Loan Modifications? Scam or Savior? Who's Got the Lowdown on this Industry?

Asked by Mike Kelly Allison Norman, Santa Rosa, CA Sun Jan 4, 2009

I wanted to put this out there to see if we have another unregulated industry taking the already beaten down consumer to the cleaners along the path of foreclosure!-- The Loan Modifications Scam or Savior?
This is a big buzz word in the real estate industry. We have many folks facing upside down loans with equities gone and loan amounts exceeding current values by hundreds of thousands of dollars. They are scared ! Are they being preyed upon by Loan Modifiers who collect "up-front" fees of thousands of dollars for a promise of "Loan Modification?. Are these folks for real? I know to collect "upfront" fees before a service is provided you must go through a registration process with the Department of Real Estate (california). So far only 55 companies have done this. But I googled Loan Modification and got over 200,000 entries coming up!!
Can anyone reccomend solid Loan Modification companies? Don't hawk your company but give me results!

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PaulMolinaro…, , Corona, CA
Fri Jan 16, 2009
Words from a Very Outspoken and Opinionated California Litigation Attorney

Here in California, our Department of Real Estate website (dub dub dub dot dre dot gov) lists the companies that have DRE "permission" to modify loans... add to this list any licensed California attorney, and that is where you should begin your due diligence search when you seek help in California. Other states probably have similar laws, so check with your own state DRE and state bar.

My law firm has been getting more and more calls recently from homeowners that were victims of predatory lenders who put them into an unaffordable loan and now fell into the hands of those same people who sold the toxic loans but profess to be saviors... DON’T BE A VICTIM TWICE! What’s that they say, “Fool me once, shame on you, but fool me twice, and I’ll sue your butt!”

Do your homework and THOROUGHLY investigate any firm before hiring them to save your biggest asset and the place you call “home.” Scammers are popping up like dandelions on a freshly mowed lawn in April. They advertise on the Internet, freeway billboards, radio, television, and print media everywhere, not to mention spamming your email box with those third-world widows needing someone to receive three million dollars for them. Make no mistake, in many cases, these “loan modification experts” are the exact same loan officers and mortgage brokers who fleeced homeowners the first time around. After losing their jobs with the crash of the mortgage industry, they have found a new way to make ill-gotten profits from hard-working homeowners through loan modifications.

In California, with very few exceptions (and attorneys are one exception… no coincidence there… attorneys make the laws), it is against the law for anyone to take money up front for helping a homeowner who is in default. Don’t trust a company that begins its relationship with you by breaking the law.


Hire an attorney – and not just any attorney either - one with experience in mortgage law, not just one with real estate law experience but one with experience in both FEDERAL and STATE litigation against mortgage companies, one who doesn’t also do family law, criminal law, admiralty law, and immigration law as well, one who limits the practice to mortgage law (or at least a great majority of it), one who has the experienced staff, training, and know how to take on the big lenders and their top notch lawyers (lenders have attorneys – and darn good ones – check out their counsel on the web – big names top schools, shouldn’t you have a lawyer too?).

We are not talking about a refund on your broken television here, we are talking about hundreds of thousands of dollars and your HOME – if you don’t think this is the time to hire a highly educated and experienced professional instead of a weekend schooled, almost out of work, broker slash loan officer slash “expensive water in a wine bottle with alleged magical curative powers” salesperson, I don’t know what would make you take things seriously.

Of course, this is one obnoxious lawyer's totally biased opinion, but one based on many many distressing calls to my office every day. And, yes, my firm loves taking cases against loan modification companies who have violated laws. This field is quickly becoming one of the fastest growing sections for our mortgage law firm.

- Paul J. Molinaro, Esq.
Web Reference:
1 vote
M Soliman, , Downtown, Los Angeles, CA
Fri Jan 30, 2009
An opinionated contrarian and realistic View - It can sometimes be difficult to sue an attorney and his firm or practice or find a lawyer who is willing to handle a legal malpractice action. The law firms who solicit "Expert's" for their clients all say this. But there are now lawyers in every state who accept legal malpractice cases. If you are having difficulty finding a lawyer, try using a lawyer referral service offered by the state or county bar association. It’s a sad and difficult task to see anyone lose a home.

The loss of home is compounded where unscrupulous professionals have cashed in on the opportunity. An attorney who boasts about modifications at a time where very few exist is a red flag. What does any professional know that congress and the senate do not?

NOTE - Comments and a view ; I am not any way shape of form affiliated with any "Brokers" nor do I lay claim to "Know WHO caused this mess". Its unsettling to lay blame on anyone where ad hoc reasoning assumes and only is based on random assumptions - If African Americans lead the nation in Foreclosure.....then they a victims or what? I do want to rid the world of Real Estate and mortgage brokers if someone can conclusively determine they solely caused the problem. OTHERWISE THATS DEFAMATORY AND CAUSE FOR CLAIMS OF DEFAMATION AND LIBEL ACCORDING A CIVIL LIBERTIES INQUIRY.

The National Association of Mortgage Brokers WILL RESPOND to the strange comments listed herein if truley by a Lawyer. BEST ANSWER? It is shocking, unconscionable and defamatory. How one can single out a professional consisting of various races and ethnicity and label such as...... (read for yourself).

