How to Tell Legitimate Loan Modification Firm from an Illegal Operation or Scam… The FTCs New Bright Line MARS Rule

How can you tell what is legitimate loan modification assistance from what is offered by a “scammer”.  When I started writing about the foreclosure crisis back in the latter part of 2008, this was one of the central questions being asked across the country.  I found it ridiculous, back then, that it should be so difficult to figure out, and I did my best to check firms out and let people know where it seemed to me that they could go for help without being ripped off.

Of course, I was coming late to the party… loan modification assistance companies of one kind or another had started springing up as early as 2006, way before I knew what a loan modification firm was… or wasn’t.  Having never been in the mortgage or real estate business before, I had no idea what forces were in play back then, but I figured that it just couldn’t be that hard to tell which firms were actually modifying loans and which weren’t.  I mean, it couldn’t be rocket surgery, right?

Well, what a three-ring-monkey-circus that endeavor turned out to be, let me tell you.  The entire foreclosure crisis has been and continues to be perhaps the least understood disaster in the history of the world, and with the federal and state governments doing their best Marx-Brothers-Meets-Carrot-Top imitation in their handling of the situation, throughout 2009 figuring out who could be trusted and who couldn’t just got murkier and murkier.

Loan modifications are free, the president said during a speech early in 2009, and when I heard him say it, I thought to myself… wow, what a stupid thing to say.  They’re free?  Loan modifications are free?  Like water flowing in a mountain stream or the air that we breathe?  Why would they be free?  Getting my mortgage wasn’t free, why would modifying it be free?  Nothing else at my bank is free… well, maybe the coffee.

Obama spoke of a new toll-free government help-line people could call and I started laughing before I even had a chance to dial the number.  It didn’t take a Harvard grad to vote for that strategy as “most likely to fail”.  Try calling ANY government phone number just to ask for another government phone number would be a low probability situation, right?  Would you want to bet you could do it on the first try?

Our government is the one that occasionally pays $17,500 for a hammer, remember?  And, once I sat up until 3:00 AM watching congress debate whether English should be our “national language” on C-Span.  After an hour I wanted to take a staple gun to my inner thigh just to make the pain stop.  We may be the land of the free and the home of the brave, but no one has ever accused the United States government of being a bastion of efficiency.  Was Obama expecting an outbreak of competence in Washington?

So, the first time I called the government loan modification help-line the guy who answered the phone said, “Thank you for calling Countrywide.”  Excuse me?  Countrywide?  “Yes,” he explained… I was calling Countrywide.  Perfect.  I said the only thing I could think of at the time… “Yes, do you have anything in a predatory loan I could take a look at?”  He hung up.

The next time I called the number the guy who answered was in India.  He was very nice, and I found out where to get good Indian food in New York City, but that’s about all I could say about that experience.  After 45 minutes he placed me on hold and 10 minutes after that the line went dead.  Swimmingly… as I had suspected, this was going to work out swimmingly.

The president went on to explain that the other thing we could do when seeking a loan modification was to call our banks directly… that they’d be happy to help.  Of course… we’re so silly… why hadn’t we thought of that?  Duh… call our banks, of course.

Call my bank and tell them I want to pay less each month on my mortgage?  And they’ll say what, did he suppose?  “Sure, no problem… thanks for calling, Mr. Andelman… please hold while I transfer you to our ‘give-some-of-the-money-back-department’.  Tell us about your hardship… we’re interested and we’re here to help?”

Back then I kept thinking… has my president ever called a bank for any reason?  Because I can’t even call my bank to find out how late they’re open on the Wednesday before Thanksgiving.  It’s faster to just get in the car and drive down there to get the answer.  So, what would happen now?  Was I going to call my bank and hear the recording say:

“Press ‘3’ if you think your mortgage interest rate is too high… press ‘4’ if you’d like your principal balance reduced… press ‘5’ if you’d like us to just forget the whole darn thing… press ‘6’ if you want to hear a duck quack.”

