Ex-Subprime Toxic Mortgage Peddlers Now Coming To The Rescue As Loan Modification Specialists???

The New York Times recently published a story reporting on how many of the operators of so-called loan modification firms are the same people who, only a couple of years ago, peddled the risky subprime mortgages that has gotten the now-financially distressed homowners in trouble in the first place. One of the loan modification operators featured in the article is Federal Loan Modification Law Center (aka FedMod).

• FedMod is but one example of how many of the same people who dispensed risky mortgages during the real estate bubble have reconstituted themselves into a new industry focused on selling loan modifications. Despite making promises of relief to homeowners desperate to keep their homes, FedMod and other profit making loan modification firms often fail to deliver, according to a New York Times investigation based on interviews with scores of former employees and customers,(1) more than 650 complaints filed with the Better Business Bureau, and documents filed by the Federal Trade Commission in a lawsuit against the company.(2)

For more, see Subprime Brokers Resurface as Dubious Loan Fixers.

(1) Two of the individuals who spoke to The Times for the story commented:

• “We just changed the script and changed the product we were selling,” said Jack Soussana, who ran the Los Angeles sales office of Federal Loan Modification Law Center. The new script: You got a raw deal, and “Now, we’re able to help you out because we understand your lender.”

• “Our job was to get the money in and then we’re done,” said Paul Pejman, a former sales agent who worked out of FedMod’s two-story headquarters in Irvine, Calif. He recounted his experience, he said, because “I really feel bad.” “I had people calling me crying, and we were telling them, ‘You can pay me or you can lose your house,’ ” Mr. Pejman said. “People were giving me every dime they had, opening credit cards. But I never saw one client come out of it with a successful loan modification.” [...] “They basically told us, ‘Do whatever you need to do,’ ” he said. “ ‘It’s a sales floor. You’re here to sell.’ People would quote success rates and just pull them out of thin air. People would say 60 percent, 80 percent, 90 percent. To the average Joe in Kansas, that sounded great. But the reality is that 50 percent were immediately declined by the lender.” What shocked Mr. Pejman was how readily customers handed over their credit card numbers. Sales agents tapped into a deep vein of anxiety.

(2) Go here for links to links to the FTC press release and the relevant court documents filed against Federal Loan Modification Law Center.