The roots of a mortgage modification scam

Desperation is powerful fodder for scams and a troubled and problem-plagued federal loan modification program offers added opportunity for scamming.

So it comes as no surprise that the New Jersey company that reached a settlement this week with the Idaho attorney general's office after being accused of defrauding homeowners with exaggerated loan modification pitches has been in trouble before -- and before that as well.

Idaho's attorney general, Lawrence Wasden, learned of the situation when a consumer complained about a direct mail solicitation by Best Interest Rate Mortgage Company (BIRMCO) that appeared to be a government form, entitled "Loan Modification -- Payment Reduction," and contained details of the consumer's home loan and information about the economic stimulus act. Only the small print said it was not being sent by a government agency.