Pimps and Whores of the Loan Modification Industry

There are individuals doing loan modifications legally but there are many more doing it illegally. This is a hot business and it is exposing homeowners to fraud now more than ever.

“It’s becoming an issue. As always, people get very clever when they see an opportunity,” said California Department of Real Estate spokesman Tom Pool.

Figuratively speaking there are “pimps and whores” in the loan modification business claiming to be advocates of the people, claiming to be legit, and claiming to be experts. Some go as far as portraying to be members of religious groups or former members of the military with the only purpose of gaining your trust. However, most if not all of their claims are far from the truth.

[Note: I got the "pimps and whores" idea from Greg Swann's post at BloodHoundBlog.com]

The list of these “pimps and whores” includes a vast number of licensed brokers and agents, loan officers, attorneys and the media as well. Furthermore, it includes licensed and non-licensed individuals with no ethics also known as the “subprime wolves.” Some of them have prior convictions and indictments ranging from “petty theft” to “attempt to defraud the United States government”. Believe me; I have researched some of these people. You can look it up yourself since it is all public information for anybody that holds a professional license.

A real life pimp and a “lady of the night” work for money and nothing more attracting many “Johns” almost every night. Similarly, the loan modification “pimps and whores” also work for money and nothing more attracting many “Johns” daily.

So, my advice for all of you is to get educated and understand how a loan modification works. Then recognize who these “pimps and whores” are so you don’t become another “John” and fall prey to their schemes.

- The Media Whores -

If you were to do a search for the term “loan modification help” or something similar in context on any search engine, you will be inundated with results. Most of these results will most likely be from individuals and/or companies doing illegal transactions hoping that you will click on their links and buy into their promises.

Similarly there are shows and ads on the radio that promote the same services. But what you need to realize is that these (agents, brokers, loan officers, companies, attorneys) “pimps” are paying for air time on the radio shows. The radio hosts are happy to endorse them because they are getting paid for it. And by accepting money from the “pimps,” the radio show hosts are becoming, figuratively speaking; their “whores.”

Many of these radio hosts and shows claim to be advocates for the community but they are actually hurting their community by accepting these scams to be advertise on the air.

- Are They All Really Illegal? -

[Disclaimer: The following information is intended to provide general information and it is not substitute for individual legal advice]

Most of the companies doing “loan mods” breed easily in the states where the declining housing market values have resulted in a high percentage of foreclosure filings. According to RealtyTrac, the top 10 states with the highest foreclosure fillings are Nevada, Florida, Arizona, California, Michigan, Georgia, Ohio, Colorado, Utah and Idaho.

However, there are state laws and regulations that everyone must follow (I will have additional information about other states near the end of this post).

Here in California for example, the California Civil Code Section 2945 regulates foreclosure consultants if they offer to stop and/or save homes from foreclosure, offer to obtain forbearance agreements, reinstatements, time extensions, waivers of acceleration clauses, or to assist in obtaining the remaining proceeds from the foreclosure of a home.

So before you go and contact anybody for help in modifying your loan, I suggest that you read the following restrictions imposed by the California Civil Code 2945:

- California Civil Code Section 2945 -

[1.] No “foreclosure consultant” or licensed real estate agent/broker is allowed to collect any fees once a Notice of Default (NOD) has been recorded against your property. So if your lender has recorded an NOD, do not pay any fees to anyone.

California lawyers are exempt from this regulation when rendering services as part of their legal services. However, some attorneys are “pimping” the industry by splitting the fees you pay with a licensed agent/broker or company. And by accepting a split fee from the “pimps,” the agents/brokers and companies are becoming, figuratively speaking; their “whores.”

Additionally, even if an NOD has not yet been filed, a licensed real estate agent/broker is also not allowed to collect any fees in advance for assistance in doing a loan modification. It is illegal. Fees may only be collected at the end of a successful loan modification transaction. Let me repeat it and make it clear for everyone; not before, not during, but only after a successful modification fees may be collected.

