As the economic crisis developed, watchdogs predicted that scammers would come out of the woodwork to take advantage of troubled borrowers. The New York Times covers a few scammers - noting that some major players are the same folks who peddled risky mortgages.
There may not be any money left to lend to high-risk borrowers, but there are plenty of desperate homeowners out there. With promises of a lifeline, borrowers have created huge backlogs - even at companies that don't do anything.
Remember, your first contacts for mortgage modification should be the government and your current lender. If you pay an upfront fee, you're hiring a "helper". At best, helpers are expensive (maybe it's worth it if you're really that busy). At worst, helpers are stealing your money. You can apply for loan modification yourself if you put the time in.
Be especially wary of firms with names designed to look like government agencies, such as the "Federal Loan Modification Law Center" in the NYT article. Start with a HUD approved counselor instead.
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