Posted by Rhonda Skansi on 1/21/11 3:15pm
Msg #369579
skeptical.... should I do it?
Got a call this morning from American Economic Solutions (however, the gal introduced herself as a loan specialist) to do a loan mod this afternoon. I asked if it was a mod or a mod application. She said it was the loan mod. I just got the docs and its an application. The signers are also being charged $3000 in which I am suppose to collect...along with a check for my fee. Since the caller wasn't honest with me....I don't want to do it. any advise?
| Reply by Linda_H/FL on 1/21/11 3:17pm
Msg #369580
The true questions is CAN you do it?
I will not get involved with collecting up-front fees here because I know they're illegal in this state.
If they're illegal in your state - do you really want to be involved in that?
Just a thought.
| Reply by Linda_H/FL on 1/21/11 3:19pm
Msg #369581
Or do I sense some facetiousness here??...::) n/m
| Reply by John Schenk on 1/21/11 3:35pm
Msg #369584
FTC Bans Up-Front Loan Modification Fees
In an effort to prevent unethical mortgage modification companies from taking advantage of consumers, the Federal Trade Commission (FTC) has enacted a new rule to prohibit up-front consulting fees for residential mortgages. The FTC felt they needed to protect consumers who have filed over 800 complaints nationally against mortgage modification companies. The new rule takes effect on January 31, 2011, and prohibits mortgage modification companies from receiving fees before a loan modification has been negotiated and the consumer is satisfied with the outcome.
However, people in the industry are divided over the new rule. While some agree with the FTC that this is a step forward in protecting struggling homeowners, others say it will put loan modification companies out of business. Mortgage modification counselors argue that they need the money to keep their business alive since they have tremendous difficulty collecting payment once the loan modification has been negotiated.
Opponents of the new rules also contend that it was driven by banks. Banks have little interest in helping struggling homeowners avoid foreclosure by lowering their interest rates and monthly payments. Most banks have been unwilling to work with homeowners who do not have advocates. The average homeowner does not have the expertise to negotiate a mortgage modification with the bank. However, a reputable loan modification consultant does have that expertise. They know the ins and outs of renegotiating a home loan and can be successful in getting consumers the help they need.
There are reputable loan modification consultants who are licensed and have never had a complaint filed against them. In fact, most of the companies charged with unethical business practices were not licensed. The Nevada Legislation will allow licensed mortgage modification companies to get paid in advance if they put the money in a trust account until the loan has been renegotiated and the client is satisfied. Additionally, before a mortgage modification company can be licensed, it will be required to post surety bonds in the amount of $75,000 to $100,000.
Even with these requirements, it could be difficult for homeowners to recoup their money if the company goes out of business. The only recourse for homeowners is to file a claim in small claims court. If the homeowner wins their case, they must first try to get the defunct loan modification company to pay the judgment. If they are unsuccessful, they can request that the bond company to pay the judgment.
However, the new FTC rules pose a major problem for reputable loan modification consultants. Since the new rules says a client does not have to pay any fees until they are satisfied with the outcome, then can legally walk away without paying any fees, even if the consultant has been legitimately pursuing a loan modification on the homeowner's behalf. While the intent may have been to protect consumers, the fallout may hinder those same consumers from getting the help they need.
Judith Ceja writes articles for MyModifiedMortgage.com
For more information on mortgage modifications go to http://www.mymodifiedmortgage.com
Article Source: http://EzineArticles.com/?expert=Judith_Ceja
| Reply by John Schenk on 1/21/11 3:39pm
Msg #369585
FTC Link on effectiveness of ban of up front fees
For Release: 11/19/2010
FTC Issues Final Rule to Protect Struggling Homeowners from Mortgage Relief Scams
Rule Outlaws Advance Fees and False Claims, Requires Clear Disclosures
Homeowners will be protected by a new Federal Trade Commission rule that bans providers of mortgage foreclosure rescue and loan modification services from collecting fees until homeowners have a written offer from their lender or servicer that they decide is acceptable.
