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"We did everything possible to prevent foreclosure on our home,” said Leticia Amavisca.

Amavisca and her husband paid someone $1,000 after he convinced them he would be able to work with the bank to lower their monthly payment.

"He moved three times in six months and changed his phone number," said Amavisca. "We were sunk."

The man who took their money and the money of at least a dozen others was caught and sent to prison, but the couple wound up filing for bankruptcy and lost their home in Chula Vista. They now live in a rental in Escondido.

State and local officials on Thursday urged people who are underwater on their mortgages to never give someone money up front to help with a loan modification.

"Most of them are unlicensed and they are out there using this federal program to scam unsuspecting homeowners," said Wayne Bell, a prosecutor with the California Department of Real Estate. "Homeowners need to be aware."

For more information on the settlement, visit NationalMortgageSettlement.com.