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LOAN MODIFICATION COMPANIES - New Business Model or Risky Scam? Chapter 1.

By
Real Estate Broker/Owner with CREST "BACKYARD' HOMES, ON THE LEVEL General & Manufactured Home Contractor, TAG Real Estate Sales & Investments 521400, 1501015, 01795582

LOAN MODIFICATION COMPANIES - New Business Model or Risky Scam?  Chapter 1. 
 

NEW INDUSTRY MODELS? In today’s deplorable economic climate with literally thousands if not tens of thousands of folks losing their homes and hope of ever owning another home diminish by the day, is it any wonder why American home owners succumb to the antics of unscrupulous loan modification companies and attorneys?  The question for real estate licensees is, do we join the growing number of companies offering "loan modification" services?
 
NEW BUSINESS OPPORTUNITY?  I came very close to jumping into this hot bed in ’08. But thank God I had the presence of mind to do some very arduous research before I became personally involved. No, I was not in trouble with the loan on my home. But I was extremely concerned about all the folks that were and my Manufactured Home business was off appreciably from the economic downturn so I figured why not do something productive and rewarding for me while trying to help some of those folks that were in trouble.
 
RECOGNIZING RISK WHEN I SEE IT.  I immediately sought the opinion and advice of a friend of mine who just happened to be a Real Estate Broker and practicing Real Estate Attorney specializing in short sales, foreclosures, bankruptcies and loan modifications. He actually offered an extensive training program for licensed RE brokers, agents and lenders specializing specifically in the budding and booming loan modification industry.
 
The course involved 4 rigorous weeks of 4 to 6 hour sessions learning the lexicon, protocol and myriad nuances relating to this area of specialization.  When the course was completed, I received a certificate of completion signed by this attorney stating that I had completed this course and was now able to jump into the arena as a certified loan modification representative.   I felt I was ready to embark on an opportunity that would help many suffering homeowners while putting some doe, rey me in my jeans as well.
 
20 HOURS of CLASSES DOESN'T MAKE A LOAN MODIFICATION EXPERT!  Well, even with all this training (16-20 hours ha ha what a joke) and all the hands-on experience I’ve had with 30+ years as a builder, developer, general contractor, Realtor, buyer, seller, land owner and property manager I was still squeamish about throwing my hat into the ring. Something just didn’t feel right about this whole thing.  So, being the stickler for detail that I am, I probed a little further and here’s what I discovered.
 
About the time I was ready to jump into the pearly brine I realized that the words “Loan Modification” ("LM") were about as common as a cube of butter on a dinner table. Everyone knew someone who needed a LM. I even ran across a group of scammers who were actually going to attempt an Multi-Level Marketing (MLM) or “Network Marketing” pyramid scam. This whole thing was spreading like a win-fanned fire and was getting totally out of control.
 
Then I heard the war drums beating in the distance what with the Attorneys General throughout the country intervening and the Attorney General of the United States threatening to invoke stiff penalties and jail time to those engaged in fraudulent LM activity. Needless to say, this made me even more apprehensive.
 
RATS JUMPING THE SINKING SHIP?  Where did it all end up?
 
It drove a number of LM scammers into hiding. Hiding where? Hiding behind the skirts of licensed attorneys. These scammers are shrewd. That’s why they get away with ripping people off so effectively. They know how to get around all the loop holes and overcome challenges and obstacles of the law like no others.
 
NEW BUSINESS MODELS??  So the new deal now is for the scam artists to team up with licensed attorneys. They’re the so called marketing arms that front load these attorneys with leads by implementing and promoting direct mail and telephone boiler room campaigns; The front man so to speak. These boiler rooms, staffed with any smooth talking suede shoe artist they can scrape up licensed or not, qualify the prospect by asking them a lot of very privileged and personal questions about their situation. These questions by the way are very confidential and should only be asked by an attorney behind closed doors in complete privacy.
 
DANGER TO THE CONSUMER/HOME OWNER.  These boiler rooms are not law firms and in most cases are not even located anywhere near the attorney’s office. They are independently run and owned businesses with no legal or ownership alliance with attorneys whatsoever. Now here’s where it really gets sticky and messy.  These boiler rooms do not fall under the “attorney/client privilege” umbrella”.  You are not talking to an attorney.  You are barfing your heart and soul and a great deal of your personal, private and very confidential guts out all over a salesperson with no attorney/client confidentiality or legal experience whatsoever.  Anything you say to these salesmen can and will be discovered by counsel should the need ever arise. Your life is an open book. That’s nuts!
 