[2.] There are certain exceptions however. A broker may apply and received a “no objection” letter from the California Department of Real Estate (DRE). What this simply means is that the broker submitted to the DRE the contract they’ll be using. As a result, the DRE did not object to its use.

The contract, after it has been reviewed by the DRE, is the one you sign. It must spell out specifically what services will be performed, when they will be performed and how much you must pay. It is illegal for a broker or company to have you sign a contract that has not yet been reviewed by the DRE and in addition they have not received the “no objection” letter from the DRE. If unsure, you may ask the company to see the “no objection” letter and verify it on the DRE website.

Keep in mind that the DRE does not approve, endorse, recommend or make any representations about any of the agreements or their terms, or any aspect of a licensed agent/broker’s activity. The DRE is simply saying “I don’t see anything wrong with the type of contract you are using.”

In this instance the advance fee may be charged; however, according to the real estate law the fee must be held in a trust account until such time the agreed-upon services are rendered (Business & Professions Code Section 10085 and Commissioner’s Regulations 2970 and 2972).

As an advice, you should carefully review anything that you sign, consider obtaining independent advice before you sign anything, and consider comparing the services and fees offered by other licensed brokers listed on the DRE website who have received the “no objection” letter.

Remember that if the NOD has already been recorded, the collection of an advance fee is illegal even if under a reviewed contract.

[3.] As defined by the California Civil Code Section 1689.5, the contract used by foreclosure consultants must give you (the homeowner) the right to cancel such contract up until midnight of the third business day.

Furthermore, the contract must provide an additional notice detailing when fees will be paid by you and/or when the fees in the escrow account will be withdrawn. It should also provide a notice that the foreclosure consultant cannot ask you to sing any lien, deed, or deed of trust. It is a violation for a consultant to acquire any interest in the residence collateralized by the loan being modified. Also they cannot take any power of attorney on your behalf.

Additionally, under Civil Code Section 2924j, a consultant cannot enter into an agreement with you to obtain any remaining funds (surplus) from a foreclosure sale prior to 65 days after the trustee’s sale has taken place.

[4.] Foreclosure consultants are forbidden from taking any monetary compensation like wage assignments, or consideration from any third party. But as I mentioned earlier, some “pimp” attorneys are happy to split the fee you paid with the referring real estate agent/broker, loan officer or company “whore.” These “whores” commonly market their business as being an “attorney affiliated or attorney based” loan modification company.

As an example, let’s say that you pay $3,500 for a loan modification. The attorney may keep $1,500 and the real estate licensee may keep $2,000, simply for referring you to the attorney. However, if your lender denies the request for the loan modification, guess what? You loose the fee that you paid in advance.

Additionally, this practice of receiving a referral fee from a third party (i.e.: attorney or loan modification specialist) is a violation of the Real Estate Settlement Procedures Act. RESPA Section 8 prohibits kickback, referral fees and unearned fees, unless the charge is measurable in equal amount with the service performed as mentioned by Jillayne Schlicke in this Rain City Guide post.

[5.] On the other hand, real estate agents/brokers who provide loan modification services and only collect fees after full completion of those services, then they are not required to receive the “no objection” letter from the DRE. Believe me, there are not that many agents/brokers doing it this way.

So as you can see, not every company or individual seen out there offering loan modification services is actually in compliance with the law and regulations. Most of them are doing business illegally.

Similarly, there are other companies who avoid breaking the law by simply finding loopholes. One loophole is to claim the status of “hardship consultants” and not actual loan modification or foreclosure consultants. Consequently, they do not need the DRE’s review of their contracts leaving the door wide open for fraud.

- Who Can You Trust? -

There are several HUD-certified organizations across the US who offers free assistance to those facing foreclosure. Jeff Davi, the Commissioner of the California Department of Real Estate, said that he would prefer people to deal with HUD-certified counselors, who do not charge a fee. “Under no circumstances, should a homeowner ever pay someone a fee upfront in exchange for a promise of a future service,” Davi said.

