'Bad to Really Bad': Foreclosure Rescue Gone Wrong

Negotiating a Loan Modification

Another option for desperate homeowners are the completely free services offered by non-profit groups. Subsidized by the Federal government, you can find a list on the Housing and Urban Development Web site or call 877-HUD-1515. Groups listed there, such as the Neighborhood Housing Services of New York, will also try to negotiate your modification. And they won't charge you for it.

The non-profits are a great way to go, since some experts suggest that it's not the best idea for most people to try and negotiate a modification on your own. However, if you have a more complex case, you could need a lawyer to help.

And if you do decide to hire a loan modification service, do your homework.

"There are very good loan modification companies out there," said Steve Dibert, whose company investigates mortgage deals gone bad. He says if you check a company thoroughly, you can get help.

"Ask for references," he said. "And real people that you can call."

Dibert says there are things to look out for. "If they tell you not to talk to your lender, so they don't want you checking on them, that's a big red flag. If they basically tell you what you want to hear and aren't being totally honest, that's another red flag."

Because he has heard from so many people recently who believe they've been the victims of home loan modification fraud, Dibert has started a Web site called MFI-Mod Squad. He says the site aims to expose illegally run loan modification companies and the people who run them, and that the number of reports is growing.

As for People's First, the company insists they have many happy customers, and don't condone overpromising.

"I apologize if people do make guarantees," said Tim Hutchison. "We don't make guarantees, to my knowledge, because there, there is no guarantees."

Insiders told "20/20" that the company has hired more support staff, but say that for some customers, the changes came "too late."

Too late to save the house Debbie Dillon's father had built 35 years ago, and that her husband lovingly remodeled.

"I'm angry 'cause I'm gonna lose everything that I've put into this place, for my for my wife and for myself and for my grandkids," said Dan Dillon. "You know, to enjoy it after we're gone. But it ain't gonna happen. "

People's First insists it has many happy customers, and critics don't dispute that, but they also say greed led to collecting thousands in upfront fees from many more clients than they could ever help.

The Dillons will say goodbye to the home where Dan Dillon said they have "a lot of memories."

"It was good while it lasted," said Debbie Dillon.

"Someone will enjoy it," said her husband. "Won't be us."

Resources for Loan Modification:

U.S. Government's Program to Refinance or Modify Loans: To find out if you qualify, and how much your loan might be reduced, CLICK HERE.

HUD-Approved Foreclosure Counseling Agencies: CLICK HERE to find a HUD-approved counselor or call 877-HUD-1515.

Neighborhood Housing Services of New York City (NHS): CLICK HERE to reach NHS, a HUD-approved counselor.

CLICK HERE for more information on where to go for help.