President Barack Obama
Corporate America still has not learned from the lesson that is the current mortgage crisis, which began in 2008 and continues unabated.
Wall Street is back to issuing risky financial instruments, with investor money, this time via loan modifications that are costly to the American people, in greedy attempts at gaining increased revenues.
For example, there is a Miami company that charges a service fee of $24,000 for the year, at a rate of $2,000 per month, to do a loan modification, with the alleged promise, the homeowner will be free of mortgage payments for 12 months, then given a new mortgage.
However, what they do not tell you is, that year is not actually free and will be piled on to the new exorbitant mortgage, along with other miscellaneous fees.
The government needs to move quickly to put legislation in place, dictating how much companies can charge consumers for loan modification services and legally compel them to disclose all the facts relating to their service.
There are companies and lawyers lying to home owners, collecting fees, telling them they do not have to pay their mortgage for many months, while the corporate entity works to obtain a loan modification, not informing them, the debt they owe will be significantly higher at the end of the 12 months, by 20-50% above their current mortgage.
Miami is not the only place in America a new breed of mortgage fraud is transpiring in the loan modification sector of finance. The proceeding New York Times article excerpt, highlights another treacherous company, FedMod, that is being sued for defrauding 650 homeowners via deceitful loan modification programs.
Back to Business
Cashing In, Again, on Risky Mortgages
Published: July 19, 2009 - LOS ANGELES — From the ninth floor of a downtown office building on Wilshire Boulevard, Jack Soussana delivered staggering numbers of mortgages to homeowners during the real estate boom, amassing a fortune.
By Mr. Soussana’s own account, his customers fared less happily. He specialized in the exotic mortgages that have proved most prone to sliding into foreclosure, leaving many now scrambling to save their homes.
Yet the dangers assailing Mr. Soussana’s clients have yielded fresh business for him: Late last year, he and his team — ensconced in the same office where they used to broker mortgages — began working for a loan modification company. For fees reaching $3,495, with most of the money collected upfront, they promised to negotiate with lenders to lower payments on the now-delinquent mortgages they and their counterparts had sprinkled liberally across Southern California.
“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.”
Mr. Soussana’s partners at FedMod, as the company is known, were also products of the formerly lucrative world of high-risk lending. The managing partner, Nabile Anz, known as Bill, previously co-owned Mortgage Link, a California subprime lender, now defunct, that once sold $30 million worth of loans a month.
Jeffrey Broughton, one of FedMod’s initial partners, served as director of business development at Pacific First Mortgage, a lender that extended so-called Alt-A mortgages for borrowers with tarnished credit for Countrywide Financial, which lost billions of dollars on bad mortgages before being rescued in an acquisition.
FedMod is but one example of how many of the same people who dispensed risky mortgages during the real estate bubble have reconstituted themselves into a new industry focused on selling loan modifications.
Despite making promises of relief to homeowners desperate to keep their homes, FedMod and other profit making loan modification firms often fail to deliver, according to a New York Times investigation based on interviews with scores of former employees and customers, more than 650 complaints filed with the Better Business Bureau, and documents filed by the Federal Trade Commission in a lawsuit against the company.
The suit, filed in California federal court, asserts that FedMod frequently exaggerated its rates of success, advised clients to stop making their mortgage payments, did little or nothing to modify loans and failed to promptly refund fees. The suit seeks an end to FedMod’s practices, and compensation for customers...
