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Subprime mortgage brokers have resurfaced in a new industry as “loan fixers,” allegedly assisting with loan modifications. Preying on past clients who fared poorly in the real estate market, in large part due to the exotic loans they were sold, these same brokers now see a fresh opportunity with the vast number of people sliding toward foreclosure.

By simply changing their sales pitch to: “You got a raw deal. Now we can help you out because we understand your lender,” these firms are obtaining up-front fees as high as $3,500, but rarely producing any results. Despite making promises of relief to homeowners desperate to keep their homes, for-profit loan modification firms often fail to deliver, according to a recent New York Times investigation. There are currently more than 650 complaints filed with California’s Better Business Bureau against just one company in Los Angeles, FedMod.

A New Mission
FedMod is among dozens of similar companies that have been accused by state and federal authorities of fraudulent business practices. The FTC is currently in litigation with FedMod and has brought action against 74 other companies as of this writing.

Most of these companies previously operated as mortgage brokers. Since October, the California Department of Real Estate has ordered 210 busiensses and individuals to stop offering loan modifications or foreclosure prevention services, because they lacked a real estate license, as required by the State.

Testimony from employees of FedMod suggests that the single goal of these companies is to get the money in upfront and not worry about actually performing the service. One employee stated: “I had people calling me crying, and we’re telling them “You can pay me or lose your house.” People were giving me their last dime, and opening credit cards to make the payment. But I never saw one client come out of it with a successful loan modification.”

There are plenty of non-profit organizations set up to assist distressed homeowners. Please call the Csira Group for information on how to contact a trustworthy source.

For a list of companies in California who have been targeted by the California Association of Realtors, click this link: http://www.dre.ca.gov/cons_drs.asp