LOS ANGELES: Sun Valley, a sun-baked and struggling corner of Los Angeles, is fertile ground for mortgage rescue scams with its high proportion of subprime borrowers, Spanish speakers and a sharp drop in home values.

And it is one of the first places targeted in the homeowner education campaign launched on Oct 26 by US government agencies, local leaders and housing advocates to stop scammers preying on desperate borrowers nationwide.

Officials do not know how many scams have been perpetrated among millions of American families who have lost their homes or face foreclosure. But they do know that scams exacerbate the foreclosure crisis because borrowers lose precious time and money that could have kept them out of default.

Some of the places with the highest subprime loan and foreclosure rates also have the biggest scamming industries -- like Los Angeles, where Mayor Antonio Villaraigosa rolled out the "Loan Modification Scam Alert" campaign with federal agencies like the Federal Trade Commission and the advocacy group NeighborWorks America.

In coming weeks, the campaign will go to other hard-hit areas like Miami, Florida, and Columbus, Ohio, and it will target those groups most affected -- senior citizens, Hispanics, African Americans and Asian Americans.

While tighter regulation and law enforcement are expected to reduce scamming operations, officials say they expect the best results to come from the first line of defence – better-educated borrowers.

"If you can stop people from going, then you don't need to worry about enforcement," said Eileen Fitzgerald, chief operating officer of NeighborWorks America.

Tom Syta, assistant director of the FTC's Western Region, believes education makes a bigger dent against scamming than law enforcement "because when law enforcement steps in, the money is gone".

One of the most common complaints among rescue scam victims is over attorneys who collected money up front and offered guarantees of modification, only to deliver nothing.

Zulma Navarrete, an immigrant from Guatemala, paid an attorney US$3,500 (RM11,898)  to get help reducing mortgage payments on her Los Angeles home.

The attorney never came through, though Navarrete did get her payment cut in half by working with a nonprofit group and her lender.

California law now prohibits up-front money for loan modifications, but many continue to fall prey to the practice, often at the hands of the same brokers who sold them subprime loans in the housing boom.

In the new campaign, teams dressed in the colours of caution -- yellow and black -- fan out across neighbourhoods and distribute fliers with the instructions to avoid anyone who asks for a fee in advance, guarantees a loan modification or says to pay them instead of paying the mortgage.

In Los Angeles, campaigners speak English, Spanish, Vietnamese, Chinese and Korean. And they encourage people to call a 24-hour hotline or visit the site www.LoanScamAlert.org for advice and to report scammers.

Martha Jimenez, a community counselor in Sun Valley, welcomes the warning against scams, but says the government and nonprofit groups have to do a much better job in coming to the rescue of borrowers in distress.

She helps senior citizens, mostly Spanish speaking, whose adjustable rate mortgages have reset, raising their monthly payments to US$4,000 from US$1,500, while the value of their homes has dropped by half. She gives them fliers to direct them to government and nonprofit offices.

"They call us back, very angry, because they get no help," said Jimenez. "Many have stopped believing in these pieces of paper." -- Reuters