Michael Fiorito, 41, was convicted in May, by a federal jury on seven counts of mortgage fraud in connection with an equity-skimming scheme that targeted vulnerable homeowners.

Fiorito had been a mortgage broker at three different Minnesota mortgage companies from 2003 through early 2007. Working with an assistant, he devised a scheme to defraud homeowners who were in foreclosure or behind on their payments.

This sounds all to familiar.  So what’s so different about this episode of mortgage fraud? Homeowners in distress were looking to save money in tough times.  So they refinanced their homes — only to discover they’d been taken in by fraud.

Now they are fighting the government in foreclosure and the loss of their home.

What you probably haven’t heard before is that these victims are being foreclosed on by the Federal Deposit Insurance Corp., a federal agency that generally pushes to keep people in their homes by reworking loans rather than foreclosing them.

So Glenn and Brenda Clark of Golden Valley are taking another unusual step — they are fighting their foreclosure in federal court.

The Clarks have filed suit in U.S. District Court in Minneapolis, saying their foreclosure is improper. They have asked for a temporary restraining order to allow them to come up with a way to stay in the home where they raised two daughters since 1993.

“It’s been a nightmare,” Brenda Clark said of their three-year battle.  Said the Clarks’ attorney, Jacqueline Williams: “We went through the proper channels, and it didn’t work. No one was listening.”

There is no doubt the Clarks are victims. He and the assistant convinced homeowners to refinance their homes — often after inflated appraisals — and then stole some or all of the equity checks the homeowners were to receive.

In all, Fiorito stripped more than $400,000 in equity from at least 17 victims. He is scheduled to be sentenced in federal court on Dec. 30.

In June of 2006, Fiorito called Glenn Clark after the Clarks’ application to refinance their mortgage through another lender was denied. The Clarks were hoping to cash in some of their equity to cover bills. After all, times were — and still are — not easy. In May 2005, Glenn Clark, a drywall installer, fell out of the back of a pickup truck and suffered a brain injury. Work has been sporadic ever since. Brenda Clark cuts and styles hair. Like many families, they needed the money.

“He promised we could get cash out with basically the same payment I had at the time,” Glenn Clark said.

So they went with Fiorito. They owed $201,000 on their home when Fiorito contacted them. But, using an inflated appraisal that Glenn Clark said he never saw, Fiorito promised the Clarks $23,500 in home equity.

Instead, he handed Glenn Clark a check for $16,000, which the Clarks never cashed. Fiorito pocketed the rest. When they saw they had been victimized, the Clarks contacted their banks and moved to cancel the mortgages.

But the clock never stopped ticking.

Now, the Clarks owe $240,000 for a house worth less than $200,000.  When the bank that held the Clarks’ mortgage went under in July 2008, the FDIC took over, Williams said. But, rather than renegotiating the mortgage, the FDIC continued the foreclosure process.

A real estate agent even showed up to change the locks. Others have offered the Clarks cash to leave before the eviction process is complete, Brenda Clark said.

The Clarks say all they want is to work out lower payments so they can keep their home.

FDIC chairwoman Sheila Bair has championed restructuring mortgages rather than foreclosing. She has even suggested providing financial incentives to banks to rework home loans to help people keep their houses.

Andrew Pizor, a staff attorney with the National Consumer Law Center (NCLC), said that has been the FDIC’s track record — restructuring loans rather than foreclosing.

So why not in the Clark’s case?

A recent report by the NCLC says that programs designed to encourage loan modifications have failed to slow the nation’s foreclosure crisis — in part because mortgage servicers find it cheaper to foreclose than to restructure.

A Jan. 7 hearing has been scheduled to consider the Clarks’ request for a temporary restraining order, as well as a motion by the FDIC to dismiss the case.

Williams, the Clarks’ attorney, said the only thing her clients did wrong was to trust a fraud.

“They were victimized by Fiorito,” she said. “They shouldn’t have to lose their home as well.”