Las Vegas, NV – January 6, 2011 – (RealEstateRama) — Effective January 31, 2011, The Federal Trade Commission has banned loan modification companies from charging up-front fees for negotiating modifications of residential mortgage loans. According to Eric Witksoki, Chief of the Attorney General’s Bureau of Consumer Protection, and the state consumer advocate, “Money spent on mortgage modification consultants is a bad bet for consumers.” Additionally, Witkoski commented that spending money on loan modification is “worse than some of the odds at the casino tables.”
Most mortgage modification companies will be unable to continue in business because of the FTC ruling, industry insiders say.
Nevada has been devistated by illegal mortgage scams. Many mortgage modification firms fail to do any work after collecting fees, industry observers say. To eliminate this risk for consumers, the FTC ruling prohibits mortgage modification firms from getting paid in advance. As a result, the FTC ban is expected to put most mortgage modification consultants out of business.
The FTC ruling will also affect Nevada Attorneys. Attorneys may continue to provide mortgage modification assistance, however only in conjunction with bankruptcy cases and other legal proceedings, according to the FTC rule. Bill Myers, Nevada Short Sale Expert and owner of the Myers Team with Century 21 MoneyWorld added, “Many Attorneys have been charging their clients $2500 – $7500 to attempt a loan modification; however, it is rare to see any refund of this money should the Attorney fail to perform.”
According to Myers, “The loan modification industry has been extremely misleading for homeowners. Government loan modification programs such as HAFA, HOPE NOW, and the Making Homes Affordable Program have been complete failures due to the fact that bank participation is voluntary. There is no government program which forces lenders to modify your loan. Additionally, Banks simply are not motivated to modify loans. It’s a sad fact that it remains more profitable for Banks to foreclose, and throw a family out on the street than approve a loan modification. Banks do NOT care about your financial dilemma…they only care about bottom line profits and their stock value. Many companies have tried to capitalize on the fear and vulnerability of homeowners in distress, and as a result, the FTC has stepped in.”
Myers adds, “Banks are very mis-leading regarding the loan modification process. Many banks instruct homeowners not to remain current on their mortgage payment during the loan modification process. Desperate homeowners, eager to follow directions, patiently wait 3-6 months only to discover that their modification request has been denied. After waiting many months (without making a mortgage payment), banks typically recommend the homeowner do a short sale, however, banks do not postpone the foreclosure during the loan modification process. This leaves a homeowner only 1-2 months to do a short sale, which is simply not enough time. As a result, many wind up being foreclosed upon.” Myers said, “The reason to do a short sale is to minimize damage to a homeowner’s credit, and avoid being sued by your bank. Many homeowners have been deceptively lured into false modification promises, only to wind up facing foreclosure, and complete devastation of their credit.”
Bill and Francoise Myers own The Myers Team with Century 21 MoneyWorld. In 2010, The Myers Team successfully closed more short sale transactions than any Realtor or Broker in Nevada. They remain Nevada’s #1 Short Sale Team. For additional information, please visit www.NevadaShortSaleInfo.com