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4.5 Million Homeowners Will Receive Foreclosure-Reviews

 

While restrictions on loan modification providers were necessary, could

they have been too strict — creating even less options for struggling consumers?

 

LAS VEGAS  —  Countless loan modification companies flooded the market during the height of the mortgage lending crisis, particularly in Nevada, where foreclosure rates still remain the highest in the country. An astounding 78 percent of those “covered service providers” have since closed[1]. Poor oversight, mismanagement and blatant misuse of client trust would have likely resulted in the eventual fall of many of these now defunct companies.

 

However, the story goes much deeper than that.

 

In late 2009, more than 400 companies applied for the “covered service provider” license in Las Vegas, which included loan modification services. Only 50 of these companies were approved but 39 of them eventually had their licenses terminated for non-compliance when the Federal Trade Commission (FTC) issued its Mortgage Assistance Relief Services Providers rule.

 

“The rule imposed many restrictions that were positive for consumers, such as prohibiting licensees from making any misleading claims about their services and requiring full disclosure,” said Damian Falcone, Founder of Falcon Credit Management. “But it was ultimately a deathblow to the industry. The FTC’s prohibition on collecting advance fees until loans settled was unfeasible when licensees were also required to fund a $75,000 security bond at the same time.”

 

The FTC rule went into effect on December 29, 2010, leaving just a small handful (11) of service providers in business. Indebted consumers were left with few options: hire an expensive attorney, rely on the bank that approved the high-risk mortgage to begin with, or seek out one of the few remaining loan modification providers.

 

Most recently, on November 1, 2011, a foreclosure review process was launched by the federal government in which 4.5 million consumers will have the opportunity to have their cases reviewed for mistakes, resulting in potential restitution.  

 

“When my competitors closed, the banks did not know how to deal with the mounting flood of homeowner prepared applications that resulted. Homeowners couldn’t be helped when their applications were missing 50 percent of the fields and written in pencil,” said Falcone. “The majority of consumers were tasked with completing their own applications without any professional help. Banks were forced to deny the applications, even if the reason was to simply make the piles on their desks smaller.”

 

Here is an insert from CNNMoney.com: When foreclosures flooded the system after the housing bust, many mortgage servicers became more cavalier in the way they handled foreclosures. Affidavits and other documents were signed by low-level employees who had little or no knowledge of what they were attesting to, attorneys hired to manage the foreclosure process were providing inadequate oversight and [review article for further information].

 

What are the 11 companies that are still standing in Las Vegas doing differently?

 

“Licensed, reputable companies are separating themselves in the new industry of consumer credit and debt management,” said Falcone.  “The main factor distinguishing us from the now-closed shops is a history of working in the financial industry preceded by a financial education.”

 

 

About Falcon Credit Management:

Falcon Credit Management became the first and only company in Nevada to receive the following licensing:  covered service provider, credit service organization and debt adjuster, enabling the company to provide all three key credit and debt consulting/restructuring services to consumers and businesses, including: loan modifications, debt adjustments and credit services.  The Nevada Limited Liability Company is unique in that it addresses all aspects of a portfolio, including: credit worthiness, debt settlement (secured and unsecured), loan modification, bankruptcy counseling and life coaching to assist with the relationship and emotional consequences of financial hardship/responsibility.

 

For more information visit www.falconcreditmanagement.com.

 

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