WASHINGTON: Amid new signs that the housing slump is worsening, Senate Democrats are saying that hundreds of millions of dollars of new federal aid may be needed to assist homeowners at risk of foreclosure.

The call Wednesday for federal involvement from Charles Shumer, a Democrat from New York and chairman of the Joint Economic Committee, came on the same day the National Association of Realtors issued a forecast that the median price for existing homes would decline for the first time since 1968 as a sales slump worsens.

“We will be proposing significant amounts of dollars,” Schumer told reporters after being asked if a large federal bailout might be needed.

“We’ve heard one heartbreaking story after another of borrowers with limited incomes being sold mortgages they could not afford,” Senator Sherrod Brown, a Democrat from Ohio, said at a briefing on Capitol Hill.

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Fraud, abusive lending crushes dreams for millions of home owners

Mark and Kerrie Russo, a Jackson, N.J., couple raising two young daughters, are struggling to hang on. Less than a year after buying a home in 2005, which they financed with a 30-year fixed rate loan based on a solid credit history, a local mortgage broker began sending letters offering to refinance their loan. A new product, the sales pitch said, allowed home owners flexibility to choose from a menu of different payments from one month to the next.

What the broker didn’t explain, Kerrie Russo says, is that this was a “negative amortization” loan — an expanding debt that buried the couple deeper in hock even as they thought they were paying down their mortgage balance.

Like many borrowers who were sold mortgages they couldn’t afford, Russo says that when she called the broker to complain, she was told that because she failed to read the fine print, the responsibility for getting in too deep was hers.

After coming up with about $14,000 to get out of the downward spiral into yet another loan, Russo says she’s learned an important lesson.

“I have learned a new term called ‘predatory lending,’” she said. “And that is what I am a victim of.”

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With record numbers of individuals seeking home loans these days, it’s no surprise that scam artists have developed new ways to separate borrowers from their money. Mortgage scams are on the rise and typically target people who are overextended, have bad credit, or are in need of financial relief. These scams can cost a lot – in fact, they can result in the loss of your home. Guard yourself against con artists with a little background on common mortgage scams:

Slight-of-Hand Signings

There are documented cases of homeowners who unwittingly signed away the title to their homes because they were confused by paperwork. With any decision involving your finances, get everything in writing and insist on reading the documents carefully before signing. Ask questions and make sure you understand the answers. Be sure you never sign paperwork with blank spaces or allow someone to rush you through the process.

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