Some of the nonprofits that can help you in the Bay Area are:

Be warned that they may be overwhelmed with requests for help. Nevertheless, they should be your first point of contact after contacting your lender.

- Helping to Modifying Your Loan is an Issue of Ethics -

I want to make a point clear here. Not all real estate brokers are doing these transactions illegally. Contrary to the beliefs of others as commented on this other post, there are agents/brokers who do follow the real estate laws and regulations I mentioned above. Stating that attorneys and not brokers (or vice versa) is your best and safest option to modify your loan is irresponsible and an overstatement to say the least.

[Disclaimer: The following is not paid advertisement; I do not receive any type of compensation from any of the following agents/brokers/companies; I do not endorse, recommend or make any representations about any of the agreements or their terms, or any aspect of their licensed agent/broker’s activity]

One example is Home Resolutions and Credit Services (HRC) in San Jose which is listed on the DRE website as having a “no objection” letter. And as far as I am concerned, the owner is very honest guy.

HRC was opened by real estate agent Robert Aldana (aka “Robertito Aldana”) and broker Martha Lopez-Chubb [As of today -03/2010- the DRE has minor pending accusations against the corporation HRCS & its officer Chubb H-10749 SF and its officer Chubb alone H-10750 SF stemming from simple accounting issues and more. Defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt].

Aldana explains that his company screens applications to ensure it can truly help his clients. He charges a fee of $2,500. The fee goes into a trust account and drawn from, 30 percent at a time, as various stages of the modification process are completed. Aldana also hosts a radio show on 1370 AM La Kaliente where he gives a chance for the Spanish community to voice their opinions and ask questions.

Another example is Beatrice Supnet of Fireside Realty in San Jose. She is member of the Santa Clara Association of Realtors (SCCAOR) who has been negotiating in the past year with banks on behalf of homeowners. As reported in a SCCAOR newsletter, Supnet is fluent in Spanish and spends hours reading documents, writing letters and making repeated calls to banks. And she chooses to do it for free. “I’d like to have someone help me if I were in such a position” Supnet said.

As you can see not everyone is a “pimp or a whore,” therefore we can’t generalize this idea when someone presents you an offer to modify your loan. However, you should be vigilant and cautious when dealing with anyone making claims of saving your home and stopping or preventing foreclosure.

Always remember that there are those who have chosen to sell their ethics for money like a “whore” and there are those who have chosen to “pimp” these “whores” just to make a quick buck. On the other hand, you also have those who have chosen to follow the law and manage their business ethically. So don’t be another “John” and beware of the “pimps and whores” of the loan modification industry.

Nevertheless, you can’t forget that there are also nonprofits that are always there to help you modify your loan at no cost.

- Other States Denounce Loan Modification Schemes -

California is not the only state that has laws and regulations regarding foreclosure consultants. Nevada’s laws also prohibit charging fees to owners in foreclosure before services are completely rendered. However, “before the foreclosure process officially begins, it’s a gray area” warned the Nevada Division of Mortgage Lending (MLD) Commissioner Joe Waltuch in this press release from the State of Nevada Department of Business & Industry [PDF format]. “Depending on the services offered, the loan modification company may also need to be registered with the Nevada Consumer Affairs Division under the Credit Service Organization law,” continued Commissioner Waltuch [Thanks to Shawna Reeves Nourzaie of the Council on Aging Silicon Valley for this notice].

In Colorado, only licensed brokers in Colorado may provide home loan modifications within the state. As of December 2008, Erin Toll, the Colorado director of the Real Estate Division, has sent 16 subpoenas to loan modification companies in Colorado, California and Arizona. In addition, Toll entered into collaboration with Jeff Davi, the Commissioner of the California Department of Real Estate to “shut down illegal loan modification companies that prey on consumers when they are most vulnerable,” Toll said.

