The Federal Trade Commission, or FTC, is nearing the end of their hearings on proposing regulations on how prfessional mortgage modification firms get paid for their service. Mandelman and I both published articles about the misguided direction of the FTC at the start of these hearings. Now, Mandelman writes an even more in-depth criticism of these hearings.
Mandelman has appeared in person to the FTC, several hundred banking lawyers at the American Bar Association’s Consumer Financial Services Conference, and Tom Pahl of the FTC. He has made it crystal clear that the answer is not to reduce the number of legitimate options homeowners have to get help getting their loans modified. Mandelman and I both know that there just isn’t the proof that the nation is overrun with scammers. Mandelman spends significant space to illustrate this.
As of mid-January,2010, the California State Bar had resignations from 13 lawyers, and three trials were pending at the State Bar Court, Layton said. Settlements have been reached with lawyers in five cases to accept discipline, he said. California has roughly 206,000 lawyers. Not much proof there.
The FTC announced 22 actions against loan modification firms since the nation’s housing crisis began.
22 in the whole nation?
Illinois has prosecuted 2 mortgage modification firms. Coincidentally, fewer than the number of ex-Illinois governors in prison.
Mandelman goes on to criticize the FTC proposal that no firm get paid for a mortgage modification until it is completed. In short, it won’t work, and is unethical. The long story is linked below. There is no other area of law that requires guaranteed results before payment. As Mandelman succinctly points out, Attorneys don’t modify mortgages, banks modify mortgages.
I personnally called more than one hundred distressed mortgage holders. All were trying to get a mortgage modification on their own. One had successfully done so. One of a more than a hundred. I never did find out if the mortgage modification actually benefited her.
No other area of law attempts to tell a private citizen whether they need legal assistance or not. The FTC has no business doing so. No attorney can afford to put in months of work waiting to get paid. No other profession is expected to do so. The effect of the FTC’s proposed rule as it stands, would be to deprive American families from the guidance and comfort that being represented by legal counsel provides. There is no statistical basis for the new rule, no hard data on how many lawyers are “scammers,” and even less on the relative efficacy of being represented by legal counsel as opposed to handling it alone.
The lenders and servicers know precisely how many and specifically which homeowners hired lawyers and/or other third parties to help them, and which didn’t. Why aren’t these statistics published? Mandelman never answers this question. Rather, he just pounds home the obvious answer. I’m here to state the obvious. The banks do not want anyone to know how successful attorneys are in negotiating beneficial and affordable mortgage modifications. The fact is that attorneys make the lenders behave. Banks are like two-year-olds. They do not like being told to behave.
Every one of my clients gets a letter from their lender whining about them runnibg off to that nasty old lawyer for a mortgage modification that they would have been happy to provide. This is after months of being ignored and neglected. It was recently reported that there are three bank lobbyists for every single legislator in Washington, D. C. They are busy full time making appointments with those legislators. Would anyone care to guess at the agenda for those meetings? All anyone has to do is read the new Home Affordable Foreclosure Act (HAFA) to see how legilation written by the banks will turn out. Anyone have a guess as to how much time these lobbyists are spending twisting the ears of the FTC?
Mandelman makes an irrefutable argument as to the success rate of negotiated mortgage modifications that save the distressed homeowner 20%. He should have focused on the 31% of gross monthly income guideline instead. That’s the HAMP guideline.
Attorneys can’t take clients to court for non-payment of fees. Read Mandelman to see convicingly why.
There’s something crooked about a federal government advising for a year that a distressed homeowner call an ineffectual HUD counseling department and simultaneosly requiring an attorney to work for free until that same mortgage modification is aquired.
Quoting Mandelman:
“Laws are enacted in this country to punish criminal behavior, not to stop such behavior. If this new rule preventing law firms from being compensated until a lender or servicer grants a loan modification is adopted by the FTC, all we will accomplish is the removal of the legitimate and ethical attorneys from the marketplace.”
“The legitimate attorneys, however, the ones that don’t want to risk being out of compliance with the new rule’s restrictions, don’t have to, and more importantly simply can’t work without compensation will have, as they say, left the building.”
Mandelman writes extensively as to a better solution than the FTC proposal. As I read it, it duplicates the upshot of California SB94.
If anyone wants to see the failure of any mortgage modification measure in this mortgage crisis, just let the FTC prevail. Can you say, “short sale crisis?”
We now know that the Federal Trade Commission did not prohibit upfront fees for attorneys in their MARS Rule. But they did make it so hard to collect those fees that the thundering herd you hear is mortgage modification attorneys running for the door.
How may I help?
Powered by Fast Secure Contact Form
I read every comment. Please use the Comment box below and tell me what you think.
The internet being what it is, certain search terms need to be empahasized so that you can find the best information. The REST Report is best classified as loan modification software, or mortgage modification software. It’s claim to fame is that you use it to calculate Net Present Value exactly the way the banks do, using the same software. It is best used as a do it yourself loan modification or do it yourself mortgage modification. For some reason, loan modification 2010 and mortgage relief 2010 are popular search terms.
This YouTube video says it all. Go here: How to Get A Beneficial Loan Modification Now Please ‘Like’ the video, will you? That makes it easier for others to find.
Read Mandelman here
tags: do it yourself mortgage modification,do it yourself loan modification,loan modification software,mortgage modification software,foreclosure alternatives,loan modification hardship letter,calculate net present value, mortgage relief act, rest report,mortgage loss mitigation, loan modification 2010, mars rule, foreclosure alternatives, loan modification process,loan modification services,
Originally posted 2010-05-11 09:27:27. Republished by Blog Post Promoter
{ 1 trackback }