We have spoken to an Attorney General as a result of the void for attorneys understanding the complexity of the mortgage debacle and he agrees with the implication of securities fraud and violations of federal guidelines. He will pursue an action on anyone’s behalf if necessary where willful malpractice is evident.

But ongoing slanderous remarks made by attorneys and published repeatedly over the net against organizations like the NAR and MBA and there members is wrong Ouchhhh! This matter caused us to write the State bar about lawyers generating business out of fear for a profession and at the expense of others gainfully employed and against business for business sake. Where were these professionals when this mortgage deal broke out over 16 months ago? Where? Why they are suddenly eager to jump in. Ask them to file a suit and hopefully not just pick off a mandatory settlement you lender maybe offering.

But why now with settlement talk coming down the line. And if there are borrowers suffering from more trying instances of fraud how can they help? Litigators need to litigate and I commend those who risk the cost of action with Pro Bono and paid from settlement . But why now after the problems and the situation has become even more compounded.

Likewise be careful as we have seen a number of recent cases where the clients paid a ridiculous retainer and were left with nothing and lost their home. The arguments made in court were not what the understanding was. Just ask first - We are called constantly and elect not to interfere. But do ask:

1) Can an attorney boast of any recent experience or victories in court that would indicate they are in the know on a very difficult subject.
2) Has the attorney written a private placement memorandum
3) Can the attorney recite securities laws and provisions for a Pass Through Investment Trust to lose its Blue Sky
4) Where will the attorney take the matter upon retainer and is there a definite resolution
5) What confidence does the attorney have in the violations that exist and hidden causes for predatory lending. If the attorney does not have these answers will they have access to a qualified "Expert"

If you hired counsel and find yourself $15,000 in the hole - I don’t know what to tell you other than find another attorney to handle the case.

In order for the plaintiff to establish that damages were suffered as a result of the alleged malpractice, depending upon state law, it is often necessary for the plaintiff to prove that, but for the malpractice, a favorable verdict would have been won or greater damages recovered. In essence, this is a retrial of the original litigation within the context of the malpractice action - a case within a case.

Attorney-Client Privilege: It is important to note that within the context of a legal malpractice action, a lawyer may utilize what were formerly privileged communications from the client in order to respond to allegations of negligence.

2 votes
Scott Godzyk, Agent, Manchester, NH
Sun Jan 4, 2009
You do not have to hire anyone and certainly do not pay anyone up front for this. You simply call your bank, ask for home retention department. let them know you would like to apply for a loan modification, most banks have the financial form on their website you can print. Otherwise you have to wait until they mail it. Once you have it fill out your financilas such as current income and debt including insurance, utilities, credit cards, car payments, food, gas etc. . You will need to write a letter explaining why or how you got into financial difficulties. Include the last 2 pay stubs, 2 months bank statements and last years tax returns. once they have it, they will take 12 days to assign a negotiater who then has another 12 days to contact you with a resolution. They can reduce your interest rate, reduce your payments or even set a specific amount of your mortgage aside that you do not have to pay on until you sell your home. Stick with doing it yourself, there is no magic formula, no one can do anything you can not do yourself and no need to pay anyone the last of your savings to do it. good luck to all....
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2 votes
M Soliman, , Downtown, Los Angeles, CA
Tue Feb 17, 2009
"Cash for keys" package but with a short 30 day fuse"

Fools and bigger fools
Funny where we (law firm) had a guy who we got $50,000 cash for keys offer- - - pending litigation right?
He loses the $50,000 and the house. Yes--does happen !

Another deal we got down to $ 250,000 on a $ 780,000 outstanding.
After wasting a 60 days short fuse he burned the chance.

It does happen and some lenders do try (when compelled.)
1 vote
Jesse Sierra, Agent, Pomona, CA
Sat Oct 10, 2009
I know this is about 9 months later, but anyone else looking for answers can try
and look for home counselors and have your clients talk to them.
The home councelor will not answer any questions if you are not the home owner.

Best Regards,

Jes Sierra, B.Sc.
0 votes
Charita King…, , Downey, CA
Fri Oct 9, 2009
Homeowners: If you can manage to gather the following paperwork:

1. Tax returns from the last two years
2. Check stubs and w-2s
3. Bank statements (both savings and checking)
4. Hardship letter
5. Completed financial statement (probably included with your monthly bill)
6. The Customer Service telephone number which can be found in your mortgage statement

Call the number, listen to the messages and press the number that will direct you to someone who can provide you with a fax number for loan mod app.

Follow up, follow up, and more follow up...until you know someone is assigned and working on your file. More follow it every other day and do it yourself.

Also make sure all pages your faxing have your account number written on the top or bottom of the page.

Good luck!
0 votes
Mike Kelly A…, Agent, Santa Rosa, CA
Sat Jan 31, 2009
I was assigned a new REO yesterday and in the coure of notification left a letter on the property to the current occupant stating the lender had foreclosed and please contact me immediately. The "Loan Modifier" called and said they were working on a modification and realized the property was in the "foreclosure process". I explained to him that it was BEYOND the "process" and had been taken back by the bank. He seemed a bit confused and dazed!! The property was also in escrow as a "contingent" sale as a "short-sale". The lender is offering a very generous "cash for keys" package but with a short 30 day fuse.
0 votes
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