Those providing loan modification services in the State of Washington must be licensed as loan originators, mortgage brokers or consumer loan companies and be overseen by the Department of Financial Institutions (DFI). Deborah Bortner, DFI’s Director of Consumer Services Division says their concern is that “Loan modification businesses are using high-pressure tactics.” “In some instances claiming a 100 percent success rate,” Bortner continued. Another concern is that homeowners are not taking “advantage of the HUD-approved counseling services,” DFI Director Scott Jarvis said. “The non-profit providers can often negotiate better deals because they have formed working relationships with many of the lenders.”

Illinois, just like California, bans upfront payments to foreclosure rescue companies. The attorney general’s office has received “thousands” of complaints about such companies, said Michelle Garcia, an assistant attorney general in Illinois.

New York is included in the 20 other states that prohibit companies from collecting payment until they have completed their services.

[Update April 07, 2010] A new Law in New York taking effect April 15, 2010, was designed to force banks to maintain seized properties and bans any firm from collecting upfront fees from homeowners for loan modifications.

[Update Dec 07, 2009] As of midnight, December 31, 2009, any individual or company who provides loan modification services (such as refinancing, adjusting interest rates or any other such services) must have an active license from the Florida Office of Financial Regulation (OFR).

[Update March 20, 2009] Here is a video of an investigative report made by 20/20 on ABC about Fraudulent Loan Modifications.

Below I am listing other resources where you can get more information and help:

As an added note, Fannie Mae announced on December 2008 that it will require the servicers of its loans to inform borrowers about its “early workout” plan. This plan was devised to inform borrowers that if they are facing financial difficulties, they might qualify for an advance loan modification even if they’ve never been late.

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January 12th, 2009 · Filed Under Loan Modifications, Real Estate & Mortgage FRAUD

Comments

19 Responses to “Pimps and Whores of the Loan Modification Industry”

  1. Jillayne Schlicke on January 12th, 2009 5:17 PM

    In some cases, homeowners can hire their own legal counsel for LESS than the amount quoted by unlicensed loan modification salesmen.

    Lenders do loan modifications for free. The only reason a person has to pay anyone for help is if their situation is way more complex in which case, they are better off with legal counsel.

    An attorney must look after his/her client\’s best interests.

    Loan mod salesmen have no such duties.

  2. Ney on January 13th, 2009 12:32 AM

    Jillayne,

    You are correct. Homeowners can hire legal counsel at any point. However, HUD approved counseling agencies are also available and they should be the first point of contact after the lender for any type of loan modification.

    No one should pay for loan modification services but sometimes the HUD approved agencies are overwhelmed and homeowners get desperate and impatient.

    Additionally, an experienced broker who has received a “no objection” letter from the DRE may also provide the same services an attorney may provide for a loan modification. The only difference is that they are required to keep the fee in a trust account and withdrawn little by little as certain stages of the loan mod is being completed.

    I am not a big fan of “advance fees” whether with an attorney or a broker (with the “no objection” letter) because 100% guarantees for loan mods do not exist. However, the demand exists and it is strong. Therefore the DRE had to adjust their regulation and look for a way to protect the consumer.

    Then you have the loan mod salesmen. All they look for is to make a quick buck either through a referral fee with an attorney or by charging an upfront fee themselves. They have no fiduciary to their clients. Their only fiduciary duty is to their own pockets.

  3. Dan Harris on January 13th, 2009 4:51 PM

    One need only review the cast of characters below to get some insight into who is behind the “free” help out there’

    It appears that the same banks and lenders that put you in the toxic loan that has caused you problems, are now posing as Hope Now ”do gooders” by giving millions of dollars to fund this national campaign to help homeowners fix their loans and save their homes.

    I certainly don’t think that an organization that obtains it’s funding from banks and lenders is truly looking out for the consumers best interests.

    These “free” counselors are not interested in identifying predatory lending and mortgage fraud.

    They aren’t examining their clients loans to see if they are legal and not predatory or fraudulent.

    They most definetly do not have the mortgage and legal skills to combat and remedy these predatory lending situations.

    My thought is that finding violations and predatory issues with these loans would be biting the hand that feeds them.

