Federal law enforcement agencies, state investigators and prosecutors, civil enforcement authorities, and the private sector banded together today to protect homeowners from criminals operating foreclosure or loan modification schemes. This new, coordinated effort will improve fraud investigations, alert financial institutions to emerging schemes, step up enforcement actions, and educate consumers to help those in financial trouble avoid becoming victims of a loan modification or foreclosure rescue scam.

The Treasury Department issued an advisory Monday alerting financial institutions about new schemes related to loan modifications. The advisory identifies red flags that may indicate a loan modification or foreclosure rescue scam. The most common red flag is the requirement that fees be paid before services are provided.

According to the FTC, these schemes typically operate in the following way. First, they use terms like "guarantee" and "97% success rate" to mislead consumers about the mortgage modification or foreclosure relief services they can provide. They charge up-front fees for these "services" -- fees legitimate nonprofit organizations do not charge. They use copycat names or look-alike websites to appear to be a nonprofit or government entity. Often, after collecting the fee, these companies do little or nothing to help consumers.

Under the new campaign, national loan servicers, including Chase Home Finance, Suntrust Mortgage, GMAC Mortgage, and American Home Mortgage Servicing, will distribute FTC consumer alerts that provide consumers with tips for avoiding mortgage relief scams and direct them to free, legitimate counseling services for at-risk homeowners. The servicers will distribute the materials in monthly statements, in correspondence to delinquent borrowers, in counseling sessions, and on their websites.

The FTC recently surveyed online and print advertising for mortgage foreclosure rescue operations nationwide and identified approximately 71 distinct companies running suspicious ads. Treasury's Financial Crimes Enforcement Network (FinCEN) also conducted recent studies on mortgage fraud that found that between July 2002 and June 2008, depository institutions filed nearly 180,000 mortgage fraud suspicious activity reports (SARs), with those involved in mortgage fraud often involved in other types of crime as well.

Treasury Secretary Tim Geithner wrote in a press release announcing the new coordinated effort, "American homeowners desperately need the relief this program offers, but the very last thing they need is to be taken advantage of as they try to hold on to their homes. This Administration is deeply committed not just to providing at-risk homeowners with assistance but also to cracking down on anyone who seeks to defraud them."

If you are asked for money upfront for assistance with a loan modification, walk away and contact one of the legitimate agencies helping with loan modifications.

Lita Epstein has written more than 25 books, including The 250 Questions You Should Ask to Avoid Foreclosure.