16 CFR Parts 317 and 318: Mortgage Assistance Relief Services Rulemaking
Government response to Loan Modification Service Companies seems to be a knee jerk reaction to the activities of some scam artists. The majority of articles I read out there attempting to educate those considering loan modification are clearly written by people who have not been through the process themselves-they are speaking from a position of ignorance and now the government seems to want to legislate from that same position. For example-countless articles advise struggling homeowners to use a non profit organization to help them, however that is as far as the advise goes. There is little information on the success ratios of these "free" help orgainzations. There in no link to these organizations in the articles. By researching not for profit loan modification organizations it becomes apparant that they have abysimal success ratios. Furthermore the government seems to be taking the stand that troubled homeowners should not use a modification company because they can do the modifications themselves. This position seems to ignore the fact that the troubled homeowner is the person who got himself into this situation in the first place. If indeed the troubled homeowner is such an adept negotiator he would likely not, in fact, be in his current troubled situation! The fact of the matter is that a loan modification is not as simple as filling out a few forms and then it is done. Loan modification is a long and involved process. It can be very frustrating and emotional to the homeowner that is facing foreclosure. Loan modification companies not only perform a service but act as an emotional barrier or buffer between the homeowner and the lender. Another consideration is that a service company needs to charge for its service. Government sponsored advertisement and articles invariably identify loan modification companies that ask for an upfront fee as con artists. I do not feel this is a reasonable or fair blanket judgment. Loan modifcation companies have expenses just like any other company -payroll, lease, insurance, equipment etc. It is only fair that the company choose for itself how it wants to do business and let free enterprise and the free choice of the consumer dictate how the fees are handled. I believe there are plenty of legitimate loan modification companies out there that truly want to help people while operating a successful business. I also believe there are plenty of scam artists out there that are taking advantage of people. It should be the governments job to address the scam artist without entangling the legitimate businesses in the same net. Learn before you legislate. Judging all by the acts of a few is called PREJUDICE.