    So much for the “free” help being provided by The Hope Now Alliance.

    [COMMENT EDITED]

    So ask yourself…
    Is it really “free help” or more akin to the YSP & SRP paid to brokers and bankers for locking their clients in at a higher interest rate?

    Isn’t this akin to when someone sues you and you offer to have your brother-in-law the attorney represent them for “free”?

  4. Ney on January 14th, 2009 12:13 PM

    Mr. Dan Harris,

    Hmmm….where do I begin?

    You are implying that these HUD “characters” offering “free help” are not to be trusted because their best interest is to help the lenders? How did you come up with that conclusion?

    Should homeowners trust the book you are trying to promote and sell through the web link you left on your comment? Do you owe a fiduciary duty to the distress homeowners or to your own pockets?

    Basically I am asking is, are you a “pimp” or are you a….you know what?

    HUD approved agencies are not collection agencies.

    A collection agency/department works on behalf of a lender in trying to collect as much money as possible from a borrower in order to satisfy the debt.

    A HUD approved agency does not work on behalf of a lender, they work on behalf of the borrower. And they provide it at no cost, hence the name “non-profit.”

    You blame the banks/lenders for putting homeowners in toxic loans? Well, I guess you are partly correct. Lenders did get too greedy for their own good by relaxing lending standards. However, are they really the only ones at fault?

    I guess you will have a rude awakening when you find out whose fault it really was for our financial crisis.

    You also imply that these HUD approved agencies “do not have the mortgage and legal skills to combat and remedy these predatory lending situations.” You are wrong yet again!

    For your information there are several HUD approved “non-profit” agencies who handle legal aspects.

    Do you really think that they have no “mortgage skills” to assist homeowners?

    How do you think they assist borrower with their loan modifications? How do you think they provide housing counseling? How do you think they provide with credit and financial counseling?

    HUD approved agencies can inform homeowners of their loan terms and associated financial options and educate them on how to improve general financial literacy.

    Finally, you also imply HUD agencies are akin to lenders and brokers? That is absurd to say the least!

    Dan, you might have noticed that I edited your original message. The reason I did that was because your comment was a “copy & paste” comment and I really hate it when people do that. The original content of your comment came from a post on your own blog.

    Thanks for sharing your point of view though.

  5. What is a Loan Modification? : San Jose-Santa Clara County Real Estate UNCENSORED on January 14th, 2009 12:20 PM

    [...] be aware that there are many untrustworthy and illegal loan modification companies out there. On the next post I will discuss how in California, Florida, Maryland and other states it is illegal to charge upfront fees for a [...]

  6. Dan Harris on January 14th, 2009 1:02 PM

    Quite interesting that the cut and paste is something that you hate…

    I alaways hesitate to place a link, and be in violation of someones spam policies.

    I note that you also eliminated my weblink which you provide a space for on the site.

    As for the HUD approved counselors doing audits and looking for violations on behalf of clients please advise people on where this type of help is available.

    My experience in these offices is that they are overburdened and can’t handle the flow of work just processing people who come in, they certainly do not look for violations.

    There are some pro-bono operations out there with attorneys, I am very familiar with one here in NY that I have placed some folks with, but they can only help about 60 people at a time.

    They typically get involved after the counseling agency can’t get a modification done.

    The cast of characters I posted was a list as you know of lenders and servicers along with the groups they fund.

    I think it important for borrowers to be aware of who is paying for the FREE service they are getting.

  7. Ney on January 14th, 2009 3:48 PM

    Dan,

    Quite interesting? Really? I guess!

    I did eliminate the weblink to your site. I do not mind self-promotion of sorts. However, I do not approve of loan modification “salesmen;” particularly if they are using the links to promote their products in addition to irrational comments.

    You can very easily go to HUD.gov and find a HUD approved counselors who have legal counsel on site. I think you can do a little click here and a little click there to find them, right? And of course there are the pro-bono organizations as you mentioned.

