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Yet another loan workout or modification scam.  I am disgusted by the number of calls we receive every week detailing a company or lawyer who takes someone’s hard earned money and fails to deliver on their promise to modify the home mortgage.

This post is prompted by a phone call I just received from a young woman who contacted The American Association of Attorneys and Legal Professionals, www.aaalp.com, to help save her home.  She understood she was hiring a lawyer that was part of this company (the small print on their web site states this is “not a law firm”).

Whenever there are desperate people you will find con artists ready to lure them with false promises, all with the goal of taking what little they have left (normally their money).

For example meet Mrs. Smith.  She was contacted by a company called AAALP (does not exist now) who referred her to someone she though to be a lawyer.  She paid this “lawyer” $4,000 to help her.  Supposedly the “lawyer” worked with the lender, but was unsuccessful in obtaining a modification.  The “lawyer” then e-mailed her a bankruptcy petition to file with the court and told her “she was really not going through with the bankruptcy, but was just using it to postpone the trustee’s sale”.  She followed directions from this “lawyer” and did not file any required documents.  This resulted in the dismissal of her bankruptcy.   A couple of months after the first case was dismissed this “lawyer” e-mailed her a second bankruptcy petition to file.  The second case was dismissed for failure to file the required documents.

Now two months have passed; on Friday, April 24th the “lawyer” called to say the lender would not modify the loan; the trustee’s sale is scheduled for May 5th.  This young woman is panicking and looking for help to file a third bankruptcy.  Due to filing two prior bankruptcies she is going to have a challenge to file a third one is such a short time.  As a result of this illegal advice this young woman is facing a serious up-hill battle to file and stay in a chapter 13 and save her home.

  • My first point – never hire someone from another state to help you solve a legal problem.
  • My second point – NEVER FILE A BANKRUPTCY WITHOUT THE INTENT TO FOLLOW THROUGH ON THE BANKRUPTCY.
  • My third point – The $4,000 she paid to this “lawyer” would have paid an experienced Arizona bankruptcy attorney to file a solid chapter 13 case and save her house.

Please be very careful when anyone offers to help individuals facing foreclosure.  They are everywhere – TV, Internet and the mail.  Put “mortgage workout fraud” into Google – there are 488,000 results.  According to the Lawyers’ Committee for Civil Rights Under Law:

Lawyer-led schemes are particularly difficult to investigate, experts say. Only attorneys are allowed by law to solicit homeowners with offers of help in foreclosure cases, and investigators often cannot determine if legitimate services were provided.

Because of the time it takes to investigate and prosecute these white-collar crimes, federal officials told the Herald-Tribune that the schemes are often overlooked, and that many individuals running them in Florida continue to walk the streets.

Although Florida is home to roughly 10 percent of the nation’s foreclosure rescue complaints, the crime has largely gone unnoticed here.

First, you should be aware that, with very few exceptions, no one except an Arizona attorney can give legal advice to an Arizona citizen as to any workout on their home mortgage.  Second, as of July 1, 2010, all companies that offer mortgage loan modification services to homeowners must be licensed by the Arizona Department of Financial Institutions as “mortgage brokers” or “mortgage bankers”.

Options in Bankruptcy, with Notes on Getting Help

Here are some links that might be of interest if you are facing foreclosure: