By MARLON WALKER & KATHLEEN HENNESSEY
Associated Press

LAS VEGAS - They call themselves loan modification consultants, negotiators or specialists. Some are legitimate, but many are simple con artists looking for desperate marks facing foreclosure amid the wreckage of the nation's housing market.

It's a good business. In most states, there's not much of a chance they'll ever end up before a judge facing any time in jail.

"It's difficult ... to get prosecutors to do the investigations on misdemeanors," said North Carolina Attorney General Roy Cooper.

Some states have recently toughened penalties for perpetrating the business of foreclosure scams, and some prosecutors have used existing fraud statutes to bring criminal charges. Prosecutors in places foreclosure scams are common often pursue civil actions designed to recover a victim's money.

Only in a few states are attorney general's offices willing and able to seek criminal charges and jail time against such con artists. Advocates say criminal prosecutions would do more to stop these scams.

"You've got to do something to get their attention," said Tom Bartholemy, president of a Better Business Bureau office in southern North Carolina. "Because what's being done - these civil actions - isn't."

More than 2 million homeowners faced foreclosure proceedings last year, and the number is expected to rise this year.

That's the audience for roadside billboards around places like Las Vegas that scream "Save my property!" and radio ads that promise "expert help." Some companies comb property records and send mail designed to look like it's from the homeowner's lender: "We have reviewed your property information and determined that you may be eligible for a loan modification."

After Hugo Malara lost his job at a neon-sign company and fell behind on his home loan, he called Derric Robinson, a loan-modification specialist who advertises a "money-back guarantee."

Malara and his fiancee, Maria Sorto, paid Robinson an $800 fee, but say they rarely heard from Robinson again. In fact, the bank had already sold their neat stucco bungalow when they handed Robinson the check.

"He was recommended by a friend. He said he could fix the problem," said Malara, a 48-year-old immigrant from El Salvador, who said he does not plan to file a lawsuit.

Robinson said he made calls to the home's new owners on Malara's behalf. He blamed Malara for not cooperating and said the fee was compensation for his time.

"That's how much my time was worth," he said, adding that the work was done outside his job as a loan modification specialist for a California company.

Some of those making the offers to help are former brokers, agents and appraisers who've seen their previous business evaporate. But it's difficult to gauge whether even the legitimate offers to help are more effective than nonprofit credit counselors who also work with lenders at no charge.

"There are plenty of HUD-approved nonprofits who will do this work for free, and that's what we recommend," said Rick Simon, a spokesman for Calabasas, Calif.-based Countrywide Financial Corp., once the nation's largest mortgage lender.

But federal loan-modification programs, as well as lender-designed programs, are complicated and time-consuming. The Obama administration's new housing recovery plan aims to change this by standardizing the process for modifying loans and offering lenders financial incentives. Cooperation remains voluntary on the part of lenders.

Homeowners who have gotten mixed up with scammers are flooding Better Business Bureau chapters, state attorneys general and consumer-protection agencies with complaints. Bartholemy said his office in Charlotte, N.C., received about 1,700 last year, while the Bureau of Consumer Protection in Nevada takes in more than 100 a month.

The response from state prosecutors so far, according to a national Associated Press survey, has largely come on the civil side of the court docket. Florida Attorney General Bill McCollum has filed several civil lawsuits, including one against a company with an estimated 600 clients. So have attorneys general in at least a dozen states.

In Maryland, state criminal prosecutors have filed no charges under that state's new foreclosure rescue statute. Ditto in Massachusetts, which recently barred for-profit mortgage-foreclosure rescues entirely.

North Carolina officials say one person has been convicted since 2004 of such a crime.

In Alabama, the attorney general's office usually reaches out to the foreclosure-relief companies first to find out if there is any money to recover before seeking criminal charges, said Rushing Payne, chief of the office's Consumer Protection Division.

In several states, attorneys general can only bring a criminal case when asked by a local district attorney. In others, they lack the jurisdiction entirely.

Some attorneys general are making criminal cases. In Arizona, Attorney General Terry Goddard has brought three cases this year on felony theft, fraud or money-laundering charges. Two defendants pleaded guilty, and the third case is pending.

In California, the attorney general's office busted a fraud ring last November that had collected upfront fees ranging from $1,500 to $5,000, stealing more than $700,000 from homeowners in all. Three people have pleaded guilty to grand theft charges and received sentences ranging from probation to 6 years in prison.

Lawmakers in Nevada, which has one of the highest rates of foreclosure in the country, took steps last fall to make foreclosure fraud a criminal offense. So far, five people have been charged under the new statute; none has yet gone to trial. The new law there makes defrauding a homeowner in foreclosure a felony punishable by up to 20 years in prison and a $50,000 fine.

"I think the tide is turning," said John Kelleher, a deputy attorney general in Nevada. "A lot of these mortgage scams are so large-scale and affect so many people, the judges are more willing to give prison time."

Mary Esch, Schuyler Dixon, Ben Greene, Dave Dishneau, Catherine Tsai, Kathleen Miller contributed to this report.