“At a time when many Americans are struggling to pay their mortgages, peddlers of so-called mortgage relief services have taken hundreds of millions of dollars from hundreds of thousands of homeowners without ever delivering results,” FTC Chairman Jon Leibowitz said. “By banning providers of these services from collecting fees until the customer is satisfied with the results, this rule will protect consumers from being victimized by these scams.”
The FTC is issuing the Mortgage Assistance Relief Services (MARS) Rule to protect distressed homeowners from mortgage relief scams that have sprung up during the mortgage crisis. Bogus operations falsely claim that, for a fee, they will negotiate with the consumer’s mortgage lender or servicer to obtain a loan modification, a short sale, or other relief from foreclosure. Many of these operations pretend to be affiliated with the government and government housing assistance programs. The FTC has brought more than 30 cases against operations like these, and state and federal law enforcement partners have brought hundreds more.
Advance fee ban
The most significant consumer protection under the FTC’s new rule is the advance fee ban. Under this provision, mortgage relief companies may not collect any fees until they have provided consumers with a written offer from their lender or servicer that the consumer decides is acceptable, and a written document from the lender or servicer describing the key changes to the mortgage that would result if the consumer accepts the offer. The companies also must remind consumers of their right to reject the offer without any charge.
Disclosures
The Rule requires mortgage relief companies to disclose key information to consumers to protect them from being misled and to help them make better informed purchasing decisions. In their advertising and in communications directed at individual consumers (such as telemarketing calls), the companies must disclose that:
* they are not associated with the government, and their services have not been approved by the government or the consumer’s lender;
* the lender may not agree to change the consumer’s loan; and
* if companies tell consumers to stop paying their mortgage, they must also tell them that they could lose their home and damage their credit rating.
Companies also must explain in their communications to consumers that they can stop doing business with the company at any time, can accept or reject any offer the company obtains from the lender or servicer, and, if they reject the offer, they don’t have to pay the company’s fee. The companies also must disclose the amount of the fee.
Prohibited claims
The MARS Rule prohibits mortgage relief companies from making any false or misleading claims about their services, including claims about:
* the likelihood of consumers getting the results they seek;
* the company’s affiliation with government or private entities;
* the consumer’s payment and other mortgage obligations;
* the company’s refund and cancellation policies;
* whether the company has performed the services it promised;
* whether the company will provide legal representation to consumers;
* the availability or cost of any alternative to for-profit mortgage assistance relief services;
* the amount of money a consumer will save by using their services; or
* the cost of the services.
In addition, the rule bars mortgage relief companies from telling consumers to stop communicating with their lenders or servicers. Companies also must have reliable evidence to back up any claims they make about the benefits, performance, or effectiveness of the services they provide.
Attorney exemption
Attorneys are generally exempt from the rule if they meet three conditions: they are engaged in the practice of law, they are licensed in the state where the consumer or the dwelling is located, and they are complying with state laws and regulations governing attorney conduct related to the rule. To be exempt from the advance fee ban, attorneys must meet a fourth requirement – they must place any fees they collect in a client trust account and abide by state laws and regulations covering such accounts.
All provisions of the rule except the advance-fee ban will become effective December 29, 2010. The advance-fee ban provisions will become effective January 31, 2011.
The FTC rulemaking proceeding was conducted pursuant to Congressional legislation sponsored in 2009 by Senators Jay Rockefeller and Byron Dorgan. The Final Rule applies only to entities within the FTC’s jurisdiction under the Federal Trade Commission Act, which excludes, among others, banks, savings and loans, federal credit unions, common carriers, and entities engaged in the business of insurance. In June 2009, the FTC issued an Advance Notice of Proposed Rulemaking seeking comment on the practices of for-profit mortgage relief companies. In February 2010, the FTC announced a Notice of Proposed Rulemaking and sought comments from interested persons, including advocates for consumers, the business community, and the legal profession.
Click here for facts about mortgage consumers’ rights.
The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics.
