State Of Massachusetts Foreclosure Listings

May 2012
M	T	W	T	F	S	S
« Apr
	1	2	3	4	5	6
7	8	9	10	11	12	13
14	15	16	17	18	19	20
21	22	23	24	25	26	27
28	29	30	31

May 6, 2009 7:04 pm | MA Foreclosures

State Of Massachusetts Foreclosure Listings

Witch Hunt or Consumer Protection? – 178 Loan Mod Companies Pursued by Government

Detroit – Over the last several weeks I’ve noticed a substantial increase in the number of loan modification companies being investigated by various government agencies.

All I can say is that it’s about time.

Now don’t misinterpret that statement – I believe that loan modifications may be part of a viable solution in getting our country out of the current housing crisis, although it’s too soon to determine their actual long-term effectiveness.

I also have nothing against loan modification companies in general nor the people that work at them. I’ve met or connected with many individuals that are intent on really helping people and do their best to do so.

Lastly, many homeowners do need some type of assistance as lenders don’t have their best interests in mind when they do loan modifications and many lenders draw the process out seemingly forever.

On the other hand, I’ve personally heard many stories from homeowners victimized by loan modification companies, have heard the same stories from mortgage associates and have read many more on the internet.

From Subprime to Loan Mods

I predicted over a year ago that loan modification companies would become the new subprime “churn & burn” debacle. This was triggered by my observations that many local subprime loan originators were flocking to do loan modifications. I even heard several stories of these originators approaching the same clients they’d put in subprime loans, with offers to now do loan modifications for them.

There really is no barrier of entry to do loan modifications. All you need is a phone and the ability to find clients. Finding clients is easy with so many homeowners struggling with their mortgage payment.

This should all sound familiar as much of it applied to the mortgage industry in general until recently, when state governments started requiring individual licensing of loan originators and the federal government created a national registration system.

When Michigan enacted its Loan Officer Registration Act, April 1, 2009, the state expected 10,000 to register based on past data. To date only 3141 have met the requirements of 24 hours of class time, passed a multiple choice test and background screening. How many of the unregistered do you think are now using their limited mortgage knowledge to do loan modifications?

Desperate People do Desperate Things

One would think that a homeowner, burned by a bad mortgage, would be a bit more cautious when considering a loan modification.

The number of loan mod companies popping up however, prove otherwise. It’s basic supply and demand – the numbers of these companies wouldn’t be expanding if there weren’t desperate homeowners to support them.

So, how do homeowners get burned by these companies? In no particular order:

Paying upfront fees for a modification never completed.
Being told they’ll get a principal balance reduction, when in reality it rarely happens.
Getting approved for a modification that raises their payment or insignificantly lowers it.
Following advice to not contact their lenders during the loan mod process, only to get foreclosed on.
Not being made fully aware of the possible credit damage, legal issues and tax consequences.

It’s all boils down to these companies over-promising and under-delivering.

What Took the Government So Long to Act?

If I saw this problem coming over a year ago, you’d think the smart people in our government would’ve saw it coming also.

In a recent informal poll of mortgage originators by “Think Big Work Small”, 81% responded that over 50% of those doing loan modifications are “rats”.

Unfortunately, just like with the mortgage meltdown and the banking crisis, the government only seems to act after the damage has already been done. Here’s a list of the agencies currently chasing loan mod companies:

Federal Trade Commission
United States Attorney’s Office for the Central District of California
Arizona Attorney General’s Office
California Department of Justice
California Department of Real Estate
State Bar of California
Colorado Attorney General’s Office
Idaho Attorney General’s Office
Illinois Attorney General’s Office
Iowa Department of Justice
Kansas Attorney General’s Office
Maine Attorney General’s Office
Maine Department of Professional and Financial Regulation, Bureau of Consumer Protection
Maryland Department of Labor, Licensing, and Regulation, Office of the Commissioner of Financial Regulation
Massachusetts Attorney General’s Office
Michigan Attorney General’s Office
Missouri Attorney General’s Office
New Jersey Attorney General’s Office
New Jersey Department of Banking and Insurance
New Mexico Attorney General’s Office, Consumer Protection Division
North Carolina Department of Justice
Ohio Attorney General’s Office
Oregon Department of Justice
Texas Attorney General’s Office
Washington Attorney General’s Office

Charges are being filed because of deceptive and/or false advertising (Section 5 of the FTC Act), charging upfront for services before rendered, unlicensed activities, mail fraud, attorney misconduct and several others.

Solutions

The Obama administration really needs to step up and address this issue quickly. The crooks and sharks need to be forced out of the industry to protect homeowners. Honest professionals also need protection – from overzealous government agencies. It’d be a real shame if those that were actually doing good things for homeowners were put out of business, fined or jailed.

An easy to implement option would be to allow loan modifications to only be done by licensed mortgage companies and attorneys. The mechanisms are already in place across the country to control this.

A better solution would be for the administration to create a national solution instead of letting all 50 states come up with their individual plans.

For a list of the loan modification companies currently be investigated, click here and then click on “preview”.

About the Author

Drew Sygit writes and speaks about the mortgage & real estate industries. He holds mortgage industry designations CMPS, CMC, CRMS, CMLO, CALO, has an MBA and is an approved industry instructor. He’s presented, spoken and/or written for HUD, Financial Planning Association, Financial Planners Association of Michigan, Michigan Association of CPA’s, Institute of Continuing Legal Education, Oakland Real Estate Investors Association, North Oakland County Board of Realtors and numerous industry publications. He also publishes his own blog: http://drewsmortgagenews.blogspot.com. He can be reached at dsygit@TheLendingEdge.com.

Thousands of Brockton area homes “underwater”

The Foreclosure Workbook

$16.99

“America’s #1 Do-It-Yourself Foreclosure Prevention Resource Across the nation, foreclosures are on the rise due to designer mortgages, rising debt ratios, and depressed housing markets. Most homeowners have no idea where to find basic, credible, and instructional information about the foreclosure process, or what to do when facing the time crunch before an auction. The Foreclosure Workbook is a revolutionary system that provides an unprecedented approach to foreclosure avoidance, protection, and survival. This workbook presents a proven step-by-step process that guides the homeowner in distress through the hurdles of foreclosure, and presents critical information about state procedures, foreclosure protection legislation, con artists, options, and much more This is the one-stop resource that homeowners need – arming them with easy to understand facts and processes for how to maneuver through the onslaught of mail they receive, fight off foreclosure scams, and organize and prepare a plan for saving their home and credit. Carla Douglin is a national speaker, CEO of Dominion Foreclosure Consulting Services, Inc., and founder of Dominion Housing Counseling Services, a nonprofit organization. For more information, visit our website at www.dfcscorp.com, and view our blog at foreclosuretipsfactsfumbles.blogspot.com”