Geithner Announces Crackdown on 'Bad Actor' Mortgage Workout Firms

Treasury Secretary Tim Geithner moments ago announced a multi-agency effort to crack down on what he termed "bad actor" loan modification companies that target homeowners in distressed situations.

Some of these companies promise to rework homeowners' mortgages and charge upfront fees, which are illegal in several states and not required for mortgage workout.

Some analysts believe the fraudulent workout companies are the same predators who worked in the subprime loan business two years ago, pushing spring-loaded mortgages on home buyers who could not afford the terms.

Geithner warned homeowners to be vigilant and to look for "red flags" that would tip them off to fraudulent workout companies, such as those that charge the aforementioned upfront fees.

"American homeowners have been through enough over the past two years," Geithner said, adding that "the last thing they need" is to be preyed upon by fraudulent workout companies.

Here's the release on the new program on the FTC Web site.