Patricia Hinds attends Neighbor Housing Services’ open house. Counseling at the New Haven center was a step along the way to mitigate her foreclosure. Photo: Brian Dowling

NEW HAVEN, Conn. – Patricia Hinds can breathe again. “I can fully walk into my home without looking over my shoulder for a foreclosure notice,” said Hinds, 53, who regained control of her mortgage after being a victim of a loan modification scam.

She was sent by a New Haven judge to loan mitigation counseling at Neighborhood Housing Service’s Home Ownership Center , which held an open house June 10 as it expanded its offices into an adjoining building at 333 Sherman Ave. The event also kicked off a campaign, organized by NeighborWorks America, to fight loan modification scams.

Space became an issue for the center when the need for counseling grew from 70 clients in 2007 to about 600 in 2009. Before the expansion, multiple clients were counseled simultaneously around the same conference table.

“It was clear that we needed more space because we didn’t have privacy,” said James Paley, the executive director of Neighborhood Housing Services. So the service bought the two-family adjacent house and rehabilitated it for more office and counseling space.

Stories like Hinds’ have been on the rise in New Haven. The number of people facing foreclosure in New Haven has more than doubled from 538 in 2006 to 1,101 in 2009, according to the ROOF project in New Haven, a coalition of nonprofits dedicated to organizing a response to the foreclosure crisis.

The project’s director, Eva Heintzelman, said that the project’s counselors increasingly see more clients who are unemployed or underemployed. And that fact, along with falling home prices, make a recovery difficult.

Hinds, on the other hand, was employed and paid her mortgage diligently. But in October 2006 when her mother died and her father was diagnosed with colon cancer, she fell behind on payments. “My mother was my backbone,” she said. “Everything came tumbling down. I lost my drive to do anything.”

Behind six months on payments, her interest rate climbed, and she was refused a loan modification from her lender, Countrywide Home Loans — which agreed June 7 after pressure from the Federal Trade Commission to repay customers $108 million in unwarranted fees they imposed on their customers with defaulted mortgages.

Hinds thought she had found a solution elsewhere in an infomercial that promised to get her loan modified. Hinds called in and gave the California-based company $4,000 to handle her loan modification and resolve her foreclosure. Then she heard nothing. Hinds realized that something was amiss when she finally received a notice telling her that her house was in foreclosure. She explained her case in court, received a 60-day extension and was sent to the NHS HomeOwnership Center for loan mitigation counseling.

Of the families in 2007 that entered loss mitigation counseling, 89 percent remedied their defaults and were still in their homes in 2009, according to Julie Fagan, who directs the Connecticut field office of the U.S. Department of Housing and Urban Development. “Lenders work with distressed homebuyers because foreclosing a property can average $35,000 in fees, holding costs and disposition costs,” she said.

After counseling, Hinds’ mortgage was modified, and she resumed payments in August. “I started breathing again when Alice called and told me that I was out of foreclosure,” said Hinds. She encourages distressed homeowners to thoroughly research sources of help and to look locally for advice. NeighborWorks, which was created by Congress to revitalize communities, warns homeowners at risk to avoid and report companies that ask for fees in advance, guarantee that they will modify the loan or tell homeowners to cease making payments.