When a home owner is seeking a loan modification, they often assume hiring an attorney is their best bet. Increasingly, though, attorneys are lending their names to fraudulent mortgage modification services, the New York Times reported.
The Federal Trade Commission and New York state regulations prohibit upfront fees for loan modifications, the Times said, but with exceptions made for attorneys. It now seems a number of attorneys have taken advantage of that loophole, offering the services for sometimes thousands of dollars in upfront fees, which would be illegal for another entity to charge. Worse still, homeowners often find they don’t even get the services they’ve paid for, the Times said.
Seven suits alleging fraudulent mortgage modification claims by lawyers have been filed on Long Island since 2011, the Times said. Some lawyers are even posting as not for profits, the paper added.
Homeowners who hope to avoid fraud but still want to use an attorney for a mortgage modification should steer clear of those who advertise “loan workouts,” and those for whom loan modifications are their only business. [NYT] –Guelda Voien