Will the Real Scammers Please Stand Up?

Martin Andelmann has a humorous take on all of this talk about “modification scams” and new laws addressing what we are supposed to accept as a menacing explosion of fraud (not the bank fraud that we know about, or the HAMP fraud by the banks that pretend to participate) by supposed scammers helping homeowners navigate the foreclosure crisis.   I don’t do modifications, just litigation, but I have had some of the same thoughts as so eloquently expressed by Andelmann.  Have you ever called a “free HUD counselor” and had your issue resolved?  Are there any unicorns out there who have received a permanent modification just by talking to your bank (aka servicer)?     I’m going to let him talk because he said it best:  (the full piece is here)

“Are you feeling me here?  The FTC’s proposed new rule would make it so a private sector lawyer could help a homeowner obtain a loan modification, but only be paid after the homeowner has received a loan modification.  That would mean that a lawyer would have to work for months and months without being paid, or without any assurance of ever being paid.  And that’s simply something that isn’t going to happen… ever.  No responsible lawyer is going to represent a client under such circumstances, nor should he or she ever do so.

At best a homeowner is being faced with uncertain outcome and complexity that they should not have to handle on their own.  For example, on one end there’s the federal bankruptcy code.  On the other there’s civil litigation against the bank.  In the middle, there are various government loan modification programs, and often additional internal bank programs.  There are also short sales, Deed in Lieus, Cash for Keys deals, property tax issues, and occurrences that can make one subject to a deficiency judgment.

If nothing else, a lawyer need not be paid for obtaining a loan modification, but for all of the work along the way.  Why would a lawyer  agree now to have a homeowner dump nine or so months worth of work on them, and then not be permitted to send a bill for what could easily be a year?  Of course, there WON’T BE A SINGLE LAWYER in the country that will do it.  Not one lawyer will offer to handle the work related to a loan modification under those terms.  So, this rule if adopted, will effectively take away a person’s right to an attorney when he or she is losing their home.

Perfect… the housing markets are in free fall… foreclosures are ravaging our citizenry… the government’s failed miserably to-date at trying to contain the damage… and the FTC is going to adopt a rule that makes it impossible for homeowners to hire a lawyer to help them avoid foreclosure.  Perfect, Mr. Leibowitz… just perfect.

And let’s not forget, when one receives a trial or permanent modification under HAMP, or another program, they are asked to sign a legally binding contract.  One that I saw was 26 pages long, if memory services… and without a doubt… written by lawyers.  So, a homeowner should not consult an attorney prior to signing these documents either.  Absurd.”

If you’re still with me, when you go to Mandelmann Matters to check out his posts, be sure to read his take on “Straight Outta Compton”—-some of us like to kill a little time and amuse ourselves.  I love it, Mandelmann!

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