TELEMARKETING -BOILER ROOMS ON THE RISE.  Here’s what Jerry Brown Attorney General for the State of California says about “telemarketing-boiler rooms”:
 
“Responding to a just-released report that exposes the inner workings of a loan modification boiler room, California Attorney General Brown warned homeowners to avoid “shadowy and unscrupulous” loan modification consultants who use aggressive telemarketing tactics and charge thousands of dollars in upfront fees for foreclosure relief.
 
The report, written by a court-appointed receiver, found that H.E. Servicing, Inc., a loan modification company that Brown sued last week, ran a “well-appointed telephone boiler room” focused on making money, rather than helping homeowners stay in their homes.”  "Never give more than basic contact information and very scant personal information at most to anybody over the phone. If you are not in an attorney’s office in an eyeball-to-eyeball personal and private interview don’t say a word."
 
IF YOU ARE IN TROUBLE WITH YOUR MORTGAGE, SEEK COUNSEL FROM A REAL ESTATE ATTORNEY.  The best way to hire an attorney is to go to the bar and get a direct referral from them and be sure to get a licensed Real Estate Attorney who has years of experience and a proven track record (ask for references) working with short sales, foreclosures, bankruptcies and now even loan modifications. Don’t hire an attorney who just happens to be a friend or one who has just graduated from law school and who’s hungry to make a buck. Take your time and do your homework. If not it’s tantamount to asking your dentist to do a heart transplant. Work with a professional who specializes in Loan Modifications.
 
COMMING SOON:  Chapter 2.  Resources For Home Owners In Need of Loan Modification Advice.

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Why To Choose Us?

John DL Arendsen, Broker, General & Manufactured Home Contractor and Dealer 

TAG Real Estate Sales & Investments

TAG (The Arendsen Group) Real Estate Sales & Investments is a full service, one-stop, turnkey, family owned and operated real estate brokerage, General Contractor, Manufactured Home Contractor, Developer, Investor, Property Manager, Interior Design, Engineering, architectural, Landscape design, Expert Witness, Consulting, Curative Title and Troubleshooting company with over 100 years of combined experience in the San Diego real estate sales, construction, design & development arena.

 

 

 

 

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Comments (54)

John DL Arendsen
CREST "BACKYARD' HOMES, ON THE LEVEL General & Manufactured Home Contractor, TAG Real Estate Sales & Investments - Leucadia, CA
Crest Backyard Homes "ADU" dealer & RE Developer

Christine, You're a smart lady to stay away from LM's right now. They're like a pheasant under glass. Besides there's already so many LM companies in your area you'd get lost like a knat in a wind storm.

Aug 25, 2009 05:15 PM
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Ah!  Another soldier in the battle to keep RE licensees out of trouble, often despite themselves.  From the east coast to the west coast, LM companies are crawling from under the rocks every minute. 

I just do not want the real estate industry tainted by agents who want to get into this business for a fast buck. 

BTW, I do not buy the "I want to help" excuse.  Unless a license includes the ability to perform these duties, "helping" is no excuse for breaking the law.

Like the phone medical devices that discourage patients from seeking medical help, agents who get involved in LM to "help" may be discouraging a home owner from seeking advice from an attorney who is licensed and able to really "help".

 

 

Aug 25, 2009 09:32 PM
John DL Arendsen
CREST "BACKYARD' HOMES, ON THE LEVEL General & Manufactured Home Contractor, TAG Real Estate Sales & Investments - Leucadia, CA
Crest Backyard Homes "ADU" dealer & RE Developer

Spot on Lenn. Our next article on this subject will delve into the RE agents roll and participaton in LM's. Good or Bad. Should they be in the game.

Aug 26, 2009 03:30 AM
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

I am scared that Associating my self with Loan Modification, even very legitimate would label me as unethical.  I got far away from it.

Aug 26, 2009 04:16 AM
James Lyon
Vista Pacific Realty - Sacramento, CA

I think that paying a loan mod company thousands of dollars for something you CAN accomplish on your own seems like a bad idea. Yet these companies are everywhere now, what does that say about the knowledge level of the average homeowner?

Aug 26, 2009 05:19 AM
Anonymous
roxy Perry Realtor* US PREFERRED REALTY Mesa Arizona

Good Post!  So I was on the phone with a BIG BANK yesterday who actually stated that "Loan Modifications are not going to happen"...the banks don't have the capital." Yet, there was a certain presidential campaign not too long ago that promised loan modifications...where did that all go? Hmmmmmmm.  CNBC was barraged with callers who had repeatedly called there "banks/lenders"  and didn't even recieve a return phone call!