Seriously?  Call my bank directly to tell them I want them to reduce my mortgage payment?  Once I spent the better part of a year trying to get my bank to credit my account for the $9 a month service fee they were charging me for my “Totally Free Checking Account”.  I finally just closed the account and opened a new one… it was costing me way more than $9 a month to get them to take off the $9 charge that they all agreed should not have been charged in the first place.

Next I started hearing something that made even less sense to my ears… “You don’t need a lawyer…”

Excuse me?  I don’t need a lawyer?  See… that’s the sentence, more than any other that I generally hear as the cue for me to absolutely need a lawyer.  Like when the finance manager at a car dealership tells you that you don’t need to read something… if you don’t read anything else… READ THAT.

And besides, when Wells Fargo or Chase tells me that I don’t need a lawyer, aren’t they giving me legal advice?  Why was my bank practicing law without a license all of a sudden?

I was 47 or maybe 48 years old at the time, had owned my own consulting firm for some 20 years, and no one had ever cared whether I hired a lawyer before, for whatever reason.  If I wanted to hire a lawyer to come with me to join a gym, no one had ever cared one way or the other.  Now, all of a sudden, my bank had an opinion on the matter, and they were solidly against the idea.  How strange.

My bank had a lawyer… or maybe a couple thousand of them.  Why shouldn’t I have one, if for no other reason than to stop me from beating the crap out of one of their lawyers when pone of them says something dickish, as bank attorneys are so often prone?

And besides all that, if a Vegas odds maker saw Bank of America on one side of the table, and Mr. and Mrs. Jones from Scranton on the other, who do you suppose the favorite would be?  You could bet $1 on the nice couple from Scranton and win a million bucks if they come out on top, right?

But, there was a problem I couldn’t reconcile… lawyers are so rarely free.  I had several friends and relatives that were lawyers and I was pretty sure I was on solid ground with my thinking there… and they are especially not free when asked to go up against Bank of America.  The only way a lawyer is going to sue Bank of America for free is if a pregnant heart surgeon were run over by one of their official bank vehicles while she was standing at their ATM in broad daylight, and as the bank’s video camera clearly captured, the driver was snorting cocaine at the time he rammed her from behind.  And even then, although it may not cost anything for the lawyer to take the case in that situation, when the 8-figure settlement check comes in, the doctor’s part is going to be about 60% of the total, at best.

Clearly, getting a loan modified was not going to fall into this category, so how could it be free?

Yet, right up until the end of 2009, we were still being told by the government, the media and the banks themselves that if someone wants to charge you to help you get your loan modified, that makes them a “scammer”.  It was ridiculous, in my mind, and since I had personally visited with perhaps 100 firms that helped homeowners get loan modifications, and interviewed hundreds of their clients… to say nothing of the numbers I spoke with all over the country… I knew the whole issue was spin city on all sides, but who was on first… I couldn’t be sure.

So, then here’s what we all saw unfold next:

More than 700,000 homeowners who had all been granted trial loan modifications, a requirement of the government’s HAMP loan modification program, all got tossed out on their rear ends… DENIED.  Not just those that hired a scammer to help them, but those that called their bank directly as the president had said to do.

Why?  No one really knew… the banks said they all had failed to send in the proper paperwork, which made no sense whatsoever… the media said it was because none of them could afford the homes they had bought, which made even less sense… and congress said: “Huh?  I’m sorry, you’ll have to ask my staff about that, I’m due at a dinner party being hosted by the American Bankers Association and they’re serving poached bald eagle eggs atop baby seal stuffed with currency and bearer bonds.”

But the real question was… who was scamming whom?  You see, up until that moment in time… right around the end of 2009, the widely held assumption, at least by those with no personal experience in the matter, was that if a homeowner hired someone to help them get a loan modification and they didn’t get their loan modified, it was obviously because the firm they hired was a scammer and never lifted a finger to help after charging a $3,000 upfront fee.  It couldn’t be that the bankers are lying or that Obama’s plan is no better than Bush’s was.  No way… he was a smart president, right?

