The Department of Housing and Urban Development pulled unspent housing counselor funds from last year into 2011 to make up for recent budget cuts. HUD said Friday it provided $10 million in housing counseling grants to 162 local and intermediary counseling agencies. The grants will be used to help homeowners acquire a modification and avoid mortgage scams. Lawmakers cut all $88 million in HUD nonprofit counseling funds appropriated for 2011. HUD said the grants announced Friday come from the 2010 appropriation and were put out for new competition among the agencies. “It is crucial that we support these agencies in helping struggling families do whatever is possible to avoid foreclosure without being victimized by so called mortgage ‘rescue’ companies,” said HUD Secretary Shaun Donovan. The Financial Crimes Enforcement Network reported mortgage fraud grew 31% in the first quarter with a large majority traced back to companies taking advantage of troubled borrowers. They often charge these borrowers upfront for a promised modification from a lender, a promise seldom kept. When counseling funds were cut from the budget, a group of senators worked to get it restored, claiming the money was vital to helping millions of homeowners targeted by scam artists. Republicans pushed back, saying the country, already straddled with trillions of dollars in debt, desperately needed to cut spending. HUD found a way around the debate by finding the unspent money from last year to serve what it felt was a vital need. “The funding announced today is specifically earmarked to provide counseling assistance relating to mortgage modification, avoiding potential mortgage scams, and assisting victims of scams,” Donovan said. Write to Jon Prior. Follow him on Twitter @JonAPrior.