BOISE, Idaho (Legal Newsline) - Homeowners in Idaho who had sought mortgage modifications from a New Jersey-based company will see refunds, following a settlement agreement announced by Attorney General Lawrence Wasden.

Best Interest Rate Mortgage Company LLC, under terms of the settlement, will pay 12 Idaho consumers a total of $19,710 and has agreed to stop operating in the state.

This settlement marks the third this year between the state and mortgage modification businesses. Investigations into several other mortgage modification businesses are being conducted by Wasden and lawsuits have been filed against two other companies, Apply 2 Save Inc., and APS Northwest Idaho LLC.

"Loan modification schemes continue to be one of the most serious issues facing Idaho consumers," Wasden said. "Time after time, consumers tell us they have paid large upfront fees to a loan modification company without obtaining any results."

The investigation into Best Interest's practices began following a consumer complaint filed about a direct mail advertisement. That ad, labeled a Form "009-S Payment Reduction Notification," listed both the consumer's address and a "total loan amount" of $150,000. The advertisement also referred to a "Buyout Program," stating that, under the Economic Stimulus Act of 2008, the homeowner could qualify for a "Special modification program."

The direct mail ad appeared in a manner that falsely suggested that it came from the government, which is lawful under the Idaho Consumer Protection Act.

Consumers were encouraged by the ad to contact a toll-free telephone number, which would allow them to confirm eligibility in the program. When Wasden's office called the number, a Best Interest representative answered.

Best Interest claims that it negotiates mortgage modifications. The company charged between $1,000 and $8,000 in fees upfront for its services. Requiring a borrower to pay any fees or charges prior to the completion of modification is prohibited under Idaho law. Best Interest was also found to not be licensed to offer loan modification in Idaho by the Idaho Department of Finance.

In addition to the refunds to customers, the agreement to cease operations in Idaho and to stop soliciting to Idaho consumers, the company will face a $20,000 civil penalty if it is found doing business in Idaho.

Best Interest did not admit to any wrongdoing in agreeing to the settlement.