Fraudulent foreclosure prevention providers are coming out of the woodwork to take advantage of today's loss mitigation culture, according to the Homeownership Preservation Foundation.

The nonprofit group, which helps distressed homeowners through the group's HOPE hotline, says the number of mortgage foreclosure scams grew nearly 60% in 2012. The scammers, they say, are able to capitalize on the hype surrounding homeownership preservation as federal programs are being modified to help more and more borrowers. 

"Regretfully, every new government initiative spawns a slew of foreclosure avoidance scams, often from the same cast of characters doing business under various names to avoid easy detection and identification," said Colleen Hernandez, CEO of HPF. "Most of these scams involve individuals supposedly offering mortgage foreclosure avoidance assistance that trained HPF counselors provide at no cost. Sadly, with most scams, no meaningful services are ever provided."

HPF said it's unknown whether all of the reported instances were truly fraudulent, but the agency still forwarded all of the complaints to the appropriate regulators and law enforcement agencies.

About half of the scams involve an attorney or individual claiming they can offer special legal services to distressed borrowers. HPF says, in fact, the services they offered are already provided by nonprofits for free.

"Sadly, with most scams, no meaningful services are ever provided," said Hernandez.

HPF put out a warning nationwide, saying no one searching for a home-saving remedy should pay upfront fees to a firm offering assistance. 

kpanchuk@housingwire.com