States have taken action in recent weeks against companies that exploit homeowner desperation with advance fee loan modification scams. Oregon is the latest state to take action.

The Oregon Department of Justice recently investigated allegations that the California-based USMAC Law Group violated state law by collecting advance fees for loan modifications aimed at preventing foreclosure sales. The investigation also focused on allegedly deceptive infomercial advertising for the firm's loan modification program that was broadcast nationally on satellite television as well as allegedly non-compliant contract language.

As a result, the USMAC Law Group is prohibited from doing loan modifications in Oregon and must pay $28,857 under a settlement with the Oregon Department of Justice.

"I will not hesitate to take action against companies that attempt to take advantage of Oregon homeowners in distress," said Oregon Attorney General John Kroger.

The 2008 Oregon Mortgage Rescue Fraud Protection Act prohibits loan modification companies from collecting advance fees and using confusing contract language.

The settlement will provide a total of $6,857 in refunds to two Oregon consumers. Nine additional Oregon consumers who contracted with The USMAC Law Group may also be eligible for refunds.

The company also must pay $22,000 to the Oregon Department of Justice and cease doing loan modification work in Oregon. The settlement, in which The USMAC Law Group admits no wrongdoing, was filed in Marion County Circuit Court.

Cracking down on unscrupulous loan modification work is part of a comprehensive strategy by the Department of Justice, the Department of Consumer and Business Services, the Oregon Legislature and consumer groups to fight the foreclosure crisis. Other states around the nation have taken similar action as foreclosures continue to mount.

"Homeowners should be wary of companies that offer to help modify mortgages for a fee," said Cory Streisinger, director of the Department of Consumer and Business Services. "If you're struggling with your mortgage, nonprofit foreclosure counselors can provide better help - and they won't charge you."