Earlier this week California Attorney General, Gerry Brown placed a legal silver bullet in the hearts of hundreds of loan modification firms across the state. With one swift press release and a subsequent letter to the offending parties, Brown has put an end to California’s most recent gold rush.
This past Wednesday the Attorney General’s office issued a stern warning to loan modification companies doing business in the state, register with his office, post a $100,00 bond or face civil and possible criminal charges for failing to comply.
As expected, word on the loan modification street spread like a Malibu wild fire. My sources immediately started leaking tips to me about various firms around the Southern California region and their plans. Most are simply closing down shop. Some are leaving the country. Yes, true story folks….
The first thing that has the remaining loan modifications firms worried is that they have to deal with the most powerful prosecuting state attorney in California. They have seen Mr. Brown put fraudsters away for years. They are scared.
The second issue facing loan mod companies is the fact that the have to post a $100,000 bond in addition to registering with the Attorney General’s Office. My sources stated that these bonds are not so easy to obtain and in fact down right expensive.
In order to purchase a $100k bond in the state of California to do loan modifications, the firm owner would have to place $100,000 of their own cash in turn for being bonded. I guess this type of high risk bond is a tit for tat policy. My guess is most of these chumps are not cash liquid enough to pay their next BMW payment, let alone pull out a $100k.
Several companies are rumored to have closed down or are in the process over the weekend. Green Credit Solutions, a large firm in Orange County shut down their websites, 800# and can’t be located by me or others looking for the company. They may be the BernieMadoffs of loan modifications, I dunno?
Some plan to process the remaining files in their pipelines and not take in any new business to avoid their clients losing their homes. But they are also worried that they can’t even do that with the new legal restrictions. They can’t sleep.
Huge Southern California firms with hundreds of employees and thousands of homeowners in process were on the AG’s list. Companies like Green Credit Solutions and the Feldman Law Center have a lot on the line and everyone is waiting to see the end result.
The major problem that has not been addressed by these agencies is the fall out from these companies being shut down. Many homeowners are left with unanswered questions and unreturned phone calls. Some fear that they will lose thier homes.
There really needs to be a system in place by the California AG, Bar, FTC and DRE for these scammed homeowners to be helped once a firm is shut down. To the best of my knowledge, once a loan modification company is served with a cease and desist order or lawsuit, they have to cease all activities and that includes trying to process these files.
Many homeowners turned to these firms because they could not get free help from a non-profit and many have second homes and investment properties that can be saved if these people are helped correctly.
The good news is that hundreds of shady and illegal companies will now be out of business. The bad news is that thousands of homeowners are now left with unanswered questions and empty wallets.
The loan modification business is not dead, yes it has been hampered and riddled with fraudsters specifically in California and Arizona. There are many of us working to bring legitimacy to this sector of the financial industry and will comply with the necessary regulations.
Personally I am glad the Attorney General is forcefully purging these rats from doing any more harm. Once 1st-Trust.Net is in a position to post the $100 K bond we will be entering into the California market to assist homeowners.
The Loan Modification Corporation will register with the appropriate parties and continue to differentiate ourselves with the highest level of professional and ethical values and standards. If you are truly working to help, doing the right thing and communicating with your clients, than you have no reason to hide or run for that matter.
Help is on the way and we look forward for the opportunity to earn your business!
Thank you for your consideration.
Mr. Sharaf
these companies wouldn’t even have to exist if the lenders would have just worked with the clients in the first place.
this is good new for the people of CA. There are alot of people that simply take peoples money and do not do anything.
Those people should be closed down…but there are some attorneys that do a good job for struggling families etc…
I agree with Mr. Sharaf. With our economic status today, a loan modification may be the only way for a homeowner to save their home.
Joe banks are not in the business of educating their clients about how to negotiate against them so that they generate ultimately less cash flow. Further most of the people working to do so call modifications at the lenders and servicers are no better than call center rep who have never done a mortgage.
I do not believe it is in the best interest of the borrower to work with the lender or service company directly. I am sure many would like to engage an attorney but this is often the most expensive option. Attorney’s are just as new to this industry as an true loan modification company and this is secondary to mosy attorney’s.
You do have to be inimate with the process and know when predatory lending has been inflicted so that you can referr the case out to an attorney when it is appropriate.
Thank you for your consideration.
Mr. Sharaf
loanmodification@1st-trust.net
I am glad these crappy mod companies are being put out of business and that a law firm can work with clients knowing that they are helping them and making sure they are protected and not taken advantage of. I am a paralegal and love helping my clients….
I have worked for both Loan Mod Companies and “Attorney Loan Mod Company”, it is unfair to say that either is better or give on the go ahead because he has some BS degree. I assure you this, Other than legal aspects of suing a lender (which happens rarely), I can good head to head in helping with a successful mod with ANY attorney
I agree that the loan mod business is not dead. While it’s great that the “scam” businesses in CA are being shut down there are actually legitimate businesses that have the people who need help best interest at heart. The large lenders are so far behind in getting paperwork processed you almost have to wonder what would happen if you didn’t have a “Plan B.” For those that are genuinely trying to assist others you are very much appreciated!