Upfront Fees on Loan Modifications NOW ILLEGAL in Los Angeles

Posted on May 3, 2009. Filed under: Foreclosure Defense, Fraud, Housing, Legislation, Loan Modification, Mortgage Audit, Mortgage Fraud, Mortgage Law, Politics | Tags: , , , , , |

The Los Angeles City Council has made it illegal for mortgage and real estate brokers to charge an upfront fee when offering to help distressed homeowners obtain loan modifications. This effectively puts the loan modification business for real estate and mortgage brokers out of business. Gone. Bye-bye…

In case anyone thinks that’s not the case, let me explain.

Once a mortgage is modified, what would a loan modification company do if the customer didn’t pay the bill? Threaten to ruin the homeowner’s credit? You must be kidding. These are people that almost lost their homes. Their credit, you might consider, already leaves much to be desired. Take them to Small Claims Court? Sure, why not. As long as you understand that the best-case scenario is that you’re going to get like $20 a month, Small Claims Court might work out fine. Of course, when the homeowner doesn’t make the $20 payment, you’ll be going back to court or chasing a homeowner around for $20… well, plus late fees, so let’s say $24.

And please don’t tell me that people will pay their bill because they’re just that appreciative of the work that was done. Because I have a friend who runs a hospital, and 50% of his bills go unpaid all the time. Why do you think hospitals are so interested in what kind of insurance you have? Because they know that 50% of the patients won’t pay their bills, that’s why.

Helping someone with a loan modification without an upfront charge is something a nonprofit organization might do, but it’s not a business plan for a for profit entity… unless of course you follow the hospital pricing model and start charging $7,000 for a loan modification. Then when half don’t pay, you’ll be okay.

Yep, now that’s what I call a law that’s helping troubled homeowners. Thanks Mayor Villaraigosa! Good thinking there. You’re a smart one, I’ll give you that. Did you have anything to do with the Hope-4-Homeowners program, by any chance? Just wondering…

Here’s what I found to be the most amazing aspect of the story in the LA Times. It said: “Some of the services are legitimate, officials said, but others are not.” SOME are legitimate? OTHERS are not?

via Mortgage & Real Estate Brokers: Upfront Fees on Loan Modifications NOW ILLEGAL in Los Angeles » Mandelman Matters.

Read Full Post | Make a Comment ( None so far )

Leahy, Grassley Introduce Anti-Fraud Legislation

Posted on February 14, 2009. Filed under: Fraud, Legislation, Mortgage Audit, Mortgage Fraud, Mortgage Law | Tags: , , , , |

WASHINGTON (Thursday, Feb. 5, 2009) – Senator Patrick Leahy (D-Vt.) and Senator Chuck Grassley (R-Iowa) introduced legislation Thursday to provide the federal government with more tools to investigate and prosecute financial fraud. The Fraud Enforcement and Recovery Act makes necessary changes to federal criminal laws, including criminal fraud, securities law, and money laundering laws, increases the funding available to the federal law enforcement agencies to combat mortgage fraud and predatory lending, and also revises the False Claims Act to ensure that the government can recover taxpayer dollars lost to fraud and abuse.

The Federal Bureau of Investigation has seen a 100 percent increase in the number of fraud investigations opened since 2005. The Treasury Department has also reported that more than 60,000 cases alleging mortgage fraud were filed in 2008, 10 times as many as were reported in 2002. The legislation introduced Thursday by Leahy and Grassley aims to provide federal investigators and prosecutors the tools and resources needed to unravel complex criminal frauds and bring criminals to justice.

Leahy said, “The federal government has spent hundreds of billions of dollars to stabilize our banking system, and Congress will soon spend even more to restart our economic recovery. But to date, we have paid far too little attention to investigating and prosecuting the mortgage and corporate frauds that has so dramatically contributed to this economic collapse. Congress should move quickly to pass this legislation so the American taxpayers can be confident that those who are criminally responsible for contributing to this economic disaster are caught and held fully accountable and to ensure that the money we are now spending to restore America is protected from fraud in the future.”

Grassley said, “Unfortunately, throughout the housing crisis we’ve seen innocent homeowners who have been victims of shady mortgage lenders and unscrupulous individuals who have used a down market to line their own pockets at the expense of others. This bill is designed to send a message by revising our laws to ensure criminals are brought to justice and that law enforcement has the tools to uncover these fraudulent schemes and go after the bad actors. Criminals should be put on notice that ripping off homeowners and taxpayers won’t be tolerated.”

via Leahy, Grassley Introduce Anti-Fraud Legislation.

Read Full Post | Make a Comment ( 1 so far )

Liked it here?
Why not try sites on the blogroll...