Complaints Alleging Upfront Fee Loan Modification Rackets Continue In Florida, Despite Recently Passed Prohibitions

The South Florida Sun Sentinel reports:

• Some Florida foreclosure rescue companies and law firms that offer loan modifications continue to charge upfront fees and do little to help struggling homeowners, according to thousands of complaints filed with state regulators. New laws enacted over the last two years made such practices illegal.

• The Florida Attorney General received 2,600 complaints about mortgage loan modifications last year and has 78 active investigations against companies offering them.

• American Residential Law Group, based in Fort Lauderdale, was the target of complaints from 48 homeowners nationwide. Consumers said they paid up to $3,000 for the company to negotiate with their lenders but had received little or no help. One complainant said he got a 0.25 percent interest rate reduction, but had $12,000 added to his principle balance.

• The Florida Attorney General has five active lawsuits in South Florida and four in the Orlando area involving companies offering mortgage or loan modifications. The Florida Bar, which monitors and disciplines attorneys, has 163 cases under investigation involving 49 lawyers, in regards to loan modifications. That's compared to 67 cases the Bar is reviewing for foreclosure fraud, 20 cases related to mortgage fraud and 30 cases involving foreclosure defense fraud. The bar closed 258 modification cases last year, and so far has issued sanctions in 84 cases involving seven lawyers.

• Consumer advocates say that while foreclosure paperwork fraud and "robo-signing" may have taken over the mortgage crisis spotlight, questionable loan modifiers have not gone away.

For more, see Florida regulators receiving new complaints about mortgage modifications.