    As I said on my post, “Be warned that” HUD approved counselors are “overwhelmed with requests for help. Nevertheless, they should be your first point of contact after contacting your lender.” That is concurrent with part of your comment, so I guess we agree on something.

    Finally, as I said before HUD agencies are not collections agencies/dept therefore they do not work to collect the money for the lender as you implied.

    Again, thanks for sharing your point of view.

  8. Dan Harris on January 15th, 2009 4:02 AM

    Mischaracterization is the hobgoblin of those with a weak argument.

    And, we agree on more than you imply.

    You certainly attemted to mischaracterize my comments here:

    “Finally, as I said before HUD agencies are not collections agencies/dept therefore they do not work to collect the money for the lender as you implied.”

    I never implied that these agencies were “collection agencies” indeed as you probably know that would put them at a legal disadvantage.

    It’s much better to fund the consumer help agencies and buy goodwill. That was the point of my post. There are groups on the list that helped unqualified homeowners get into this trouble who are now taking money from the lenders to help homeowners get out of trouble.

    I think that someone needs to shine the light of day on this practice, instead of having a kneejerk reaction to their being “outed”.

    You have a bias against “loan modification” companies, but don’t apply the same disdain towrds the practice of lenders funding the organizations that purport to be helping homeowners fight them.

    Make no mistake, every loan modification negotiation is a fight, tooth and nail.

    Finally you cast aspersions on me because I wrote a book, and actually have the nerve to try and sell it.

    Everyone out there “sells”. How did you get your last job? An interview where you tried to “sell” yourself to your prospective employer…

    Which were you then, a pimp or a *****?

    A book on how to negotiate a loan modification whith your lender is unfortunately much needed in the current market.

    I for one intend to help as many people on every level of this endeavor, whether it’s through a not for profit counseling operation which I am in the process of building, “selling” my book, or negotiating for profit on behalf of borrowers who can afford to pay a fee AFTER modification is acheived.

    I make no apologies for that and would be more than happy to help expose those folks out there that are actually preying on and taking advantage of homeowners in trouble.

    Have you ever heard of this group that purports to check out and register loan modification companies?

    I recieved an e-mail from them this morning.
    DRLMC Registration Application
    [LINK EDITED] DRLMC.org

    I do not know who they are, and have never heard of them before today. They are in your neck of the woods.

  9. Ney on January 20th, 2009 12:48 PM

    Dan Harris said: “I certainly don’t think that an organization that obtains it’s funding from banks and lenders is truly looking out for the consumers best interests.”

    Dan; what you are trying to describe here is a collection agency. A collection agency works on behalf of a credit card company and they look out for the best interest of the company no the consumer. A HUD approved agency work on behalf of the consumer and not on behalf of the lenders.

    You are trying to cast a dark cloud over the HUD approved agencies simply because they receive funding from various sources, some of them being the lenders themselves. Well, I hope you do understand the definition of “non-profit”?

    These agencies do not profit from the consumer therefore in order to provide services to the consumers; they need to receive funding from somewhere. If lenders are providing some of those funds; it is because they want these “non-profit” agencies to help consumers modify their loans to an affordable rate and/or loan so that loan does not go into default again.

    As a result of HUD approved “non-profit” agencies modifying loans, lenders are able to keep loans and not houses on their books. Therefore they are able to receive payments for these loans and homeowners are able to keep their homes.

    You make it seem like HUD approved agencies are agencies that work on behalf and/or for the lenders in secrecy. That is absurd to say the least!

    Also, do you know the difference between Acorn and Acorn Housing? If you don’t, you should look it up. Nevertheless, Acorn Housing is not one of the agencies I listed on my post because I have not seen much effort from them to participate in comparison to the other “non-profit” agencies I did list on the post.

    How is that I have a bias against loan modification companies? I listed one on my post that is a “for profit” company. They charge a reasonable fee; they are approved by the DRE to charge money upfront and to keep that fee in a trust account until the services have been provided.

    I am a salesperson, of course I am. Everyone is.

