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: CL&P Blog

NCLC Issues Report on Loan Modification Scams

By Brian Wolfman

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by Brian Wolfman

On Friday, the National Consumer Law Center issued this report on loan modification scams. The beginning of the report's executive summary describes the problem:

As the number of foreclosures continues to grow, a new ?industry? has emerged seeking to profit from desperate homeowners who are trying to save their homes. For-profit loan modification services claim to help homeowners obtain changes in the terms of their mortgage loans that will make the loan more affordable and, thereby, help the homeowner save their home from foreclosure. Unlike older foreclosure rescue scams that seek to bilk homeowners of their equity, loan modification scams are more interested in homeowners? spare cash. They make extravagant and unverifiable claims regarding their ability to help but too often the homeowner gets nothing after paying thousands in fees they can ill afford to spare.

The report proposes a number of legislative and regulatory solutions including a proposal that the Federal Trade Commission prohibit the industry from charging any up-front fees and instead requiring that the fees be tied to benefits actually provided to the homeowners -- that is, "prohibiting fees until the homeowner obtains an affordable, sustainable loan modification."

Check out NCLC's press release as well.

Full post as published by CL&P Blog on July 13, 2009 (boomark / email).