And the lines are truly getting blurred aren't they?

The scam artisits out there are exactly that!  And Jerry Murphy is correct  (hi Jerry!)  ...if it looks too goo to be true, it probably is!

 

Good luck everyone!

Aug 26, 2009 06:05 AM
#40
John DL Arendsen
CREST "BACKYARD' HOMES, ON THE LEVEL General & Manufactured Home Contractor, TAG Real Estate Sales & Investments - Leucadia, CA
Crest Backyard Homes "ADU" dealer & RE Developer

Good call Gene

Not much James. That's why we need to have consumer protection to some degree. Most folks aren't stupid they're just unwarry and so caught up in their own day to day drudge and looking for a quick fix that they don't stop long enough to study a lot of the things they get themselves into.

Roxy, subscrebe to my blog and get ready for the next post with a lot more info much of which will address your comment and concern.

Aug 26, 2009 07:59 AM
Anonymous
roxy Perry Realtor* US PREFERRED REALTY Mesa Arizona

Thanks John...how do I subcribe to YOUR blog?

Aug 26, 2009 09:04 AM
#42
Walter Getz
1st Choice Mortgage Resolutions - Rochester, NY

While I certainly agree with many things said here, and disagree with others, this is my opinion.

 

Stop selling what you dont know.

 

IF you are a realtor, and don't KNOW loan mods, DON'T advise your clients.

 

IF you are an attorney, and CAN'T get mods done, DON'T take on new clients.

 

IF you are a mod specialist, and WON'T do what you say you can do, either because you simply WON'T or CAN'T leave the homeowners alone!!

 

This same sort of thing happened to good, professional LO's when the sub-prime market crashed. To generalize that every LO is a scammer trying to rip off a client was just rude, ignorant, and a waste of everyone's time.

 

You (the general populace) may disagree, but I feel the same here. Why generalize those you are badmouthing? Give specific examples! Call out the scammer themselves!

There ARE reputable companies out there, who are saving homes every day! I can't tell you how difficult it is to build trust with a new client that you can truly help to resolve their foreclosure matter, when all they hear is this negativity....

 

The constitution gives us the right to say what we want when we please. Does that mean that any Joe Blow can say whatever they want and suddenly they are a LEADER in the industry they are talking about? No. I think not.

I recommend walking the walk before talking the talk. If you have not been able to successfully negotiate a loan modification or other program for a homeowner to keep them in their home, I don't think you would be an "example" for others to follow.

My favorite phrase: "Stick with what you know."

 

So you hear all this bad news, this is what America has become, 90% negative 10% postitive. We FEED on negative stories, and build our opinions and values on what we see and hear. Truly, how can we honestly expect to give sound advice if all you talk about are negatives? Is it your position to scare every homeowner? To freak them out so much they just put their arms up and say "I give!"? I dont think that is anyone's intention. But the consequenses of our actions are sometimes unseen until it is too late.

 

Hindsight is always 20/20

I believe AR is a great community. I've been in this industry a long time, and have found this network to be one of the most informative places to network with others in your industry, yet recently, all I see is negativity. Maybe we need to take a step back and figure out if our "intentions" are truly good. Who are we hurting by saying the things we say? And lastly, do we have the RIGHT to act like an expert in something we don't understand....

Aug 26, 2009 09:51 AM
Anonymous
roxy Perry Realtor* US PREFERRED REALTY Mesa Arizona

 

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Hi Walter

Wow, you certainly had a lot to say!

 I will say this much.  I sit on a board in my city , I am a leading advocate in my entire community and hold meetings at my home, and I meet and talk to MANY homeowners who have lost there homes that could NOT get a loan mod.  Period.  I have yet to meet ONE single person who got a home mod in the past 2 years......if it's successful where are these homeowners ?    Until you posted, I really didn't see other REALTORS on this post being negative and I did not take it this way either.  I think folks are sharing what they know.Trying to help.

Walter...I think AR is awesome too and a great place to learn...and share.  Your comments were accusatory and in doesn't take a genius to read between the lines, you are clearly upset. 

