SAN DIEGO -- The California Attorney General and the Federal Trade Commission (FTC) have launched Operation Loan Lies to fight back against loan modification companies.

Victims of alleged loan modification scams tell the I-Team in a desperate move to save their homes, they agree to pay upfront fees to loan modification companies who say they can save the homes.

"We're going to go after those who go after homeowners in California only to rip them off," said California Attorney General Jerry Brown who along with the FTC filed nearly 200 lawsuits and cease and desist orders against loan modification companies operating nationwide, including four companies and 21 people based in Southern California, primarily in Los Angeles and Orange counties.

The promise of a loan modification is tempting, but the reality is something different. Less than one percent of homeowners ever get that promised reduction, according to Brown, who wants these lawsuits to result in millions of dollars in penalties, restitution for victims and stopping the companies from working in mortgage-relief businesses.

"What these people are doing is preying on the vulnerability of those in financial distress," said Keith Slotter, special agent in charge of the San Diego FBI office.

A recent FBI report pinpoints California as the number one state for mortgage fraud.

"When you bring in a third party who is supposedly going to help fix the situation like that, it can often lead to trouble," said Slotter who warns consumers to be wary of red flags like when companies ask for upfront fees

According to the FTC, other red flags to watch out for include: guarantees to stop the foreclosure process; requests to consumers to not contact their lender; requests a consumer transfers the property deed to the person or company contacting them.

The FTC is proposing a law to stop mortgage modification services from taking upfront fees. They want to have that law in place by the end of the year.