MEDIA CONTACT:
Office of Public Affairs
202-326-2180
STAFF CONTACT:
Laura Sullivan or Evan Zullow
Bureau of Consumer Protection
202-326-3224
(MARS)
(FTC File No. R911003)
http://www.ftc.gov/opa/2010/11/mars.shtm
| Reply by John Schenk on 1/21/11 3:42pm
Msg #369586
Up-Front fees illegal nationwide 1/31/11-Illegal in your
state now? It becomes applicable nationwide, with some exceptions, the end of January. Until then it could be illegal in your home state, which would still be in effect.
JMLO
JJ
| Reply by John Schenk on 1/21/11 3:52pm
Msg #369587
Washington AG link
The Washington State Department of Financial institutions requires that any provider offering loan modifications be licensed as a loan originator, mortgage broker or consumer loan company. Check the DFI Web site at www.dfi.wa.gov or call 1-877-RING-DFI.
http://www.atg.wa.gov/pressrelease.aspx?id=23408
| Reply by Jessica Ward on 1/22/11 1:42am
Msg #369619
Re: Up-Front fees illegal nationwide 1/31/11-Illegal in your
Hey--thanks for this info--I didn't hear this before now. I've been skeptical of these mods for a while, and I've been following the AG's reports on them, but lost track of where things were going officially. So glad to see that this practice is going away.
| Reply by John Schenk on 1/21/11 4:03pm
Msg #369588
I guess she's out there doin a loan mod LOL n/m
| Reply by HisHughness on 1/21/11 4:23pm
Msg #369591
John, could you give us your input on this thread, please? n/m
| Reply by John Schenk on 1/21/11 4:34pm
Msg #369594
What else you wanna know, Hugh? LMAO
Actually, I looked further as I knew the FTC had a ban coming up on it. That ban, effective January 31, affects ALL states, which is good info for anyone even considering it on the effective date, or after.
As to the question posed, I think she could have done it in Washington so long as the company was licensed as a loan originator, mortgage broker or consumer loan company. JMLO (Just My Lay Opinion) I provided the link from the Washington AG site. Didn't find it all at once or woulda put it in one post. I haven't posted much here in a while so I wanted to take up some space, brutha. LOL
JJ
| Reply by Rhonda Skansi on 1/21/11 4:27pm
Msg #369593
Re: I guess she's out there doin a loan mod LOL
hey John thanks for your input! Nope.... as soon as I noticed that I had been lied to.....I decided not to do it. Your posts were very informative... thanks again
| Reply by John Schenk on 1/21/11 4:35pm
Msg #369595
You're welcome! :-) n/m
| Reply by MW/VA on 1/21/11 7:58pm
Msg #369605
Re: I guess she's out there doin a loan mod LOL
Good for you, Rhonda. If you had done a search under loan mod apps you would have found more than enough info on the subject. I got the point that you were tricked into it, and some might have gone ahead with it. I haven't touched those from the beginning, and have been very glad for that decision.
| Reply by Linda Snell on 1/21/11 4:46pm
Msg #369596
Illegal in Iowa unless you are an Iowa licensed lawyer. n/m
| Reply by Claudine Osborne on 1/21/11 9:43pm
Msg #369612
Re: Illegal in Iowa unless you are an Iowa licensed lawyer.
Thanks John for the great information! I appreciate it!
| Reply by LKT/CA on 1/21/11 9:55pm
Msg #369614
<<<I asked if it was a mod or a mod application. She said it was the loan mod. I just got the docs and its an application.>>>
They'll *call* it any name other than what it really is - a loan mod APPLICATION. Next time, ask more questions during the initial call. This way you won't waste your time accepting the assigment then giving it back. And more IMPORTANTLY, you won't book such an appointment and lose money by turning down other legitimate calls for signings - only to find out that *this* appointment is a no-go.
| Reply by Jessica Ward on 1/22/11 1:40am
Msg #369618
Send it back--and see WA's atty general warnings on mods...
Atty General Rob McKenna has come out a couple of times and talked about loan modifications that cost money. Basically, it's not OK. I know there were a few bills about it in the legislature in the past couple of sessions, but I stopped taking mods last year unless it was direct from a bank. Way too much risk!
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