But hey ....glad that you shared what's really on your mind.  And I respect ALL on these forums for doing such.....being that you are a Mortgage resolutions type guy, maybe you could share how many folks homes you have  saved!  That would be a positive twist, eh? :)

I think that would have caught our attention..and would help us to understand that loan mods really dowork so we could spread the good news and reccommend you Walter !  :)

Aug 26, 2009 11:44 AM
#44
John DL Arendsen
CREST "BACKYARD' HOMES, ON THE LEVEL General & Manufactured Home Contractor, TAG Real Estate Sales & Investments - Leucadia, CA
Crest Backyard Homes "ADU" dealer & RE Developer

Roxy, I think you just have to hit the subscribe tab which is located below our photo. Thank's for your rebut to Walter.

Walter, You're absolutely right. I haven't been successful in the LM biz because I never signed on with a LM company and never took on a single client. But I did about 6 months of intense research and read everything I could, signed up for training webinars, joined every blog, talked to myriad attorneys, RE Brokers, Agents, Lenders, took classes, etc and it all led me to one finite conclusion. If you do decide to get into this biz be very careful because the jury is still out as to the overall impact and success rate LM's will have in the short and long run.

All I am endeavoring to do is throw caution to the wind about dealing with unscrupulous operators who are only in it to hit a quick lick. If you really read the post you would have also noted that I encouraged troubled homeowners to work with experienced RE Attorneys who have been specializing in RE law, short sales, foreclosures and bankruptcies. I'm sure that they have been much more successful in securing a successful LM than the SCAMMERS and I stick by that conviction.

Aug 26, 2009 12:31 PM
Walter Getz
1st Choice Mortgage Resolutions - Rochester, NY

First, allow me to apologize to the Arendsens:

 

I did not intend to "bad mouth" you or your post specifically. My intent was to target the general perception it created. More of what I stated was aimed at those making comments than the posters themselves. Please accept my sincerest apologies. I hope you have not felt slighted by my previous posted comment.

Roxy: I am annoyed, angered, and frustrated. I'm glad I didn't post what I had initially typed into this box! :P I am sincerly sorry that you have not had the pleasure of speaking with anyone who found a true solution to their foreclosure matter. My company is a small one, and I do other things on the side, so we have not grown to a huge conglomerate like some of those you see being investigated, however, of the 50 or so solutions I have been able to obtain this year, I can tell you, that unfortunately, I was unable to help one client. They DID receive a refund of their monies, in addition to further counseling by my office to the best options available to them. Client confidentiality IS a priority here, and it is not my place to discuss anything more than unidentifiable details about my client's case with our company. Many of my clients read my blogs (when I have time to post them) and I have no intention of spreading facts about their situation(s). The fact that they need help is enough to bring anyone down. Spreading their problems around in a forum type setting (in my opinion) can't make them feel any better. Not only is this a hard enough problem to deal with, but they don't need to feel subjugated by our need to use examples. Any examples I have ever used, or will in the future has been with the permission of the client being referenced.

Additionally, there are numerous articles, blogs, news flashes, you name it, where there ARE homeowners getting solutions. Many are being provided by the bank, some are not. Bankers have become more lenient recently, and are providing better solutions, however, their first goal IS to get the monies due to them (why should it be?), and sometimes their solutions only land our clients right back where they started 6 months down the road. I ask you, is that a true solution?

Since Im not really here to drum up business from the AR community, I didn't feel it was prudent to list my success ratios, or list the number of people I've helped. I believe this community is a rewarding place to be. And use the networking available to me to get my job done.

John & Janis: I cannot say there are not RE attorneys out there who are able to get the job done for their clients. I have my own opinions about that aspect of this industry, and because they are most likely biased, I will keep them to myself. I can say however, that I have had clients who have paid outrageous fees to attorneys to solve their problems for them, yet were unable to do so. It warms me inside to know that attorneys have come to me to ask for advice, or have sent their clients my way. Truth be told, many attorneys suggest bankruptcy when it is not even in the client's best interests. In many cases, BK's are being thrown out, are a waste of time and money, and only truly work as a stall tactic. At the end of the day I require two things in my profession. Money to pay the bills (just like anyone else), and a solid feeling that I have helped someone who was unable to help themselves. This is why I do what I do, and without both of these things I would not do what I do.

In light of this converstation with all of you, I will take some time this weekend to formulate a blog series that may help. I am no stranger to conflict, and can see that in addition to my comments here, I will need to provide more info than is suitable to place in this small box to convince anyone that I mean what I say :)

 

Thank you both for being strong enough in your convictions to reply to my comment. Maybe, more good can come of this than even WE realize.