At the same time, I had a very hard time believing that lawyers en masse were ripping people off for three grand.  My thinking on this was simple… I’d gotten bills from lawyers for $3,000 just for photocopying.  Why would they put their license to practice law on the line for three grand?  And besides, if charging homeowners three grand to help them get their loans modified was so profitable… and there were so many homeowners in need of the service… wouldn’t it make more sense to just submit the package and try to get the loan modified?  That way you could get even more three thousand-dollar checks from homeowners and stay in business for longer than Spring break.

After all, it wasn’t that much more work to send the homeowner’s paperwork into the servicer than it would be to take it to the dump.  And it was a sure thing that the servicer would claim to have lost it three or four times anyway, because all of a sudden another weird development was occurring: banks were all consistently losing stuff.  I felt like I was living in an alternate reality in which banks lose things all the time and lawyers are all trying to steal three grand from homeowners who can barely make their mortgage payments.

I couldn’t help but wonder what would come next?  Would my doctor offer me a cigarette while sitting in his waiting room, or suggest I put on a few pounds by cutting back on my exercise and eating more bacon?  Would my CPA soon be calling me up to ask if I had a calculator he could borrow, or would the bumper sticker on my dentist’s car now say “Flossing is for Sissies.”

So, as 2010 unfolded the foreclosure crisis did nothing but worsen, and by June, when the economic stimulus programs ran out of steam and housing prices resumed their free fall, it became clear to anyone with a brain that we were not recovering, we were sinking and now faster than ever.  Unless we were bankers, of course, in which case even though our banks were still largely insolvent, our bonus checks only went in one direction… up.

Yes… swimmingly… things were just going swimmingly on the home front, as I had suspected they would for some time now.

As the midterm elections approached the Democrats, led by the prince of hope and change, were clearly oblivious to what was happening in this country.  Obama had started to sound like he was getting his economic news from John McCain, saying that we were on track and recovering, while at the same time Ben Bernanke was taking the unprecedented step of printing hundreds of billions in cash in order to pump it into the Treasury Department via Goldman Sachs.  Everything’s fine… pay no attention to the man printing cash behind the curtain… there’s nothing unusual about that… we do that all the time.

By midway through the year, “economists” were being “surprised” quarterly.  It seemed that economics, which had always been known as the “dismal science,” was more like an optimists club.  The media reported that all of the economists kept on being surprised that we weren’t back on easy street.  One report I remember specifically said that something like “48 out of 48 economists were surprised by the numbers for the quarter.”

But which economists were those?  Certainly none that I knew of, or whose books I was reading.  Stiglitz… Roubini… Johnson… Tavakoli… Reich… the list would go on and on… none were the least bit surprised by our sinking ship.  To the contrary, they had by now all predicted it.

Then things went from bad to worse for the bankers… enter the “robo-signers”.  A group of foreclosure defense attorneys, led by lawyers like Max Gardner in North Carolina and April Charney of Jacksonville Legal Aid in Florida, finally started establishing through depositions and mountains of hard evidence that the banks had been playing the foreclosure game… let’s say… fast and lose.  Or perhaps fraudulently would be a better description, and this time it wasn’t just homeowners they were defrauding, it was judges… and judges, I knew, were going to hate that.

All of this was now being covered by the mainstream media and one thing was becoming quite clear… we now knew who at least some of the scammers were and their names were JPMorgan Chase, Bank of America, and Wells Fargo, et al.  All of a sudden the idea of homeowners needing a lawyer when at risk of losing a home didn’t sound so bad, and no one expected those lawyers to work for free.  Maybe charging for services wasn’t what made someone a “scammer” after all.

The bank’s propaganda campaign about not needing a lawyer when trying to save your home from foreclosure had been a lie and was unraveling faster every day.  Billy Shakespeare had said it best: Oh what a tangled web we weave, when first we practice to deceive.  And when that web starts coming apart, it’s something to behold.  GMAC froze foreclosures first, then Bank of America, then Chase… but then they checked their own work and in a matter of weeks gave themselves passing grades and went right back to work attempting to eradicate any remaining wealth still being held by the country’s working class.

So, now it was clear that homeowners, at least in many if not most instances, would need to hire someone to help them work with their banks to save their homes from foreclosure.  Oh sure, you could still handle it yourself if you wanted to, but you could also file your own tax returns or handle your own drunk driving defense in court.

