Loan Modification Schemes: Mostly Scams

by Alex Stenback on July 20, 2009

If you’ve been following along here, you’ll know that many if not all supposed “loan modification” services out there are essentially advance fee fraud scams.

But in case you’ve forgotten the NYT has up a very good piece which establishes in fact that a very large number of these loan modification companies are simply former sub-prime mortgage outfits manned by the same re-treads that put you into your bad loan in the first place:

“We just changed the script and changed the product we were selling,” said Mr. Soussana, who ran the Los Angeles sales office of Federal Loan Modification Law Center. The new script: You got a raw deal, and “Now, we’re able to help you out because we understand your lender.”

And this:

“many dubious loan modification companies have organized themselves as law firms solely to allow them to collect upfront fees, even though the lawyers have little, if anything, to do with the services provided. The department cautions consumers against hiring such companies.”

Which inspired me to re-post my own words from January of this year:

And also, for the homeowners out there: The only party who can work out your loan with you is your mortgage servicer.  If you feel compelled to dish out money to have someone represent your interests, please hire a real attorney (not one at the head of a network of former sub-prime goofs) to do so.

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