An interesting comment popped up to one of my previous posts. It reads:
Loan Modification advisors help you navigate through this complicated industry and its converse regulations. Watch out for unethical companies advertising to provide Loss Mitigation, Loan Modification and stop foreclosure services. Home owners should only use companies that offer 100% Guarantees or use an attorney-backed firm .
The commenter appears to be an attorney running a loan modification company in California. I have posted before about the need to avoid all companies and lawyers advertising loan modification help. You are wasting your money, even if the firm is “attorney-backed.”
I write this as a warning to people out there. These are tough times for everyone, including attorneys, and not all attorneys are upholding the oaths they took. Just a few days ago, there was a law.com newswire story about the California Bar identifying 16 lawyers who are under investigation for running loan modification scams. Let’s take a look at some of the names of these lawyers and their firms:
- David Arase, Arase Law Firm and National Housing Assistance;
- Stephen Burns, Legal Group Network;
- Robert Buscho, United Law Group;
- Nicholas Chavarela, Rodis Law Group and America’s Law Group;
- Steven Feldman,Feldman Law Center;
- Paul Lucas, Lucas Law Center;
- Brandon Moreno, U.S.Foreclosure;
- Jeffrey Nemerofsky, U.S. Advocacy Law Group and U.S.Financial Products;
- Adrian Pomery, U.S. Foreclosure;
- Ronald Rodis, Rodis Law Group and America’s Law Group;
- Mark Shoemaker, Advocates for Fair Lending;
- Marc Tow, Marc Tow and Associates;
- Michael Yellin, A Fresh Start Loan Modification; and
- Sean Rutledge, United Law Group
Apart from a few of these law firms, most have names that include words like “Group” “Network” “Law Center” and even a few invoke the terms “U.S.” or “United.” Call me old fashion, but what happened to simple law firm names like Dewey, Cheatem, & Howe? And what is a “Law Center”? To me it sounds like a hybrid YMCA that offers free wills and trusts planning. For all you folks in Arizona, you should know that our rules of ethics prohibit law firms from using trade names such as “United Law Group,” “Phoenix Bankruptcy Lawyers,” or anything that nature. If you encounter such a firm, run.
So back to the comment on my blog. The commenter appears to be an attorney in Beverly Hills. I went to his website and his firm is offering one service: loan modifications. I find that strange since his post on my blog said in no uncertain terms: “Watch out for unethical companies advertising to provide Loss Mitigation, Loan Modification and stop foreclosure services.” Those are exactly the services he is advertising! He may be a late-comer to this game, but I guarantee you he is finding people to pay him for a loan modification help. Remember one thing, an attorney cannot guarantee you a loan modification, and lenders have no real incentive to lower the principal on home loans right now. Therefore, any firm that offers “100% Guarantees” is simply using that as a sales pitch. (Bias disclosure: I currently have a consumer fraud lawsuit pending against a California loan modification company who promised a 100% Money Back Guarantee).
In my practice, I know of only one legal tool that can “guarantee” a loan modification. It involves stripping a second mortgage in a Chapter 13 bankruptcy or cramming down a mortgage on a non-primary residence. For some homeowners who’s houses are now worth less than even the outstanding balance on their first mortgages, filing a Chapter 13 generally can eliminate the second mortgage altogether, and if a homeowner has more than one property, a Chapter 13 filing can bring the outstanding balance on a second home down to fair market value (the so-called “cram-down”). These are the only sure fire legal loan modification tools that I know about, and they are not even disclosed as options by most of these so-called loan modification law firms, and my recent commenter.
My advice, steer clear of all loan modification firms. Even if lawyers are involved, how do you know your lawyer won’t end up on the list of lawyers being investigated by the bar? And, no offense to my recent commenter, but if you are trying to advertise loan modification services, please don’t do it on my website.