Today, it should be clear to everyone that lawyers who represent consumers and homeowners against financial institutions are very much needed.  Because even though we were all raised to believe that we could trust the bank, but not the used car dealer… as it turns out… given the choice, the reverse is the way to go.

Of course, I’ve always known that people needed lawyers to help them with their banks and mortgage servicers, not only because I’ve written 360 fairly in-depth articles on the subject, but also because I continually see that the “Trusted Attorneys” page on my blog, Mandelman Matters, always has as many pageviews as any of my articles… a fact that drives me nuts, by the way.  I write what I consider fairly astute and important stuff at times… try to be funny on occasion… and all you guys care about is who’s on the “trusted lawyer” list.  It was sad, really.  It shouldn’t be that hard NOT to get scammed in this country.

I had the trusted attorney page “under construction” for many months as the FTC was formulating a federal rule that would finally define who could charge to help a homeowner get a loan modified and who couldn’t, because NOTHING else was being done to clean up the mess out there.

(I wrote an article summarizing the new FTC rule the day it was issued and you can find it here: FTC Moves to Protect Homeowners with New MARS Rule.  Basically, it prohibits any type of for-profit company… except attorneys and presumably law firms… from charging you anything in conjunction with a loan modification until you sign-off on a loan modification offered in writing by your lender or servicer.  So, if it isn’t a lawyer’s office asking for a check so they can help you get your loan modified, JUST SAY NO.

I’m not saying that you should say no because that company who is offering to help is a scam, necessarily, but they will be operating illegally, so if you write them a check and they end up being shut down by the FTC or state regulators, you will probably not get your money back or your loan modified.

So, as of January 30, 2011… in all fifty states… a lawyer… it’s okay to pay to help you get a loan modification.  All other for-profit companies or business models… NO… No payments until you get a written offer from your bank and you accept what they’ve offerdd.


The California Experience…

In California, the scam capital of the country, it often seems, they passed a law in the fall of 2009 known as SB 94, which prevented a non-attorney, which in this context primarily means a “mortgage broker,” from charging a homeowner anything until the mortgage gets modified.  Obviously, the thinking by the legislature was that by banning upfront fees, homeowners would be assured of receiving value before being charged.

As I explained in several articles written as the bill was moving through the California legislature in 2009, the intentions may be good, but the thinking was and is fatally flawed, and sure enough, while the new law did get the legitimate companies out of the business of helping homeowners obtain loan modifications, it hasn’t reduced the number of scammers preying on homeowners in distress.

As a result of SB 94 there are certainly fewer “loan modification companies,” not operating as law firms, but as I predicted, all that happened was that the scammers moved into the unlimited number of perceived loopholes available.  For example, instead of selling a loan modification for $3500, many started selling “forensic loan audits” for guess how much?  Bingo… right around $3,500.

The forensic loan audit pitch is that the homeowner will receive a report showing all of the laws their lender broke having to do with their loan, and armed with that information the homeowner will force their too-big-to-fail bank to the negotiating table.  Ultimately, the bank will have no option but to modify the loan to avoid being sued by Johnny Lunchbucket, for all of the rules the bank broke along the way, I suppose.

It’s a preposterous premise for all sorts of reasons, but it’s also an attractive sales pitch for a slick sounding salesperson targeting homeowners who want nothing more than to take some control of the situation back from the banks that seem to be holding all the cards ever since the bubble popped and easy credit evaporated overnight.  It’s a bit like having something to blackmail the bank with… the threat of a lawsuit.  Modify or else… pilgrim.

It doesn’t work in at least 99.9% of cases and there are two key reasons why not:

  1. The banks have broken all kinds of major laws in so many areas that it’s unfathomable, and many have already been sued by the Justice Department or the SEC, etc. and they barely care about those lawsuits.  John Q. Public doesn’t scare JPMorgan by threatening the global mega-bank with litigation… ever.  JPMorgan certainly has hundreds of lawyers on its payroll, to say nothing of the firms on retainer around the country, and you threatening to sue them would be like the U.S. being threatened with invasion by Monaco.  Goldman Sachs settled one such suit for something like half a billion dollars, which is like you or me handing someone a five dollar bill.
  2. The forensic loan audits being offered by these companies are primarily designed to show violations of the Truth in Lending laws, often referred to as “TILA violations,” and the many of these have a one-year statute of limitations, so if your loan is more than a year old… which it is… the violations are irrelevant.  Other aspects of TILA offer a remedy called rescission, which means the homeowner would need to get a new loan to replace the one found to have violated the rules.  But, there’s not much chance of that happening today, as essentially everyone in this situation is underwater and unable to qualify for a new loan anyway.

