Bernanke says Fed cracking down on housing scams

WASHINGTON (Reuters) - The U.S. Federal Reserve is working with other regulators to crack down on scams that seek to take advantage of distressed homeowners by mimicking mailings sent out by mortgage industry alliance HOPE NOW, Fed Chairman Ben Bernanke said on Thursday.

"We've written to the (Federal Communications Commission) and we're working with the FCC to provide information to try and stop this because it's too heartbreaking at this time of great stress," Bernanke told a meeting of the Fed's Consumer Advisory Council.

"There are disgraceful people who would try to take advantage of that great stress," he said.

The Federal Reserve first reached out to the FCC on October 1, according to a Fed spokeswoman.

HOPE NOW is a coalition of lenders and mortgages services and investors brought together under the arm of the U.S. Treasury to try to modify mortgages for homeowners at risk of losing their home.

HOPE NOW Executive Director Faith Schwartz told the meeting of the Fed's advisory panel that one scam involved the creation of a Web site that mirrored the alliance's own site down to small details. That Web site has since been shut down.

She also said 'copycat' mailings had been going out that match letters HOPE NOW sends to distressed homeowners, but which contained a different toll-free number to call for assistance. The homeowner is then charged a fee for making the call.

"All of the regulators and all of us need to be vigilant about making sure that all services are free. We have to get out to the media and the public that counseling should be free, validate who you are talking to," she told Reuters.

(Reporting by Nancy Waitz and Tim Ahmann; Editing by Andrea Ricci)