The recent nationwide settlement between states and mortgage lenders is intended to help struggling homeowners, but it may also unleash a new wave of attempts to fleece them.

The $25 billion in mortgage assistance promised by the settlement will be used "as a hook" by scam artists to ensnare homeowners facing foreclosure, predicted Wayne Bell, chief counsel for the California Department of Real Estate.

On Friday, Bell and a group of law enforcement, state agency and real estate industry officials held a press conference outside a bank-owned home near El Camino Avenue in Sacramento County. It was part of a statewide campaign to draw attention to mortgage fraud.

"We want to sound a warning about the rise in predators … who are ripping off homeowners. It's an alarming trend," said LeFrancis Arnold, president of the California Association of Realtors, who said mortgage fraud complaints nationwide have jumped 60 percent in 2012 alone.

One fraud victim, Kenneth Hamilton, described the mortgage assistance scam that caused him to lose his two-bedroom condo in the Arden Arcade neighborhood.

"I warn anybody who gets a call from (mortgage relief companies) to turn them down. They're no good; it's nothing but a scam," said Hamilton, 70, a wedding and portrait photographer who sought help with a mortgage loan modification in late 2009.

A friend referred him to LIS Mortgage Corp., which promised to get his monthly payments dropped from $783 to $386. The company collected an upfront fee of $1,900 and told him to stop paying his monthly mortgage. From then on, he says, the company gave him "the runaround." Ultimately, the bank foreclosed on his condo.

Bell said "foreclosure rescue fraud" is widespread and cloaked in many forms, including forensic loan audits, claims of class-action lawsuits and advance fees for loan modifications.

LIS, the company used by Hamilton, is shut down, accused by DRE of illegally taking up to $4,000 in fees from a dozen or more Sacramento-area homeowners. The firm's real estate license expired last summer but it's contesting DRE's accusations in a hearing later this summer.

Sacramento County District Attorney Jan Scully said her office has seen cases where perpetrators scam their own friends and neighbors. Many victims, she noted, are too embarrassed or don't know where to report the fraud.

"Please report these crimes and encourage (friends and family) to report them," Scully said.

Homeowners struggling with mortgage payments were warned to check credentials, avoid upfront fees and anyone offering mortgage relief.

For mortgage help, go to: www.KeepYourHomeCalifornia.org or the national program, www.nationalmortgagesettlement.com.

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