(One of my closest friends, attorney Julie Greenfield, is a mortgage banking attorney with thirty-some years experience in mortgage banking compliance.  Julie advises the California State Bar and numerous other organizations on such issues and she has published numerous articles on the inadequacies and absurdities of forensic loan audits, as they are commonly marketed today.  Here’s a link to the FTC’s Website where you can find her article and many others on the subject as well.


As more homeowners became aware that a forensic loan audit wasn’t worth the paper it was printed on, the California mortgage brokers, now blocked out of offering loan modifications by the new law prohibiting advance fees, found a new avenue to charge homeowners for upfront that’s related to loan modifications, and it’s called “Doc Prep”.

This pitch is simple: You need someone who is expert in mortgages and loan modifications to help you get your loan modified, but since we can’t help you with all of it, we’ll charge a bit less and we’ll at least prepare your package that you can then submit to your lender.  You’ll never be able to figure it out on your own, so since we’re the experts, we’ll create your submission, give you some tips on how to do it, and you take it from there.

How much to create these documents?  The going rate is between $1,500-$2,000, but I won’t be surprised if I find that some are figuring out how to get the bill for doc prep up to $3,500 before it’s over.  I’ve heard just about everything by now, so nothing surprises me anymore.

DOC PREP COMPANIES ARE NOT OPERATING LEGALLY IN CALIFORNIA, and after January 30, 2011, when the new FTC rule takes effect, they are NOT allowed to charge upfront fees anywhere in the country either. I’m not saying that the non-attorney firm offering to help prepare your documents is doing something badly, they may be very good at their job, but THEY ARE OPERATING ILLEGALLY and therefore they can be shut down at any time.

Only a law firm can charge you before you receive a loan modification for services related to obtaining a loan modification, so unless it’s a real law firm, if someone contacts you and offers to help you create your documents for a fee… JUST SAY NO.  And do the rest of us a favor and tell them you will be reporting them to the California Department of Real Estate and State Attorney General’s office.

Other Scams to Watch Out For…

It pains me to say that this list will likely be a work-in-progress for some time to come.  If there’s a homeowner who’s afraid of losing a home, there’ll be someone waiting to take advantage of that situation by selling them the equivalent of magic beans, but without the golden goose that showed up at the top of Jack’s famous stalk.

Recently, I’ve heard about companies that claim that they have investors who will buy your home and sell it back to you for less than you owe now.  Nice plan, but it’s a bunch of crap in almost every instance.  There are a few companies that do something like this, called a “short sale lease back,” but they are few and far between and they never charge you an upfront and often exorbitant fee to “get the ball rolling”.

We now even have a few join-the-lawsuit scams out there that are offered by companies that sound like law firms, and claim to be offering consumers a chance to join a larger lawsuit in the hopes of winning money or even their home free and clear.  If you’re contacted by someone offering you this sort if deal, until you’ve spent some time checking out the firm you’re talking to, STAY AWAY.

To begin with, lawyers are NEVER permitted to solicit you without you requesting assistance, by phone especially, so if a salesperson is calling and offering you the chance to join a lawsuit and all you have to do is write a check for five grand… thank the caller for calling, write down the information about the firm and hang up the phone. If you requested information from a website or called them first, they can respond to your inquiry however. If you’re interested in pursuing the idea, spend time checking things out.  Check the State Bar’s Website to make sure the attorneys involved are in good standing.  Ask to speak with other clients of the firm.  And talk to other lawyers to see what they think of what’s being offered to you by the other firm.

