Beware California Loan Modification Companies

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I could not believe that I just heard a radio commercial on 880 CBS am radio for Mortgage Restructuring Solutions where an out-of-state non-attorney company promises to handle your loan modification. They promise to tell you in advance if you will be approved for a loan modification if you can answer just 12 questions. So I looked them up online and found out that they are just another one of those California companies that you should run away from.

First of all, there is a long list of California companies that have either been shut down or investigated for fraud and scams. I routinely hear from clients who sent money to pay those companies for help and never got any help and had calls that were never returned.

Second, the radio ad and the work this company is offering is a misdemeanor in New York called unauthorized practice of law. They cannot attend the mandatory settlement conference in a foreclosure action in the Supreme Court where foreclosures are brought in New York.

Nor can they offer legal advice about anything, including modification of a mortgage (real estate law), foreclosure (litigation), or bankruptcy alternatives. Yet, I doubt that will stop them from giving exactly such advice to unsuspecting homeowners. Eventually when a New York homeowner has a problem, they will have no recourse because a lawsuit will get them nowhere – even if they win a suit for a refund of the fee, collecting in New York will be impossible because this company will be all the way on the West Coast. Non-attorney companies like this are also not allowed to charge an up-front fee.

When I listen to radio ads like this that are in fact a crime and consumer fraud in New York, I wonder if the Attorney General is listening too.

I have blogged on this before for those who may want to search my site. The whole concept of a “loan modification consultant” is troubling. In most cases, these are the same mortgage brokers who made the bad loans in the first place and who found this new angle after becoming unemployed. I know it is cynical but I hear the horror stories from homeowners all day every day.

Here is a site listing complaints against this company. Here is the Better Business Bureau site’s record.