Lawyers sit in the hot seat for mortgage scams as more borrowers are wrongly promised outlandish results if they go to court to fight lenders.
Now the most costly of these foreclosure rescue scams involve or are directed by attorneys. Since 2010, more than 40,000 homeowners have complained someone promising to offer foreclosure assistance or help them with a mortgage modification scammed them, an article in the Huff Post said.
The article did not explore greatly why these lawyers are able to operate so successfully, or provide a solution to dealing with this growing threat to distressed homeowners.
Over the years, there have been trends in foreclosure litigation that have waned while others have developed, Steve Eisenberg and Troy Freedman with Stern & Eisenberg, said.
For example, in Pennsylvania, where Stern & Eisenberg is based, wrongly accusing everyone as robosigners is not as prevalent as it used to be.
Meanwhile, last year, Freedman wrote an exclusive blog with HousingWire that explained just how to deal with these Rambo-type foreclosure litigators, who are known for challenging every aspect of a complaint.
They explained that the biggest complaint they get is that borrowers have to wait 20 or 30 minutes on the phone for help from lenders, and in their impatience, people get desperate.
“The people who are scammed tend to already have a foreclosure that is active, so rather than look through the information itself, they look to the local courts,” Freedman said. “Borrowers are scared of the process, so it feeds the fuel for these types of scams to thrive. The borrowers are afraid to engage in the system.”
The answer: mortgage companies.
“The group that has been most required to make sure borrowers are treated properly are the mortgage companies themselves," Freedman explained.
“Getting education out there about what options are available is something that is huge,” Freedman said. “Desperation makes you think a lot of things are possible. If people had more realistic expectations, the scam artists wouldn’t exist. Everyone is hoping they are the exception to the rule.”
However, “it’s always dangerous to generalize who is responsible for an entire area of scam because generalizing and stereotyping magnifies one group over another,” Freedman cautioned.
“To say lawyers are the driving force behind scams when you have brokers, title people and financial counselors is difficult since there are a lot of people involved,” he noted.