing a company.
The letter is designed to resemble a W-2 or other form from the Internal Revenue Service, with boxes across the top and a similar typeface. It suggests the recipient "may be eligible for a special modification program according to guidelines created in conjunction with the Government Stimulus Program HR 1106: Helping Families Save Their Home Act."
The bill that bore that number in the House of Representatives actually used the plural "Homes" in its title, a subtle misspelling that consumer advocates say is the type of thing that should be a red flag for recipients.
The letter also states "only an attorney or licensed debt adjuster can legally represent a borrower for a mortgage modification."
That's not true, said Dan Crevina, director of operations and marketing at the BBB of New Jersey. "There's no need to have representation to call the bank," he said. "They're going to do the same thing that the consumer can."
Financial Solutions Today President Frank Riccio said the letter in question was changed, although he claimed the modification took place weeks before the copy obtained by The Associated Press was received. "That was just an overflow," he said. "I don't like the way it looks."
Riccio declined to discuss his business practices beyond the letter and did not return follow-up calls.
Yet Financial Solutions Today, which also does business as Home Rescue Today LLC, is accredited by the BBB. That means it was reviewed by the consumer watchdog and pledged to "abide by a set of ethical standards for marketplace conduct," according to the BBB Web site. The BBB has received only one complaint against the company, which Crevina said was about spam e-mails, and was resolved.
