Mark Winston Griffith
Mounting A Surge in the War Against Foreclosure Predators
This entry is cross-posted on Huffington Post
Every time I'm in public settings and talk about the need for regulation and the reform of the financial services industry, I caution that, like rat poison that leads to poison-resistant rats, implementing stronger rules around the financial services sector eventually leads to regulation-resistant scammers.
But one of the most frightening aspects of the range of real estate scams and mortgage abuse that led to many of the foreclosures around the country is that so many of the high pressure tactics and high priced products were legal. While there was certainly enough fraud and trickery to go around, knowingly making an unaffordable mortgage was, for the most part, kosher under the law.
The New York Times editorial page today commented on one of the inevitable outcomes of the foreclosure crisis: Predatory loan-modification companies that find desperate homeowners looking to survive their mortgages, and then charge them unconscionable fees or loan percentage points to do what is offered for free by non-profit organizations. As the Times, also noted, while this practice is immoral, it's legal in an industry that is largely unregulated.
The Times concluded that "nonprofit organizations need to be more creative and assertive to out-maneuver the predators."
While there is certainly a lot of room for improvement among nonprofits doing foreclosure prevention, this observation made by the Times is like blaming the troops in Iraq for not policing enough territory. The inadequacy lies not with our frontline army, but with the political will and resources necessary to address the problem.
First of all, literally millions of people, each of them in a unique state of crisis, are currently delinquent on their mortgages throughout the country, with millions more to follow over the next couple of years. Each of these people, whether they can be ultimately helped or not, potentially require hours of counseling and intervention.
Talk to any legitimate nonprofit foreclosure prevention counselor or lawyer and you will find a person overwhelmed by the scale of foreclosures, and outgunned by the scammers who helped put homeowners in that situation in the first place – unscrupulous brokers; predatory lenders; so-called foreclosure rescue specialists that literally steal people's deeds; "one stop shops" that collude to sell crumbling, over appraised, unaffordable, over-leveraged houses; and countless variations on these themes. With the hundreds of billions of dollars in house equity that was generated through the housing bubble there were armies of pirates and bottom feeders that assembled to cash in on it and strip it from people.
As Sheila Bair, chair of the FDIC, said, we need a national solution to the national foreclosure crisis. We need not only more money and resources put towards nonprofit foreclosure prevention, but a national public policy of mortgage modification that would help make loan-modification scammers irrelevant.
Mark Winston Griffith: Author Bio | Other Posts
Posted at 9:47 AM, Nov 24, 2008 in Economy
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In California, the DRE website lists the companies that have DRE "permission" to modify loans... add to this list any California attorney, and that is where you should seek help (in California). My law firm has been getting more and more calls recently from homeowners that were victims of predatory lenders 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... do your homework and THOROUGHLY investigate any comany law firm or otherwise before hiring them to save your biggest asset and your home. And, yes, my firm does take cases against loan modification comanies who have violated laws. These scammers are popping up everywhere on the Internet, billboards, and media advertisements everywhere. Make no mistake, in many cases, these are the exact same loan officers and mortgage brokers who fleeced homeowners the first time... they have now found a new way to make huge profits. Furthermore, in California, with very few exceptions (attorneys are one exceotion) it is against the law for anyone to take money up front for helping a homeowner who is in default. Of coure, this is one lawyer's biased opinion, but one based on many distressing calls to my office every day.
- Paul J. Molinaro, Esq.
Posted by: Paul J. Molinaro, Esq. | December 7, 2008 01:50 PM