Mitch Goldstein | Coach Mitch | July 9th, 2009Bloomberg.com June 9 (Bloomberg)
New York Attorney General Andrew Cuomo subpoenaed 14 loan-modification companies and plans to sue another one as part of a probe of the “foreclosure rescue” industry.
Loan modification companies, which get lenders to change the terms of mortgages to help avoid foreclosure, are capitalizing on the housing crisis and preying on desperate homeowners, Cuomo said. His investigation was spurred by homeowner complaints that the companies fail to deliver the services they promise, and he said they often leave consumers further in debt.
“Many of these companies charge upfront fees which are specifically prohibited by law,” Cuomo said on a conference call. “Sometimes homeowners even end up paying a higher cost after one of these companies gets involved.”
Cuomo said that in many ways the “entire industry is a scam” because the U.S. Department of Housing and Urban Development provides assistance to struggling homeowners for free.
Cuomo said he served Amerimod and its owner and president, Salvatore Pane Jr., with an intent to sue. He said the company, which claims to serve consumers nationwide, often fails to deliver promised services and advertises misleading claims of success rates of 90 percent to 100 percent.
“At no time has the New York Attorney General’s office, or any other state official condemned Amerimod Inc.’s integrity or success in completing modifications and helping homeowners in a time of need,” the company said. “Amerimod has been and will remain a frontrunner for compliance as well as a reliable source for distressed homeowners and consumer advocacy groups.”
The subpoenas request information on marketing strategies, fee structures and the services performed, Cuomo said.
For entire story: http://www.bloomberg.com/apps/news?pid=20601103&sid=ayf4__hn9ZWo&refer=news
********************
Coach Mitch’s REFLECTIONS™
More government duplicity
The government just continues to tarnish. Government again, has come down on a group that is trying to help consumers who are in trouble precisely because of a government policy.
Cuomo say’s that the “entire industry is a scam.” It seems that HUD, The Department of Housing and Urban Development provides some help to consumers seeking loan modifications. By this logic, any outside help that a consumer seeks, must surely be fraudulent.
What “O” should do – but won’t
“O” should do what Sweden did. In this era of ignoring the Constitution, the government should underwrite those in foreclosure, modify the loans to a payment that the borrower can make, and eliminate the foreclosure mess.
“O” is not doing this because the President does not want to be in the position of being seen as kicking people out of their houses when some of them will not be able to pay back the loans. It’s bad politics to be seen as hurting the public. Rather, “O” will let the banks hurt people by not modifying loans and making the foreclosure situation much worse. So sad.
People are fighting back
In trying to save their home, people are seeking any way open to them. Loan modifications are a standard way to work in this type situation. Just as in any industry, there are specialists who are in business to accomplish the task. Just ask any businessmen, when he gets in trouble, he goes to the bank and modifies the loan.
When people are trying to clear up their credit report, they can go to the FTC, The Federal Trade Commission. They would be one of over 50,000 who, each year, register a complaint against a credit reporting bureau, and ask for assistance in clearing up some negative item on the report.
FTC carries out government policy
The FTC will ask you if the negative item is accurate. If it is accurate, the FCC will say that the negative item must stay on the credit report and “there is nothing that you can do.” That is not “help” in removing the negative item.
Just like any good defense lawyer, a credit clearing company would not ask if the negative item is accurate. A credit clearing company’s job is to employ tactics that will try to remove that negative item, because that is how you define, “working in your client’s behalf.”
FTC deceives
However, Cuomo would say that credit repair is a bogus activity, and that “The FTC will help you clean up your credit report and the service is free.” In fact, the NYS AG’s office has made these comments, many times.
FTC acts with duplicity
There are technicalities in the Fair Credit Reporting Act that every credit item must meet. If any of the technicalities in law are not met, then that negative item must be removed – period, even if it is accurate.
Neither the credit reporting bureau, nor the FTC, who claim they are public advocates, will ask the questions that a credit repair company will ask:
- was the item reported accurately,
- was the item reported in a timely manner, according to law,
- was the item checked for its veracity,
- did the checking procedure actually check for the veracity of the information,
- who did the checking,
- did the clerk swear in an affidavit that they did the procedure, properly, on pain of perjury,
- were they qualified or trained in the verification procedure,
- was the credit verification done in the legally required time frame, etc.
What is going on?
As you can readily ascertain, the government does not ask these questions, and therefore, the government is duplicitous when claiming to be the advocate of the people. Rather, the government is the advocate of Big Business, making sure that important procedures are kept intact so that control is maintained. Credit is one such important procedure.
In the just ended credit expansion, lending was based on credit reports. No longer do banks do any real fact checking. They find this too time consuming and costly. Therefore, in an effort to be efficient, a system of credit checking has replaced traditional bank fact checking. This credit checking system relies on lenders having all the negative information it can get, because banks are creating loan programs that don’t check anything else.
In this coming period, the policy is to be more careful and only do “good” loans. Policy changes every so often. Back in the late 90’s we had such loose credit that in 2000-2002 we had to deal with the Savings and Loan debacle. The Federal Reserve, instituting government policy, regulates how tight or how “easy” the money supply is. When going for a loan today, you will be scrutinized. Had we been scrutinized in the past several years, we would not now be in poor credit the situation that we find ourselves.
The 3 C’s of credit
- Character: relates to how a person has handled past debt obligations. By compiling a credit history and personal background, lenders determine the honesty and reliability of the borrower to pay credit debts.
- Capacity: is means testing. Capacity relates to how much debt a borrower can comfortably handle. Income streams are analyzed and anything which could interfere in repaying an obligation is looked into.
- Capital: determines the borrower’s currently available assets. Included are real estate, savings, investments, and personal items that could be used to repay debt if income should be unavailable.
Credit
With the banking failures, the banks will probably go back to this model, but loan officers must be trained. Reliance on credit will still dominate any banking decision.
A high credit score is almost the only way to get a loan these days. With foreclosures being prevalent, millions of folks are doomed to 10 years of high interest rates. A loan modification would alleviate some of the pain and raise credit scores of these individuals, something the banks do not want.
Big Brother vs. Big Brother
Where is it written that a consumer must restrict themselves to only going to a government agency to contest a grievance? This is a conflict of interest.
The banks and credit bureaus are both extensions of government policy. Today, it is most clear that the banks and credit bureaus are government vehicles, because the banks are owned by the government. Of course any government agency will do anything it can to uphold any policy of any other government agency.
The IRS is your friend
This is the effect of Cuomo’s statement. Don’t you believe it.
What to do?
Enacting Coach Mitch’s “Ridiculously Simple System…”™ is a great way to get around bank loans because you don’t usually need them when dealing with tax delinquents. Coach Mitch’s system try’s to deal with free and clear property. In this manner, the tax delinquent, who is willing to give you a great deal, is able to give you a great deal because there is no mortgage to contend with.
See Coach Mitch’s “Ridiculously Simple System…”™ for details.
Be on guard,
Leave a Reply