As of February 1st, all companies that provide loan modification services are expected to be fully compliant with new Federal Trade Commission guidelines. These guidelines were created to protect consumers from loan mod scams that usually involved companies that would take money up front and never speak to their clients again.
With house prices continuing to fall, bringing on more and more foreclosures, proper foreclosure defense is more important than ever and now homeowners will be less likely to end up being victimized once again. Modification companies that are not law firms are essentially out of business now because they are not allowed to charge up front. Law firms that offer modifications as well as foreclosure defense will still charge up front for retainers. There are also stiffer sanctions for companies and law firms that make misleading statements and have improper record keeping.
Even though these rules were first announced months ago, according to Diane Lade with the Sun Sentinel, this hasn’t stopped many companies from getting into trouble:
“Some Florida foreclosure rescue companies and law firms that offer loan modifications continue to charge upfront fees and do little to help struggling homeowners, according to thousands of complaints filed with state regulators.”
“… The Florida Attorney General has five active lawsuits in South Florida and four in the Orlando area involving companies offering mortgage or loan modifications.
“The Florida Bar, which monitors and disciplines attorneys, has 163 cases under investigation involving 49 lawyers, in regards to loan modifications. That’s compared to 67 cases the Bar is reviewing for foreclosure fraud, 20 cases related to mortgage fraud and 30 cases involving foreclosure defense fraud. The bar closed 258 modification cases last year, and so far has issued sanctions in 84 cases involving seven lawyers.”
The article specifically lists companies such as American Residential, Financial Management Services, and Mortgage Crisis Solutions, among others.
Foreclosure Fraud to Be Heard by Florida Supreme Court
Following the lead of other states, Florida’s Supreme Court will also be hearing a foreclosure case in the near future. Like so many others, Roman Pino’s foreclosure case was dropped by its plaintiff, the Law Offices of David Stern, but was then singled out by an appeals court so that the Supreme Court could rule on the impact of forged documents on homeowners’ rights statewide.
“We conclude that this is a question of great public importance, as many, many mortgage foreclosures appear tainted with suspect documents,” wrote the court.