 

My sincerest apologies to anyone effected negatively by my previous post,

 

 

Aug 27, 2009 09:57 AM
Lyn Sims
Schaumburg, IL
Real Estate Broker Retired

I really think that more homeowners realize that seeing a real estate attorney to get the process going is the best way to go.  I also think that sometime in the future we will (Realtors) find out that we are going to be sued for doing something outside our expertise.

Aug 27, 2009 10:14 AM
John DL Arendsen
CREST "BACKYARD' HOMES, ON THE LEVEL General & Manufactured Home Contractor, TAG Real Estate Sales & Investments - Leucadia, CA
Crest Backyard Homes "ADU" dealer & RE Developer

Walter,

Thank's for your sincere apology but I didn't feel offended in the least by anything you said. Everyone is intitled t their opinion. This whole thing has turned into one huge debacle and my main goal in my own little wasy is to keep desperate folks from getting taken advantage of. The reality, and this will be a significant point in my next article on this subject, is that there are sincere and ligitamate companies in the Loan Mod areana with the best of intentions but they can only to so much. Where they hit the wall as you know is in dealing with the stubborn and indifferent lender who are not budging.

I'll be looking forward to reading your posts on this subject as well. One thing I really like about the AR community is the open exchange of information that flows within our walls. We all learn and grow from each other and in so doing there's bound to be a little friction from time to tme. But that's healthy as long as it doesn't end up in grid lock and a big screaming match with no hopes of any resolution.

Aug 27, 2009 12:26 PM
Roxy Perry
US Preferred Realty - Casa Grande, AZ

Hi Walter,

Thanks for the explanation.....and I look forward to seeing and reading your blog.  Sorry that you too were unable to help homeowners. I think that was my point.  I look forward to seeing you around Walter!  Thanks again for sharing. :)

 

Lyn:  I have wondered the same for  REALTORS, ya know ...when is the other shoe going to drop? It's pretty messy out there.

 

John and Janis!  Yes I did get the email that subscribed me and like you , I don't know how I did it either...but I look forward to more on the subject as well.  Thanks!

Aug 27, 2009 04:50 PM
Roxy Perry
US Preferred Realty - Casa Grande, AZ

SCAM.   Period.

Nov 20, 2009 05:31 AM
Christine Hynes
American Capital Corporation - Laguna Beach, CA
Orange County Senior Loan Consultant

John and Janice - This is such a tough subject for everyone, from homeowners, to Agents, to banks, Attorneys,to the government.  And the real tough issue of it all is that the banks really do not have loan modification guidelines like the banks have loan guidelines.  So, when homeowners call into their banks, they get different answers for many reasons, no real defined guidelines like loans, lack of enough resources, lack of enough trained resources and really no real step by step guidelines that can be followed to accomplish a modification.  Keep in mind that these banks do not have underwriters for loan modifications that are trained.  It is a complex issue and I does sadden me that the homeowner is again receiving the short end of the stick. 

Dec 05, 2009 11:35 AM
John DL Arendsen
CREST "BACKYARD' HOMES, ON THE LEVEL General & Manufactured Home Contractor, TAG Real Estate Sales & Investments - Leucadia, CA
Crest Backyard Homes "ADU" dealer & RE Developer

Great comment. Unfortunetely there are some pretty bad characters out there making it bad for the few good LM companies that really want to help folks. Glad you're one of the good guys. You sound like you have a lot in common with my youngest daughter. She played as a 5'4" shooting guard on a full BB ride at USD. She then played a year of pro ball in England, ruined her ACL and said to heck with BB and hit the road traveling, Europ, Malaysia, Indonesio, Austrailia, New Zealand and the South Pacific in search of the perfect wave. She finally retrurned to Leucadia, married her high school sweetheart had acouple of beautiful girls and is nestled in woriking as our corporate COO and finally found the perfect waves right here in ole SoCal. You guys have to be connected at the hip.

Dec 08, 2009 07:37 AM
Julie Beall
Irongate Realtors - Springboro, OH
CRS

great feature!

Dec 11, 2009 02:27 PM
John DL Arendsen
CREST "BACKYARD' HOMES, ON THE LEVEL General & Manufactured Home Contractor, TAG Real Estate Sales & Investments - Leucadia, CA
Crest Backyard Homes "ADU" dealer & RE Developer

Thanks Julie. Better late than never as they say. I like to stay on top of my posts no matter how old they are.

Aug 14, 2011 07:25 AM