Associated Press

RALEIGH -- North Carolina officials on Tuesday expanded a foreclosure prevention program to all homeowners, seeking to prevent recession-stretched borrowers from losing their homes.

The state banking commission said it is expanding free financial counseling to all mortgage-holders in hopes it will hold down the rising number of foreclosures as more borrowers lose their jobs and are unable to repay lenders.

The expansion is also seen as undercutting scammers who promise to obtain loan modifications for struggling homeowners in exchange for an upfront fee. It is illegal under state law to charge an upfront fee for foreclosure assistance.

"It's in all of our interest to avoid unnecessary foreclosures, and to fight back against foreclosures scams that prey on struggling homeowners," Attorney General Roy Cooper said.

North Carolina's foreclosure rate is up 7 percent this year and almost six out of 10 cases are hitting middle-class families that previously had good credit, the banking commission said.

The Center for Responsible Lending said more than 2 million North Carolina homeowners will see their property values decline over the next three years because of foreclosures in their neighborhood. Foreclosures also hurt bankers, who lose about 40 percent of the loan value.

The banking commission last November kicked off its Home Foreclosure Prevention Project to help subprime homeowners by knitting together financial counselors, lawyers and nonprofit organizations.

The program has helped prevent almost 2,000 foreclosures and advised more than 5,700 homeowners, the banking commission said. All told, that has saved lenders and neighboring property owners about $160 million in potential losses.

Public service advertisements describing the free foreclosure-prevention counseling were to begin airing Tuesday through the end of the year. The ads are funded by the State Employees Credit Union, the Z. Smith Reynolds Foundation, and the state Realtors association.

For information,visit www.fightncforeclosure.org online.