Fair Business Practices.....This Is Still America....Right?

Yesterday's blog was such a success, we've been asked to do a part two. Many loan modification companies have come under fire recently between clients that have been taken advantage of, government agencies, and lenders. The majority of these complaints have three main components.
1) Customers have paid for a service and did not receive the service that they paid for.
2) The customers were asked to pay up front fees, typically very large fees to the tune of $4000-$5000 per modification, per property.
3) They lied and used deceptive business practices.

Very reasonable complaints in any business setting. We've mentioned this before. Although vendors of all sorts have the God given right to sell their products for whatever they want, the consumer also has their God given right to do diligent research before they purchase those products, and make sure they're not only getting the best deal, but also get what they're paying for. Furthermore, if you're telling the people that are inquiring about your business practices that you're doing something right, when you really aren't......that's just plain shady. There's a need for legitimate loan modification companies, part of which is really giving the oversight (making sure that they are giving fair deals) on lenders that the Government is currently not giving. This is why PMC is committed to matching qualified homeowners, with legitimate and qualified loan modification companies and ensuring that ALL parties best interests are represented throughout the process.

Let's examine these three major complaints, and contrast them with what's CURRENTLY going on with the majority of the lenders.
1) At this point the Federal Government, more over the American Taxpayer (homeowner or not) has paid for a service, and we have not received that service. We've dished out a total of 1.487 Trillion dollars between the initial bank bailout, cost of the stimulus bill, the American Recovery Act and the American Reinvestment Act. In addition, we've given another $20.1 Billion since the HAMP program was released. We currently have a total of 9% completion, and 235, 247 TOTAL trial modifications started. The FTC is after companies that are not doing what they're clients paid them to do, yet they are currently endorsing companies that are doing that exact same thing but on a much grander scale. Furthermore, it's Federal money.....doesn't that make it a FEDERAL crime???
2) We have ALL now been asked to and have paid an up-front fee. The $20.1 Billion dollars mentioned above has been GIVEN, not promised. So the American Taxpayer (homeowner or not) has paid an AVERAGE of $85,483 per successful TRIAL modification, and has paid that money upfront. It's been mentioned by numerous Finance Departments and AG offices that $1500-$2000 is a FAIR fee to do a loan modification. I would suggest that $85K would clearly be UNFAIR, and not "reasonable and customary". Wouldn't this be the exact example of an Unfair Business Practice?
3) If you don't think that lenders and servicers have lied, and continue to lie, you are definitely fooling yourself. Let's reconvene on why we're in this situation in the first place. Not properly disclosed terms, HUGE closing costs, HUGE prepayment penalties, VERY high interest rates that were borderline if not predatory. It seems like the hunt for "predatory lending practices" was quickly phased out with the "loan modification witch hunt". I think the multi-billion dollar corporations have a little bigger media budget than most...... My mom used to say that, " Everyone makes mistakes, it's what a person does to rectify and learn from that mistake that the person is judged by". So if the person/business has not only NOT rectified the mistake, but continues to make new ones....what are we supposed to do? We have numerous videos, blogs, articles and interviews that have shown what they have done and are still doing, yet we not only allow it, but we continue to give them more of our hard earned money.

If you take an average home loan of around $200K, used a 5% interest rate over a 40 year term, the homeowner will end up paying over $262K in just interest over that time, the total paid back would be $462,912 over TWICE as much as they paid for it. Although clearly in the advantage of the bank, this is a semi-FAIR deal. Now use that same scenario, but use a 9% rate. Now you've gone to $540,510 in interest, making your total $740,510.40. Come on now, when is enough enough? If the Government would really like to make a difference, then let's employ a plan that's actually working. Let's use legitimate modification companies