The wave of foreclosures has brought even more pain to some strapped homeowners a wave of mortgage rescue scams. Some attorneys general are gearing up to counter these fraudulent operations.

In Iowa, Attorney General Tom Miller has drafted a package of legislation providing new safeguards to people taking out mortgages.

Miller's package also contains a bill that directly addresses mortgage foreclosure rescue fraud scams that prey on people facing foreclosure by asking them to pay hundreds of dollars for so called assistance or "rescue" from the danger of foreclosure.

"The problem is these 'rescue scams' just take people's money and fail to do almost anything to help them avoid foreclosure," Miller said. "And they take precious funds from people who are vulnerable and who can least afford to be cheated. This is the definition of adding insult to injury."

Dan and Patricia Potter, Des Moines residents who were the victims of a questionable foreclosure "rescue" scheme, joined Miller at a news conference last week.

The Potters were in danger of foreclosure, and paid $795 to a company that claimed it would set up arrangements to help them stay out of foreclosure. But Miller said the company made no attempt to make the arrangements, and then insisted on another $500 payment. The Potters were able to recover about half of the $795.

"Foreclosure rescue scams are just starting to appear in Iowa," Miller said. "It's a symptom of the overall climate of an avalanche of foreclosures here and all over the country. We need this legislation to prevent the problem flaring up here as it has in many other places," he said.

In Indiana, Attorney General Steve Carter filed a lawsuit against Indianapolis-based Capital Foreclosure, Inc. seeking nearly $20,000 in restitution for customers and an injunction to halt the company and its operators from illegal practices.

"Some people lost their homes after placing their trust with this company," Carter said. "The company exploited the vulnerability of its customers who faced foreclosure."

Carter says nearly 20 people sought "foreclosure rescue" and credit counseling services from Capital Foreclosure and its operators, Eriq Brye, Kenneth Brye and Sallie Brye. Individuals paid fees and other costs that ranged from $40 to as high as $4,100.

The attorney general's office is seeking customer restitution totaling $19,176 and penalties and costs of up to $5,500 per violation.

Miller, meanwhile, says foreclosure rescue scams take money people desperately need to address their foreclosure situation, and they may cause people to delay authentic efforts to modify a mortgage and come to terms with lenders that the borrower can afford.

"Some rescue scams specifically tell people not to contact their lender or loan servicer, and that can just make matters worse," he said.