Above all, what I would say in the strongest of terms to every homeowner in America… and this advice is supported by other consumer attorneys that are friends of mine, Nathan Fransen, Julie Greenfield, Mark Zanides and undoubtedly numerous others, is to never hire a law firm without having spoken with an actual attorney who works at that firm.  I realize that there are paralegals and other support personnel that work at law firms and they certainly serve their intended purposes, but when you write a check to a law firm, ask to talk to an actual lawyer there.

The Bottom-Line is the FTC’s New Bright Line.  And the facts of the matter…

The bottom-line to this entire discussion is that finally the FTC has issued its rule, and formally, it’s called Title 16 – Code of Federal Regulations, Part 322, for Mortgage Assistance Relief Services.  Informally, it’s called MARS.  And for all of its imperfections, it does provide a “bright line” by which homeowners in all 50 states can now at least know what is not a legitimate operation as related to loan modification services.

Attorneys are largely exempted from the new rule’s ban on upfront fees, in the sense that lawyers are permitted to charge a client a retainer in advance for services to be rendered as related to the homeowner’s application for a loan modification as long as they comply with applicable state laws and how many and what were they doing to abuse me place the amounts into their attorney trust account, earning their fees as work is completed.  Lawyers have worked under this type of arrangement forever, and there are very strict rules governing such trust accounting, and very strict penalties for failing to follow those rules.

For mortgage brokers engaged in helping homeowners obtain loan modifications, however, it’s pretty much the end of the line… nationwide.  Non-attorneys, under the FTC’s new rule, are NOT permitted to charge a homeowner for services having to do with application for a loan modification until the homeowner receives a written offer from their lender or servicer, and the homeowner ACCEPTS that offer in writing.

I simply cannot imagine anyone being able to operate under such a restriction to cash flow and ultimate uncertainty of payment, so I will be very surprised to see non-attorney firms operating legitimately in this area come next year.  The fine for not being in compliance is $11,000 a day, so it’s no small thing for a company to get caught breaking this rule, and although I don’t know this for sure, I would think that the FTC will be looking to enforce this rule come next year to send a message that they mean business.

So, homeowners need to know about this rule, as do the firms and individuals involved in helping homeowners.  And I hope the industry will support the rule in the sense that it will start policing itself in an effort to stamp out the abuses of the past, and come together to share best practices that will lead to improved outcomes for homeowners.

The facts of the matter today…

Scammers are all around us every day.  But most of us don’t get scammed because we’re not in a panic.  The first day we are feeling panicked is the day we are no longer thinking clearly and therefore vulnerable to buying into a sales pitch that leads to our being taken advantage of and ripped off.

So, now we have a federal rule, and it draws a clear and bright line, but it’s always going to be buyer beware out there… there’s no rule that replaces knowledgeable and cautious decision making, especially during times like these.

The facts of the matter today as related to the foreclosure crisis and loan modifications, however, could not be considered positive, I’m afraid.  Help does not appear to be on the way, or on the horizon.  As inconceivable as this is to my way of thinking, there are no plans that have been announced from anywhere in our government that have the potential to make anything meaningfully better anytime soon.

So, here are the facts of the situation.  I know these facts to be true because I’ve ended up in the position of hearing from both homeowners and lawyers from all over the country essentially every single day for almost two years. If there were a definitive trend emerging as related to getting a loan modified, I’d have seen it by now… and I can assure you that one doesn’t exist.  Those seeking loan modifications are fighting the world’s largest and most powerful banks and in order to win must prepare as one might prepare for a battle… both psychologically and physically.

Sometimes getting a loan modified goes surprisingly smoothly, but then the same servicer a week later can appear utterly intractable.  I’ve seen it take a matter of days for a loan to be modified and I’ve seen it take well over a year, and because the combination of factors related to each borrower’s application, mortgage, and servicer interface paints a unique picture, it’s impossible to know precisely why it went one way or the other.

Let’s look at the numbers…

This past year, for example, we saw more than 700,000 HAMP trial modifications cancelled, and to-date, according to Treasury’s most recently released data, there are 466,708 active permanent loan modifications under HAMP.  But this past year essentially anyone could get a trial loan modification under HAMP simply by applying for one.  When it came time to qualify for a permanent modification, many discovered that they were being denied, and the reasons for the denials were as many and varied as they were opaque and undisclosed.

