Mandelman vs. Matt Padilla of the Orange County Register

There’s a guy named Matt Padilla who writes a column for the Orange County Register. He calls himself “The Mortgage Insider,” and I’m not even going to comment on someone who deems himself an “insider”. Anyway, I’ve tried to reach him on a couple of occasions and been ignored, even though here at ML-Implode, I’ve even been told he’s a good guy.

Luckily, here at ML-Implode, no one tells me how to think or what to write, so I’m calling Mr. Mortgage Insider out. Not because he ignored my calls, but because what he knows about loan modification firms, you could put in a thimble. And because that little detail doesn’t stop Matt from writing about them. Maybe Matt’s been “inside” too long, because he certainly doesn’t get out much. What up with that, Matt?

He wrote an article in the OC Register on Sunday, July 12th that was about loan modification scams… I suppose because he felt that the world needed another article about loan modification scams… as if there’s still someone somewhere that hasn’t heard already that there are those in our society willing to rip you off… and I read it. And I responded. And I thought… since he might delete my comment on the OC Register’s Website… I better publish it here as well.

Now… before you read it… let me first admit that I was a tad angry when I read his article and wrote my response. I’m not apologizing, nor am I sorry. I just thought you should know. Click here to read Matt’s impeccably researched, as long as you don’t venture outside, article, but first… check out my response. You already know what his article says anyway. You’ve read it before.

Matt Padilla’s Article on Loan Modification Scams


Well, Matt… I suppose I do have to acknowledge you for not writing a completely imbalanced piece on loan modification firms, but since you cover Orange County, where unquestionably we have quite a few legitimate firms that are helping thousands of homeowners get their mortgages modified, I certainly expected more. Heck, you could have ridden your bike to a couple of them.

First of all, there’s no question that the state has failed us at every turn in the housing crisis. What began as a brush fire has been allowed to engulf the entire state and even the country. Our government failed to provide any sort of regulation or guidance for loan modification companies for almost two years. The banks failed to even lie about their willingness to help distressed homeowners for the same period.

The DRE didn’t even have an advanced fee agreement until October of 2008. And the Attorney General’s office, which recently announced that foreclosure consultants should post a bond, among other things, has not been clear about whether a loan modification firm is a foreclosure consultant. (I called the AG’s office personally and they themselves are not sure.)

So, here’s what happened as a result:

Homeowners, and I have personally interviewed hundreds of them, faced with losing their homes, tried calling the government help-lines and then they tried calling their banks directly… and they got nowhere. Soon after, now in a panicked state, they wrote checks to companies they had not checked out. As an example, two women who were convicted of scamming 70 homeowners in 2008, and who are now in jail, had no office, no licenses of any kind, no references… nothing. How panicked would you have to be to write a check for $3,000 to someone you hadn’t checked out at your front door?

It’s not the scammers alone that cause the scams… it’s the people in a panic that allow themselves to be scammed, who play a large role in the transaction, just as it’s greedy people that invariably get scammed by ponzi schemes.

Matt… How many loan modification scams have there been to-date? How many people in California have been scammed by a loan modification company? Any idea? A ballpark guess? I know you have no idea, because I’ve called the DRE, the California Bar Association, and the California Attorney General’s office and they don’t have the foggiest idea either.

Let me be very clear… I detest anyone that would even think about taking advantage of a homeowner in distress, and I would be in favor of keeping Guantanamo open just to send them… and the bankers that defrauded our nation… to serve time there.

But in a state of almost 37 million people, roughly 7.3 million mortgages, and hundreds of thousands of homeowners at risk of foreclosure… a number that continues to increase steadily with no end in sight… well, when you consider how the media has and is reporting it… I better see AT LEAST tens of thousands of people scammed, right? Otherwise, you and your brethren in the press will be guilty of yet another Y2K-Boy-Who-Cried-Wolf job.

I often wonder if you and the general media think you’re helping protect people from being scammed when you report the way you have in this article. I mean your message that I the buyer should beware is certainly correct… if not a tad droll. Buyers should most definitely “beware” at all times… like when they’re choosing a company to help them obtain a loan modification… and especially when buying anything from a bank.

Of course, if you choose the wrong loan modification company you might lose a couple grand… but if you choose the wrong bank’s mortgage… you could lose maybe a hundred grand and soon after that, your home. My bank, for example, Downey Savings, or now US Bank, sold me a mortgage that I have only recently learned will “recast” and if you’re thinking that “recasting” is what you do when fishing, you’re absolutely right. It is what you do when you’re fishing.

The banks, however, have their own secret language, just like I did when I was seven and used to run around in a Batman costume. It was cute when I had my own secret language… but when banks have a secret language… well, not so much.

Recasting means that your mortgage payment might double or triple at some point, and the banks position is that this is disclosed in the package of paperwork that comes along with a mortgage. But the banks, it should go without saying, are lying as they almost always do. Saying that something might recast, and then slipping in a page that shows a maximum payment per $10,000 on a half a million dollar mortgage isn’t even close to disclosing something, now is it?

