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Mortgage Brokers Responsible for Subprime Loans Find New Work as Loan Modification Consultants

July 27, 2009

As Diamond Bar loan modification lawyers, we have known for some time that many of the loan modification companies that popped up in the past year are run by former mortgage brokers whose business has dried up. In many cases, these brokers are the same people responsible for selling thousands of subprime and exotic loans across Southern California -- raising questions about whether they can be trusted. On July 20, the New York Times ran an article that made the same point. As one broker-turned-consultant brazenly told the Times, "We just changed the script and changed the product we were selling."

The article focuses on Irvine-based Federal Loan Modification Law Center, a loan modification company started by several former employees and executives from subprime mortgage lenders and brokers. It was sued by the Federal Trade Commission in April for allegedly misleading and defrauding clients and is now defunct, unable to pay employees. Like other loan modification companies, the article said, employees at FedMod used their sales experience to convince panicked borrowers to hand over credit cards. Thanks to their experience, FedMod's founders also knew to hire an attorney, so that it could charge up-front fees that would otherwise have been illegal under California law. Former employees at the company described their colleagues as:

  • Making up unrealistic success rates out of thin air
  • Misleading clients into believing the company was backed by the federal government
  • Misleading clients into thinking an attorney would work on their cases
  • Promising interest rate reductions and loan structures they couldn't deliver
  • Taking clients' money, then failing to turn over files for processing
  • Publicly mocking clients' panicked voice mail messages

While our Murrieta loan modification attorneys do not believe that all former mortgage brokers or lenders are necessarily crooked, we're glad the Times is calling attention to the connection. Many mortgage brokers and lenders who sold subprime loans misled buyers and used pressure tactics to sell people loans they couldn't afford. Now that the housing bubble has burst and they are out of business, some of these same people are taking their questionable ethics into the loan modification business. Essentially, they are using industry experience and the same high-pressure sales tactics they used to sell mortgages to exploit people backed into a financial and emotional corner -- sometimes by them or their colleagues in the lending industry. Consumers looking for help with a loan modification should know as much as possible about these companies before they sign a check.

Anaheim-based Howard Law LLP has an active practice representing Southern California borrowers seeking loan modifications. Our Escondido loan modification attorneys have been in business for years -- unlike the loan modification companies that have mushroomed over the past year -- and are proud of our clean, publicly available professional ethics record. We cannot promise specific outcomes, but we can promise that lenders listen when we call, because we are attorneys -- and to lenders, that means a lawsuit may not be far behind. In fact, we can use any evidence of predatory lending to help secure a fair and sustainable loan modification. Our goal is always to lower your monthly payment to a number you can afford over the long term and keep you in your home.

If you're facing foreclosure and you'd like help from an experienced, professional attorney, you should call Howard Law as soon as possible for a free, confidential consultation. You can reach us through our Web site or call toll-free at 1-800-872-5925.