Indiana is the latest state to clamp down on so-called mortgage rescue firms. At the request of the Indiana Attorney General's Office, a judge has ordered an Indianapolis company to make refunds to three consumers.

Karen Reinisch and her business "My House Saver, LLC" entered into contracts with consumers to assist them in securing deferred debt payments but failed to comply with various laws governing such practices, according to Attorney General Stave Carter.

"There are certain requirements that must be met for companies to act as a credit service organization or foreclosure consultant," Carter said.

"Since Indiana ranks among the highest in the country with respect to home foreclosures, it's important that we don't allow fly by night companies to take advantage of people who are facing the possibility of losing their home."

Reinisch and My House Saver acted as a Credit Service Organization but failed to meet the legal requirements of such a company.

Reinisch contracted with consumers who were in danger of mortgage foreclosure by telling them she would negotiate with the mortgage company to implement a plan that would prevent foreclosure.

Reinisch claimed she would establish "work out" plans with the mortgage companies which would defer or lower mortgage payments for the consumer.

Reinisch told consumers she would try to obtain financing through other lenders if a "work out" plan could not be established. Reinisch also promised consumers if she was unable to obtain other forms of financing, she would buy the house and re-sell it to the consumer on an installment contract basis.

All three consumers who filed complaints with the attorney general's office never received a "work out" plan or new financing and all eventually lost their homes to foreclosure.

Carter says Reinisch and My House Saver violated Indiana's Credit Service Organization Act and Indiana's Deceptive Consumer Sales Act by:

• Failing to obtain a surety bond in the amount of $10,000 prior to doing business as a Credit Service Organization;
• Failing to complete performance of services before receiving payments from consumers;
• Failing to provide consumers with a written contract detailing provisions of services and notice of cancellation;
• Representing she could perform services of a loan broker without obtaining the proper licensing;
• Intentionally and knowingly committing deceptive acts.

The court ordered Reinisch and My House Saver to make consumer restitution of nearly $3,000 for the fees consumers paid as well as pay more than $82,000 in costs and penalties.