If a bank wants to disclose something like a mortgage “recasting,” I can help. Put a big red sticker on the contract that says: WARNING YOUR PAYMENT MAY TRIPLE WITHOUT NOTICE AND YOU MAY NOT BE ABOE TO REFINANCE TO A FIXED RATE WHEN IT DOES BECAUSE THE BANKS MAY HAVE BROKEN THE BOND MARKET BY DEFRAUDING INVESTORS WITH IMPROPERLY RATED MORTGAGE BACKED SECURITIES… something along those lines would have been nice.

So, yes… I agree… buyers should beware. Thanks for the tip. You’re so concerned about consumers being scammed? Where was your buyer beware article when thousands of people were being shown mortgages that had the very definite tendency to explode? Email it to me, I’d love to see it. “Matt Padilla warns homeowners not to trust banks offering mortgages that recast… film at 11.” If I don’t get anything in my email, I’ll just go ahead and assume you to be a fraud who majored in journalism writing an article in order to pick up a paycheck.

I happen to know that you’ve been contacted by numerous loan modification companies and invited to come see for yourself what’s happening in real life. To my knowledge, you’ve ignored all of them. I, myself, have attempted to contact you by phone and email several times, only to hear nothing in response. I realize you don’t know how many homeowners have been scammed, do you know how many homeowners have been saved by loan modification companies here in OC? Do you even want to know? Do you care?

And don’t bother with wondering if I work for a loan modification firm… I don’t. I’m not in the mortgage business… the real estate business… the loan mod business… none of them. In fact, I don’t earn a dime having anything to do with mortgages. I’m just a homeowner… and a writer… who cares deeply about people losing their homes as a result of this country having been defrauded by its banks and investment banks, while our government and our regulators stood idly by.

Sean Rutledge, of United Law Group, states that his firm has helped hundreds of homeowners obtain mortgage modifications. The Bar seems to be accusing him of failing to refund $1750 to someone that didn’t obtain a mortgage modification. You think that’s his firm’s fault? It’s not. It’s the bank that refuses to give a borrower a loan modification, not the law firm.

If it was up to law firms or DRE licensed loan modification firms… everyone would receive a loan modification in 48 hours… they’d all include principle reductions of 50%, and the interest rates would be changed to 3% for 30 years. That’s what’s in the best interest of the loan modification firm.

And since when does a lawyer give refunds when something doesn’t go the way you want it to. I had no idea that was considered the norm. I think I’ll call every attorney I’ve ever hired and ask for my refund as a result of the outcome being less than I’d hoped for. People hire attorneys to help them negotiate with their banks because it’s the only way to get the bank to play fair. Banks don’t like it, of course, and that’s exactly why homeowners should do it.

Funny… but the legislation you reference that would prevent law firms from charging a retainer in advance was proposed by Senator Ron Calderon. Can anyone guess which committee he chairs? Anyone? Anyone? Right… the Banking committee. What a coincidence that is, huh? Who would have thunk it? Go figure.

I’ve spent days at law firms that offer loan modifications to OC homeowners… days and days… and I’ve seen the numbers of loan modifications these firms obtain for homeowners. How’s this for a statistic: The top 25 law firms offering loan modification services in California have saved something over 10,000 homeowners from foreclosure since January 1, 2009. And that number keeps going up too.

Matt… all articles like yours do is hurt homeowners. People read them… and as a result they don’t hire a firm to represent them in the negotiations with their bank… and they lose their home as a result, or they agree to terms they shouldn’t and re-default as a result. You are part of the problem, if you’re going to write stories that have no data to back up their accusations, and you have no clue what’s really happening in the neighborhoods of OC. Maybe you should consider getting up from your desk and coming outside to look around.

After all… there are quite a few securities scams every year in this state and in this country. But no one ever wrote an article telling me not to pay my broker at Fisher Investments, or whatever. Why do you suppose that might be, Matt?

The state should not be allowed to abdicate their responsibility to regulate an industry that tens of thousands of homeowners are turning to for help every day, by putting it out of business because some indeterminable number of people may have been scammed when they were in a panic. If you want to stoop the scammers, make it easy for homeowners to hire legitimate help, and you certainly don’t accomplish that by making it illegal for law firms to charge a retainer.

The Obama administration has acknowledged that homeowners do need help when negotiating with their lenders for loan modifications. In fact, the administration has spent very close to $100 million on non-profits to provide that assistance. Are you asking me to believe that the nonprofit housing counselor will out-perform the paid, skilled attorney or mortgage expert? Please Matt… sell that somewhere else, ’cause I’m not buying.

You want to respond, or read 80-some articles about this ridiculous and immeasurably tragic situation and pack of lies being spread by the banking lobby and our in-the-dark politicians… I’m easy to find. Just look somewhere above where your column ranks when doing a Google search… Mandelman Matters. I’m Martin Andelman… the guy you can’t seem to possibly make time to call back.

Anyone care to place bets on whether he’ll respond?

I’d bet against, if I thought I could find anyone to take the other side.

I’m only just getting started over here… I’m not proud… or tired.

Like I said at the top of my blog… Let the games begin.

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