A growing number of firms are promoting the use of attorneys by borrowers seeking loan modifications. In other modification news, the nephew of Angelo Mozilo has co-founded a modification company and agency modifications increased.
Nearly 37,000 loans were modified by Fannie Mae and Freddie Mac during the first quarter, their regulator — the Federal Housing Finance Agency — reported Tuesday. Modifications jumped 57 percent from the fourth quarter and more than doubled from the first-quarter 2008.
Modifications accounted for 43 percent of the government sponsored enterprises’ 87,000 first-quarter workouts, up from one-third of the previous quarter’s workouts. But the efforts came in the face of rising late payments.
Residential delinquency of at least 90 days at Fannie ended March at 3.15 percent — the highest level on record. Over at Freddie, the delinquency rate ended March at a record 2.29 percent and subsequently rose to 2.24 percent in April.
New mediation programs recently rolled out in nine states have helped prevent foreclosures in 75 percent of the cases, according to a news release Monday from the Center for American Progress — which is calling for mandatory mediation programs. Findings by state judges suggest that more than 80 percent of borrowers who were at risk of foreclosure last year did not attempt to work with their servicers to avoid foreclosure.
“Jurisdictions in nine U.S. states now employ so-called ‘alternative dispute resolution‘ methods, and in particular mediation, to help at-risk homeowners deal with looming foreclosures,” the center stated. “These mediation programs are still young, but the best ones are showing impressive results, resolving in nearly three-quarters of all participating foreclosure cases without the need for formal foreclosure proceedings.”
The California Department of Real Estate issued a consumer alert Monday warning borrowers about loan modification scams. The state said foreclosure rescue scams have dramatically increased — with complaints about modification companies soaring from just 10 last July to 750 currently pending investigations. More than 200 desist-and-refrain orders and accusations have been filed since October 2008.
Still, the number of modifications completed in the Golden State during the first quarter was up from a year earlier, the department said.
California noted that some licensed firms legitimately collect advance fees.
The National Mortgage Complaint Center warned that many loan modification advertisements promote companies that are not law firms. The center is promoting its own directory of attorneys and law firms — which costs $425 per listing.
In a June 17 announcement, Feldman Law Center also recommended that borrowers utilize attorneys to assess their complete financial profiles.
A California law firm issued a news release last week touting its success helping one couple reduce their monthly mortgage payment from $1,478 to $1,076. United Law Group said it filed a lawsuit in April against Bank of America and Countrywide for tortuous interference with contract, defamation and unfair business practices (pursuant to B&P Code §17200).
The nephew of Angelo Mozilo has co-founded a loan modification company.
Chris Mozilo, whose uncle founded Countrywide Financial Corp., and Omar Kassem have launched eModifyMyLoan.com, the Phoenix Business Journal reported. The new online business provides a $97 guide for borrowers preparing to apply for a modification.
Mozilo’s background reportedly includes stints at Countrywide and Citigroup, while Kassem previously worked at JPMorgan Chase & Co.
Borrowers should not pay up-front fees to loan modification companies, according to Debt Consolidation Connection — which says it has developed a free step-by-step loan modification manual and video.
Homeowner Toolbox Inc. said Tuesday that it developed the “Probability Meter” to determine how likely it is that a lender will grant a loan modification. The company claims that only 20 percent of modifications are being approved. The $99 service factors in financial information inputted by the borrowers and considers eligibility requirements at the specific lender.
In re. case against Bank of America and Countrywide
Case No. 30-2009 00121999, April 2009.
