California has already addressed the serious problem of attorneys taking upfront payment for loan modifications and failing to do any work. Or at least failing to get any results. It's now illegal in California for attorneys - or anyone else - to do any work.
But in much of the rest of the country, the problem continues. The Chicago Trib, for instance, reports that "Some lawyers profit off foreclosure fears, loan modifications"(!):
Attorneys are among the few professionals who can legally charge upfront fees to help homeowners modify their mortgages. But instead of negotiating with a lender, some attorneys or the companies they work for just keep the cash and don't complete the job. Homeowners are often unaware until it's too late and their homes are in or near foreclosure.
The FTC is looking at making a rule like California's nationwide, but the American Bar Association and many state bars oppose it as infringing on state courts' power to regulate lawyers.
The article highlights the evils of attorneys associating with loan mod companies.
The Illinois attorney general's office in November sued Loan Mod One, which was working with Skokie attorney Mierswa, alleging consumer fraud and deceptive business practices.The firm advertised that it "guarantees in writing that we will find a solution to stop your foreclosure and save your home or your money back," according to the complaint filed in civil court.
Like Vega, consumers wrote checks up front that were made payable to Mierswa, according to the complaint. Mierswa and the company were supposed to renegotiate the terms of consumers' mortgages, but the work was never done, the complaint alleges.
There are a lot of sharks out there. Homeowners need to be careful and remember ... there's no such thing as a free lunch. Always ask: How do you make your money?
