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Homeowners are so desperate to find solutions to their mortgage problems they will try anything. Some lawyers and consultants have encouraged homeowners to carry out mortgage audits to assess if any irregularities were committed. In this blog we have previously pointed out how over 90% of mortgages have some kind of irregularities that could make them void.

Although it is possible to sue your bank for an illegal mortgage it is not as easy to be successful as some might want you to believe. Lawyers and loan modification agents have often included a mortgage audit in their loan modification process as a way of intimidating the lender, often through an aggressive letter sent to the servicer or lender of the mortgage. However consultants and lawyers are reporting that these letters are not having the results hoped for. Put bluntly banks are more often than not ignoring them.

Another factor that must be taken into account is the cost of litigation. Even if you have a valid case, the question is if you can afford to see it through. If you are trying to get a loan modification, the chances are you do not have money to throw around. And if there is something litigation is, is expensive. It pays to calculate the cost before you enter a David and Goliath battle with a large corporation that has dozens of lawyers at their beck and call.

Lawsuits are long and expensive endeavors that are often won by the party with more resources. Loan modification companies and private homeowners do carry out this strategy but are advised to do so only when it makes sense, they have a solid case and have the assets to see it through.

We must be careful when contracting the services of a so called expert. Many lawyers and real estate agents are simply going to a weekend seminars and calling themselves experts in foreclosures or mortgage audits. This is a very sensitive area of expertise where your home and financial security are at stake. It pays to make sure you are dealing with professionals with a proven record of success.

A good way of knowing if you are dealing with a real professional is by the kind of advice they provide and the promises they make. We must be careful when dealing with any lawyer or Loan Modification Company that makes lofty promises and 100% success guarantees. The truth is that nobody, no matter how good they are can provide these ironclad guarantees. They are often used to reel in naïve and desperate customers and steal them from their dwindling resources.

In conclusion, although mortgage audits and loan modifications can be useful tools when trying to find a way out from a mortgage foreclosure, they are paths that must be taken carefully. Litigation is costly, takes a long time to complete and is not fun. It is important to do our research and make sure we only hire experts with real experience in the field. Unfortunately the foreclosure crisis that is hitting the U.S has no quick fix and in some cases no fix at all.

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1. Loan Modifications and Forensic Loan Audits, Speak Softly with a Big Stick
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Last week was National Consumer Protection Week and the Government wanted to make the most of the heightened awareness to publish some general guidelines and advice. One of these releases was made by Florida Attorney General, Bill McCollum, on the issue of loan modification scams. This issue is right at the top of the list of complaints made to his office. The Attorney General pointed out how the desperation with which many homeowners are protecting their homes will continue to breed con artists that want to make the most of this desperation.

Not all loan modification companies are scams and some can provide specialized counsel in the somewhat complex world of loan modifications. However, there are some tell tale signs that we should keep alert to if we are dealing with loan modification companies. The Attorney General warned people from dealing with companies that ask for up-front fees on foreclosure rescue services. This is actually illegal and only carried out by loan modification agents of dubious reputation.

The Florida Attorney General advised listeners to contact their lenders before contacting third party companies or agents and to never pay up front for a loan modification. The Attorney General office is busy in Florida with over 90 companies being investigated and 20 open lawsuits.

The public statement echoes the words of advice shared by many experts. These guidelines highlight the main issues borrowers must be aware about when dealing with loan modification companies in order to avoid scams.

These tips include:

1)      Keep well away from companies that “guarantee” they can save your home from foreclosure. This is like car salesman guaranteeing that if you buy a certain model you will get a date with the hottest girl in the class. It might help, but ultimately the decision is out of the salesman’s hands.

Only the lender can decide if a loan modification is granted or not. It is simply not true that any loan modification application method can assure your success.

2)      If your loan modification agency tells you to not contact your lender, lawyers or financial counselors, RUN! This is like the kidnapper asking the parents not to contact the police. The reason why scammers ask you not to contact anybody is just as obvious.

3)      Finally, if a business asks you to make payments directly to them and to stop paying your lender, you can be sure you are dealing with criminals. Run to your nearest police station and sue the crooks.