Today, however, borrowers are required to prove their income before they can be placed into a trial modification, so although the number of trial modifications has decreased, the percentage of permanent modifications being granted has risen significantly and the expectations are that this percentage will continue to increase.

Still, there are no magic bullets for sale here.  The banks in this country are still in grave financial trouble and the government is obviously afraid of the impact that their failing would have on this country and the world.  In other words, it seems safe to assume that for now anyway, the banks are going to win the toss.  These are far from normal times, and the only thing we know about the “new normal” is that it’s going to be around for a long time, and feel anything but.

But, new rule or not, the same old rules do apply… if it sounds too good to be true, it probably is… there’s no such thing as a free lunch… and you have to be careful and cautious with your money.  Don’t just write a check because someone said something you wanted to hear.  And in loan modifications, and life…

The good news is that it’s not at all impossible to get your mortgage modified… if it makes financial sense to do so, and if you are relentless and dedicated to achieving the goal.  You have to decide what’s best for you and there’s nothing wrong with fighting and nothing wrong with giving up and walking away.  Take you time and discuss the pros and cons with others with experience in the area.

You don’t NEED a lawyer to get your loan modified, but then again you may NEED a lawyer to get your loan modified.  It’s not something anyone can answer for you, and it may not be something you’ll ever know for sure yourself.  It’s a call you’ll have to make based on learning about the process and knowing yourself.

The FTC’s new rule is the bright line upon which things can be put right, if the legal profession and specifically those consumer attorneys committed to the fight view it as such, and start operating as part of a greater whole.  Some undoubtedly won’t like the new rule, and it may very well not be fair to the non-attorney professionals who have provided effective and ethical support to homeowners in need of loan modifications.  But the time for that debate has ended and the FTC’s new MARS rule becomes effective in its entirety as of January 30, 2011.

Illegal operations can’t be tolerated as unpleasant facts of life.  The new rule must be embraced and communicated by the law firms involved in the newly legitimized field.  Consumers must be protected from scammers and it’s everyone’s job to assist in that cause.  There can be no condoning of noncompliant behaviors and no looking the other way.

Thoughts for homeowners…

Whatever you do as a homeowner, don’t avoid the subject, don’t give up, and don’t feel ashamed and alone… because if you are anything at all, you are far from alone.  There are only two types of Americans today… those who have already felt the impact of the foreclosure crisis, and those that will soon feel the impact of the crisis.  None of us are getting out of this unscathed.

Well… I suppose there are also banker-Americans, but who cares what they’re thinking or feeling?  I certainly don’t, and besides I’m fairly sure that they lack the capacity for independent thought or human feelings anyway, so laissez les bon temps roulez, as they say in France.

A Time for Education…


The most effective way to protect yourself as a homeowner today is though educating yourself as to what is going on all around you.

It was a lot harder to get your arms around the subject matter two years ago, because there were very few writing about the topic of loan modifications objectively.  I began in late 2008, but there were others that came before me… like Moe Bedard from, who really was out in front educating all of us before we knew anything of what was to come.  Aaron Krowne of, the site that tracked the implosion of the mortgage industry more than any other by far.  And Danny Schechter of The News Dissector, who has been writing about financial disasters from a consumer’s perspective since the S&L crisis, which now feels to me like it might have happened over a century ago, sometime after Holland’s tulip bubble.

Today, there’s Shahien Nasiripour who writes both brilliantly and passionately for Huffington Post, and Richard Zombeck of who also writes important, real life articles for Huffington Post.  Richard, who is someone I consider a friend, is currently looking for homeowners to sign on to his site and share their stories that expose what the banks have done to countless Americans.

I think its very important that homeowners post their stories about how their banks have behaved on  The site is nationally recognized as a repository that provides a window into the lives of Americans dealing with our nation’s financial institutions during this crisis.  Homeowners that share their experiences on the site directly impact the awareness level of how commonplace shameful banker behavior truly has been and continues to be today.