    Nevertheless, I have a fiduciary duty to my clients. Do you know the definition of “fiduciary duty”? If you do…….Do you owe a fiduciary duty to the distress homeowners or to your own pockets?

    As far as DRLMC.org, anybody can have a websitename.org on the internet. Does that make it legit? Of course no!

    That website insinuates to be a department for loan modification companies. But as you should know, the loan modification industry is NOT regulated since it is a new emerging industry.

    What happens to non-regulated industries? They often leave the door wide open for fraud.

    Is there anything a consumer can do against a company that is not regulated by a federal or state agency? Not really!

  10. Sean on February 16th, 2009 11:42 AM

    Interesting debate. I believe you both have valid points and expose opposite sides of the same coin.
    People can do loan mods themselves. Attorney’s can represent themselves also, but should they? No.
    HUD approved counselors can arrange a loan modification for free. They help the homeowners understand what documents to gather, fill out the forms, check the math, and give the banks what they want to attempt to get a “successful” modification.
    Then there are the loan mod companies. Some are OK, some are good, some are crooks. Yet without question if a homeowner wants to get the best possible negotiation and ultimate modification one needs to hire a local real estate attorney with the support of a strong processing and negotiating staff. The question is how to find one. Or as it seems they are finding you a beter question may be how to qualify one when they solicit you. A few points to consider.
    Attorney, not “Attorney Based” regardless of what they say you want to be able to talk with the attorney.
    Forensic loan file audit, they should always be conducted.
    Use of an independent 3rd party escrow. Attorney’s do not have to use them but it is a good business practice, and assures the homeowner that their money is safe until they get a successful loan mod. Finding a firm that meets these three elements would drastically reduce fraud and significantly improve results.
    Part of the real probelm here that needs to be addressed is that servicers make the most money from the loans that are late paying and/or that turn into REO’s. So while it is true banks don’t want the REO’s in this market the servicers do. Banks have many reasons why loan modifications make sense but servicers gain nothing from a loan modification, in fact they lose. Most homeowners do not know the difference from the servicer of their loan to the actual lender, or investor.
    Communication and education are vital to our getting out of this mess. I hope the “Joe the Plumber’s” of our nation can elicite both. I also hope those of us who have the ability and desire to help can and will leverage our resources to help as many people as we can.

  11. george martinez on February 25th, 2009 2:36 PM

    can a real estate sales associate agent working for a broker do loan modifications for someone else ? i would like to stay with my broker and not hang my license with a mortgage broker.

  12. Ney on February 26th, 2009 10:18 AM

    George,

    The short answer to your question is yes. The long answer is the following:

    If the broker who you are working for has not received the “no objection” letter from the DRE, upfront fees cannot be charged. In this case, if you charge an upfront fee for the loan modification, you and your broker are in violation of the California Civil Code (read the post above).

    If the broker who you are working for has received the “no objection” letter from the DRE, an upfront fee may be charged. However, this fee has to be placed in a trust account per the Business & Professions Code and Commissioner’s Regulations.

    If your clients have a “Notice of Default” recorded against them, NO upfront fees may be charged even if your broker has a “no objection” letter from the DRE.

    All this was explained on the post you see on this same page.

  13. Understanding Obama's Making Home Affordable MODIFICATION plan : SCC Real Estate UNCENSORED on March 6th, 2009 12:20 PM

    [...] If you decide to use a modification company or agency other than a HUD-approved agency, verify they are approved and qualified to do modifications. [...]

  14. Understanding Obama's Making Home Affordable REFINANCE plan : SCC Real Estate UNCENSORED on March 11th, 2009 7:58 AM

    [...] make matter worse, loan modification “so called experts” are yapping on the radio and TV spots telling everyone that this plan won’t work or that they can qualify clients directly with their [...]

  15. RC on August 5th, 2009 7:00 AM

    People get mad when they dont get paid…..