The fact is that the government has subsidized the creating of hundreds of counseling offices around the country to provide help to homeowners that are struggling with their mortgages. You are well advised to visit these free counseling agencies.

However, if you do not trust these agencies, still cannot tell the difference between an NPV test and a hardship letter, but still need a loan modification, make sure you find a reputable company that is not simply trying to take advantage of your situation.

Related posts:

1. Loan Modification Scams: Oregon AG Comes To The Rescue
2. California trys to deter loan modification and foreclosure rescue scams
3. Loan Modification Company Scams How to Avoid Them

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1. Loan Modification Scams: Oregon AG Comes To The Rescue
2. California trys to deter loan modification and foreclosure rescue scams
3. Loan Modification Company Scams How to Avoid Them

It is no secret that the Obama administration has a lot vested in the success of the Loan Modification Program, also called the Home Affordable Modification Program (H.A.M.P). In order to help the program along the government has provided a long list of incentives, bonuses and other methods in order to encourage lenders and banks to do their part in making the program work.

First it was financial incentives in the form of cash payments for every completed loan modification of up to $4,000 over three years. This didn’t have the result they hoped for so the administration started naming and shaming tactics where underperforming banks or lenders were published on a list of the worst loan modifiers in the industry while the better performing banks were prized with kudos and positive publicity for “helping troubled homeowners”.

Recently the government has also added to the prize generous capital risk-weightings for banks that perform well with their loan modification application to completion rates.

Those tactics didn’t really lift the program off the floor, of the 750,000 applicants that have entered the loan modification program three month trial only 31,000 have to date actually received a permanent modification to their loan.

This is why the administration started to show its meaner side. Banks and lenders that did not support the cause have been threatened with fines, increased government scrutiny and recently even lawsuits.

Blown Mortgage readers will remember the lawsuit Ohio Attorney General Richard Cordray filed against New York based Barclays Capital Real Estate, doing business as HomeEq Servicing.

The lawsuit details that HomeEq / Barclays has been accused of issuing unfair loan modification agreements and providing inadequate and incompetent customer service to Ohioans who were at risk to losing their homes to foreclosures. HomeEq is accused of forcing troubled homeowners to sign one sided agreements that were unfair and deceptive. Homeowners were required, for instance, to realease HomeEq of all liabilities (which you can’t really do), pay extra fees (not supposed to that either) and waive their own right to defense (not a very popular measure with the Attorney General).

In addition to this Barclays was accused of breaking Ohio’s Consumer Sales Practices Act (CSPA) through their unsatisfactory customer service by not returning calls or responding to enquiries.

The question is this the real reason Ohio Attorney General is suing Barclays. I would say no. If you read carefully the statement of Mr. Cordray it is clear that the main complaint is “unfair” and “indadequate” customer service with loan modifications. Cordray is further reported to say:

There has been ample time for loan servicers to strengthen their efforts and start making a significant difference in preventing home foreclosures,” Cordray said. “Unfortunately, many servicers have instead repeatedly chosen to aggravate the crisis through noncompliance and excuses. As I see it, for every excuse, hundreds of families become more vulnerable to losing their homes. In Ohio, we have zero tolerance for any more excuses.”

If you check the latest servicers loan modification performance lists you will quickly see that HomeEq was way down there with 657 trial loan modifications and zero completed permanent loan modifications.

It doesn’t take a leap of imagination to see that the Obama administration has decided to start suing underperforming servicers and has started with a British company that has recently entered the industry. Targeting a foreign company could be seen as a warning shot to big banks like JP Morgan and Wells Fargo that have a measly conversion rate of 3 to 4 percent on their loan modifications.

Related posts:

1. Rogue Loan Modification Servicers, What Are The Signs?
2. Loan Modification Low Numbers, Why?
3. Loan Modification Success Report, The Truth Is Far Worse

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1. Rogue Loan Modification Servicers, What Are The Signs?
2. Loan Modification Low Numbers, Why?
3. Loan Modification Success Report, The Truth Is Far Worse

During the housing boom, mortgage lenders were doling out the dough, giving loans to people who could never have qualified before.