Wednesday, September 19, 2012

Lawyers in "Hot Water" over mortgage modifications

A few years ago I looked into offering mortgage modification services to my Bucks County bankruptcy clients.  Frequently, my clients were attempting to modify their mortgages, but either had a poor experience with a company or lawyer who assisted them or they were unable to achieve a modification on their own. 

I knew there were some snake-oil salesmen promising modifications and I thought there could be a better way.  What I learned after exhaustively researching mortgage modifications, was that there is limited benefit a service or lawyer can provide.  Essentially, as one U.S. Trustee mentioned to me when I was representing a Bucks County Chapter 7 client, "It comes down to diligence and persistence."  She was right. 

My determination is that if someone needs their hand held through the process to meet deadlines and submit paperwork, then they should use a company for their modification.  But, they can easily do it themselves if they are diligent and persistent.  What this means is that a person must submit timely documents to the mortgage company (i.e. paystubs, bank statements) and follow-up with their point-of-contact.  Paperwork seems to get lost frequently during modifications, so the follow-up is key. 

This all leads me to the article in today's Wall Street Journal.  "Lawyers Land in Hot Water" highlights the alleged fraud lawyers have been committing in over-promising and fraudulently marketing mortgage modifications.  The article states that there are approximately 11,000 mortgage complaints involving attorneys received from California's bar since early 2009.  And that's in California only! 

The takeaway from all of this is:  Buyer Beware.  Mortgage modification is hot.  Homes are underwater and unemployment is high.  This makes for a perfect storm for people to seek some mortgage relief.  But, remember that it may be best to pursue this avenue on your own, rather than rely on the promises of a company or an attorney. 


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