Truemors
is reporting from
Member
NP Rank:
NP Rank:
Mortgage Loan Modifications A Scam Perhaps Too The American Dream
Share:
by Rory Cripps | July 20, 2009 at 04:39 pm
277 views | 2 Recommendations | 9 comments
Subprime Brokers Back as Dubious Loan Fixers
LOS ANGELES — From the ninth floor of a downtown office building on Wilshire Boulevard, Jack Soussana delivered staggering numbers of mortgages to homeowners during the real estate boom, amassing a fortune.
By Mr. Soussana’s own account, his customers fared less happily. He specialized in the exotic mortgages that have proved most prone to sliding into foreclosure, leaving many now scrambling to save their homes.
Yet the dangers assailing Mr. Soussana’s clients have yielded fresh business for him: Late last year, he and his team — ensconced in the same office where they used to broker mortgages — began working for a loan modification company. For fees reaching $3,495, with most of the money collected upfront, they promised to negotiate with lenders to lower payments on the now-delinquent mortgages they and their counterparts had sprinkled liberally across Southern California.
“We just changed the script and changed the product we were selling,” said Mr. Soussana, who ran the Los Angeles sales office of Federal Loan Modification Law Center. The new script: You got a raw deal, and “Now, we’re able to help you out because we understand your lender.”
Despite making promises of relief to homeowners desperate to keep their homes, FedMod and other profit making loan modification firms often fail to deliver, according to a New York Times investigation based on interviews with scores of former employees and customers, more than 650 complaints filed with the Better Business Bureau, and documents filed by the Federal Trade Commission in a lawsuit against the company.
“Our job was to get the money in and then we’re done,” said Paul Pejman, a former sales agent who worked out of FedMod’s two-story headquarters in Irvine, Calif. He recounted his experience, he said, because “I really feel bad.”
“I had people calling me crying, and we were telling them, ‘You can pay me or you can lose your house,’ ” Mr. Pejman said. “People were giving me every dime they had, opening credit cards. But I never saw one client come out of it with a successful loan modification.”
The "pick yourself up by your bootstraps" and "self-reliant crowd" would have American homeowners believe that the prospect of foreclosure is entirely the fault of the homeowner. You know whom I'm referring to . . . windbags like Rush Limbaugh and Michael Medved and the rest of their country-club Republican ilk who have never worked a day in their lives.
It's true that some American homeowners over-extended themselves throughout the past few years due to the booming real estate market. But what about the millions of homeowners that played by the rules and simply got financially screwed because George W. Bush and his administration allowed (by incompetence or design) the American economy to take a nose-dive?
No one, other than the most cynical "broken clock" economists, predicted that Americans would take a 40% to 50% hit on their home's equity value within two years time along with a comparable hit on their life-long investments and retirement funds. The real outrage is that those that created the economic and financial mess are still living high off the hog, as it were, and still on the corporate welfare roles. There is no shame in America when it comes to making money and as a result, the American Dream has become a nightmare for many . . . .
What is NowPublic?
NowPublic lets people work together to cover news events around the world.
Most RecentMost Recommended Comments (9)
at 17:11 on July 20th, 2009
No one ever went broke underestimating the intelligence of the consumer. I guess if they were stupid enough to take out a toxic mortgage with little or no equity in their own homes than why not hit them again when they fail and need picking up. I am not sure what is sadder the lenders preying on these dummies or the fact that people are this stupid.
at 17:57 on July 20th, 2009
If it were only toxic mortgages then I might agree with you. However the "toxic" is merely a convenient excuse. Indeed, it's not as cut-and-dried as certain entities would have us believe. Hat's off to Americans that manage to weather the storm. And to those, that have weathered the storm, I say this: It's not because you're any smarter or financially savvy than the rest of us. You've either been born with a silver spoon in your mouth, gotten a big hand-out along the way, or you're just plain lucky. Intelligence, talent, and honest/hard work has very little to do with achieving so-called "success" in America.
at 21:24 on July 20th, 2009
No. You are completely wrong. Those that weathered the storm were prudent financial managers of their household finances. They didn't buy homes that they couldn't afford. They didn't buy homes when they had no equity to put down. They didn't re-finance those mortgages to pay for a lifestyle they could not afford. Some did these things and were still taken down by the economic downturn but I can assure you that those that lived beyond their means were taken down by their own spensthrift hands.
at 17:07 on July 21st, 2009
Eastvanray: Again: I'm referring more to Americans that didn't go out and buy homes that they couldn't afford. If you, yourself, are a "prudent" financial manager, good for you and more power to you! And if you own a home that didn't take a major equity hit and you have investments that didn't take a major hit in value, I'd love to hear you're secret!
But it's kind of hard to be a "prudent" financial manager when you live pay paycheck to paycheck and especially when you find yourself out of a job or your work hours cut through no fault of your own due to an economy that, in some regions, has approached that of the Great Depression. There are millions of Americans that have exercised financial prudence through sound investments and that have purchased modest homes in pursuance of the "American Dream". They drive ten-year-old vehicles; eat out (when they do) at MacDonalds and Burger King; brown-bag their lunches; and no longer attend baseball games or go to the movies because they can't afford the ticket prices together with the price of a hot dog or popcorn. The median salary in the U.S. is in the 50K range. In this day and age, given the price of goods and services, and after taxes are paid, the modest monthly mortgage is paid (which in many cases is less than the rent for an apartment), the utility bills are paid, and the medical bills are paid, the average American income earner doesn't have much left over for food, clothing, etc.It's getting worse and worse . . . and any American that lives in the real world of America can tell you that. No brag just fact . . . .
at 17:26 on July 21st, 2009
My comments were not directed toward those in situations that you describe. I have been interested in the distressed real estate market in the US for some time now. As part of my research I have contacted several mortgage brokers. Their stories of families refinancing again and again to support lifestyles they clearly could not afford are widespread. Some were refinancing just to plow that money back into mortgage payments higher than they could afford, some for new trucks and cars, some for vacations and flat screen TV's. These people may only be a couple percentage of mortgage holders but they are the once who started this meltdown. It seems that the concept of living within ones means is a concept completely lost on some for whom ever increasing real estate values and not prudent financial planning was the guiding household budgeting principle.
at 18:45 on July 21st, 2009
eastvanray: Mortgage brokers or anyone that's involved with real estate in the U.S. are the last people that I would contact before undertaking objective research into the housing meltdown. They should talk . . . real estate professionals are among the biggest offenders when it comes to being spendthrifts and non prudent. Find out how many of them filed for bankruptcy throughout the last few years. Real estate "professionals" used any means necessary in order to make a sale and they couldn't have cared any less about the bigger picture. They're in the same league as used car salesman and mortgage modification "specialists". Anything to make a buck! BTW: I've just got to ask . . . why did you post a picture of a child instead of your own picture in your profile?
at 18:58 on July 21st, 2009
That is exactly why I contacted them. Not for their advice or expertise but for thei contacts and knowledge. They know where the bodies are burried since they sold those consumers the mortagages they can't afford. In fact, they are the absolute best source if one wants to find these distressed situations.
As for your last question; I post whatever image I find interesting at the time. I don't find pictures of my all that interesting.
at 19:10 on July 21st, 2009
eastvanray: Thanks for your comments! I appreciate them! I don't find pictures of myself that interesting either! And I know that many share that view! HA!
at 20:22 on July 20th, 2009
You can count on crooks to take advantage of hard financial times