There’s Steve Dibert of, who has also become a friend over the last year or two, and is incredibly knowledgeable when it comes to anything related to the foreclosure crisis and mortgages in general, and there are sites like,,,, largely written by the uber-smart Yves Smith, and, written by Denise Richardson, and too many others for me to remember them all, or list here, even if I could.

Then there are the legal blogs that are written by some of the country’s top foreclosure defense and bankruptcy specialists like Max Gardner’s blog, and, among many others, and there are economics blogs like, Calculated Risk, and of course the Baseline Scenario, written by brilliant economist and all-around rational thinker, Simon Johnson.  Johnson was also the author of a book this past year, “13 Bankers,” and I cannot recommend it highly enough.

Even big name columnists, like Gretchen Morgensen, who writes for The New York Times, have started to write brilliant and often scathing articles exposing the truths about the foreclosure crisis upon which the banking lobby would prefer we didn’t focus.  My personal favorite is Rolling Stone journalist, Matt Tiabbi, who recently knocked it completely out of the park with his fifth book, “Griftopia.”  (With the holidays upon us, I can only say… get it, get it, get it.  It’s great.)

The mainstream media finally taking more of an interest in the foreclosure crisis reminds me that I’ve not been insane to write about what I’ve been writing about these last couple of years.  And obviously, the more people that understand what’s happening in this country today, the sooner we can begin the long road back to becoming the country I remember, and not a nation doing some sort of kleptocracy impersonation act, appearing to be run by an oligarchy made up of a near cartoonish banking elite.

Because we’re not that, you know, and we will never be that.  No matter how much we may look that way today… we won’t stand for that sort of thing for very long.  We’re standing in a river not a lake, and things are changing almost daily.  The courts are starting to understand what foreclosure defense lawyers have been trying to convey and it’s making a difference.  And as I’ve always said, the current path the banks have chosen is not a sustainable one, regardless of how it may appear at any given moment.

Just a few days ago, according to an article written by Shahien Nasiripour for Huffington Post:

The Obama administration will spend less than a quarter of the $50 billion it promised to help homeowners facing foreclosure, the nonpartisan Congressional Budget Office said in a report Monday.”

Yes, you read that right.  By far the most significant economic crisis in this nation’s history continues to unfold in front of our eyes, and I have all the faith in the world that soon the people will stop being placated with tales of recovery and realize that the Obama Administration has allowed the wealth of the middle and working class in this country to be wiped out while debating incremental changes in health care and anemic stabs at financial reform.  Ben Bernanke now talks of inequality in this country creating “two societies,” as if this country can survive as two societies.  I assure you… it cannot.

The crisis is only worsening.  And perhaps that’s a good thing because at some point the people will demand change, and they will do so in a way that their demand won’t be ignored or negotiated.

We’re still the place that recognized the right to legal representation for British soldiers responsible for the Boston Massacre, and then three years later threw the tea into Boston Harbor.  We’re still the people that marched for Civil Rights, and refused to stop until we stopped an unjust war.

Our society has been threatened by the unbridled avarice of our bankers before and we endured the pain of The Great Depression only to emerge, our flaws extant, as a world superpower and beacon of freedom and democracy.  We have come through our past storms because we are nation that is unwavering in its belief in certain fundamental and inalterable truths, one of which is, as stated by Thomas Jefferson:

“All, too, will bear in mind this sacred principle, that though the will of the majority is in all cases to prevail, that will to be rightful must be reasonable; that the minority possess their equal rights, which equal law must protect, and to violate would be oppression.”

It may not feel like it today, but when it reaches a certain point the only question on the minds of most Americans will be whether to carry a torch or pitchfork… and from there we will exact the essential reforms that will provide the foundation upon which we will set things on a more righteous course once again.

So, just as we have persevered through monumental struggles before, I have little doubt that we will do so again.  We as a nation once highly resolved, as stated by our 16th President, Abraham Lincoln, “that this nation shall have a new birth of freedom; and that this government of the people, by the people, for the people, shall not perish from the earth.”

And I know, whether left, right, or center… I can still get a resounding Amen to that from everyone, right?

Mandelman out.

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