    Also not all the time can you get help from HUD department since they are pack and they dont have more space in their files for desperated people. pretty much when you contract people to help you you are paying for processing the documentation make the calls for you, send faxes over and over again. banks are overwhelmed with work you have agents reciving e mails and faxes like crazy, you also have missing faxes, missing emails you call one day they say is in review you call the next day and they say you never have send anything there, when you authorized someone else like i did they say that you never send any 3rd party authorization when you have send their form like a thousand times. I guess in there is a miss comunication between homeowners and banks, and maybe thats why you contract someone to help you, never the less there are lots of people out there that dont do their jobs and people that actually help you get blame or get target by the ones that either lost money or in worst case their houses.

    I have 5 friends they applay in the same company as me from those 6 applications 5 went thru 1 didnt but i guess sometimes is not companys fault sometimes is the bank that doesnt want to lose any money…

  16. Ney on August 5th, 2009 7:55 AM

    RC,

    Although many banks are very slow to respond, the main problem within the “loan modification industry” is that it is largely unregulated. There are some regulations at the state level but fraud with loan modification is rampant.

    I don’t disagree with getting paid for completed services, after all that is how the business world woks. However, there are many companies who don’t do anything or charge clients who don’t qualify for a loan modification. There are also many companies who are not authorized to charge upfront fees.

    Additionally, there are many brokers, insurance agents, CPA, financial advisors, etc; who claim to be working with an attorney who does loan modifications or they claim to have an attorney on staff. All those claims are a sham!

    If a client needed to use an attorney for a loan modification, they should find someone who is NOT working with a real estate agent. They should go to the attorney directly and pay them directly if desired. They should make sure the attorney is not referring them back to their “partner” real estate agent/broker, mortgage broker, insurance agent, etc. and splitting the fee they have paid for attorney services.

    It’s not all on the bank’s side but also on who is providing the services. It is true that HUD approved agencies may be lacking the manpower to handle the demand for loan modifications but that should be the first point of contact. If a HUD approved agency is not available, consumers should get informed about the different types of loan modification scams so they don’t become another victim. By being informed, they are able to contact a good reputable company that may be able to help them.

  17. Loan Mod on November 24th, 2009 8:50 PM

    If a client needed to use an attorney for a loan modification [LINK EDITED], they should find someone who is NOT working with a real estate agent. They should go to the attorney directly and pay them directly if desired. They should make sure the attorney is not referring them back to their “partner” real estate agent/broker, mortgage broker, insurance agent, etc. and splitting the fee they have paid for attorney services.

  18. Ney on November 25th, 2009 7:40 AM

    Loan Mod (or should I call you Harold Banks of San Jose),

    The California State Bar has clear rules that apply to lawyers regarding foreclosure assistance. Some of those rules are:

    • California lawyer may not pay a referral or marketing fee to a foreclosure consultantor other person for referring distressed homeowners to the lawyer.
    • California lawyer may not directly or indirectly split any attorney’s fees that the lawyer earns from a distressed homeowner client with the foreclosure consultant or any other non-lawyer.

    Although you are very correct in your comment; I could help but notice that you are using Internet Marketers to post this comment and get a link back to your site using keywords.

    I noticed that Harold Banks and Roxanne Gutierrez are the registered owners of the business located of Paragon Drive in San Jose. I also noticed that Harold Banks is the registered owner of the web site you tried leaving a link to. If you are either person, I thank you for your for your very correct comment but I don’t appreciate spam comments.

    Finally, neither the Department of Real Estate nor the California State Bar show a Harold Banks or Roxanne Gutierrez registered as real estate agents or as an attorneys. Therefore, if you are doing loan modifications, you are doing it illegally. California law prohibits anybody not licensed by the DRE or the Bar to do loan modifications.

    As a word of advice, you may want to work on your site; a 5 year old could have done a better job.

  19. SB 94: D.O.A. Loan Modifications : San Jose-Santa Clara County Real Estate UNCENSORED on December 23rd, 2009 1:57 AM

    [...] the same manner, when SB94 was signed into law it made loan modification scam artists think twice about getting involved in modifications again. Most scammers, however, will continue to [...]