Monday, December 29, 2008
On December 26, 2008, the Washington Post reported that for profit mortgage assistance companies are charging upwards of $2,500 (and sometimes, more) to assist distressed homeowners during this mortgage crisis, where nonprofits do it for a lot less and with better results. Below is a brief excerpt of the article:
A growing industry has emerged to take advantage of the unprecedented wave of foreclosures, charging distressed homeowners for help negotiating better loan terms -- a service provided for free or for a nominal fee by many nonprofits.
Such companies charge $500 to $2,500 or more and are drawing the ire of consumer advocates, regulators and lenders, who say many are just the latest version of foreclosure rescue scams and can make it more difficult for homeowners to get help.
"You don't need to go out and hire someone to help you," said Michael Gross, managing director of mortgage servicing for Bank of America. "It is very, at times, frustrating to find a homeowner who has paid a for-profit company $3,000 to $5,000 in an upfront fee, when they could have gotten the same or better assistance free."
Loan modification firms say they are taking up the slack left by unresponsive lenders and overwhelmed nonprofit groups. "Nonprofits are not as efficient as the regular market," said Moose M. Scheib, the head of Michigan-based LoanMod.com, a loan modification firm that charges homeowners $1,500 to help renegotiate their mortgages. "I think the difference is probably more attention you get from us."
. . .
"We are extremely concerned about the huge proliferation of for-profit companies making a buck on these people," said Laurie Maggiano, senior policy adviser at HUD's Office of Housing. The department has certified 2,300 nonprofit housing counseling agencies across the country, which are required have at least one year of experience administering a housing counseling program, Maggiano said.
For the full story, please click here.
The article also includes a discussion of local Virginia, Maryland and District of Columbia laws and the extent to which these for profit companies and their practices are regulated. The article also demonstrates the important role nonprofit legal service providers are playing in helping homeowners to resolve unfair practices by these for profit companies, and also the role that nonprofit legal service providers and other nonprofits are playing in helping homeowners restructure their mortgages avoiding foreclosure.