In Emmett Pierce’s March 22nd article titled, “Loan-Modification business booming,” he states that attorney’s are attempting to reinterpret the law, which prohibits advanced fees for loan modification services in the state of California.

“Some for-profit loan modifiers are circumventing the law by affiliating with lawyers who can request retainer fees. The California Bar Association’s Committee on Professional Responsibility and Conduct recently issued an ethics alert, warning members that such conduct can result in discipline. ‘Over the past two months, the association has received more than 1,800 calls or complaints regarding loan-modification issues,’ spokeswoman Diane Curtis said.”

At American Economic Solutions, our position is this: a client in need of a loan modification should be wary of using an attorney to obtain the same results that a trusted loan modification company can provide. Not to mention, clients should make sure that there is no advanced fee paid for the modification services until the modification is complete.

At American Economic Solutions, our  California clients utilize a 3rd party client-trust account. In the client-trust account, the funds remain in the name of the client while providing AES with sufficient evidence that the client can pay for the service once the loan modification is finished.

In an August 4th article written by Ray Berona titled “No Advance Fee Loan Modification?” Berona writes,

” Why Not Use An Attorney?…
1) Attorneys charge upfront fees, usually with a minimum fee of $3000.00
2) Even if the Attorney is unsuccessful, they will keep the client’s money
3) Most Attorneys have no experience dealing with mortgage lenders
4) The main goal of an Attorney is not to modify a loan but to create a lawsuit against the lender. The majorities of these lawsuits have no grounds, and therefore are unsuccessful. Attorneys will keep the Clients money anyway.”

After reading these articles, American Economic Solutions personally called 3 law firms in San Diego inquiring about loan modification services. We found that all three were attempting to collect an advanced fee for loan modification services.

When we asked the firms about the passage of SB 94, all three gave their spin on what they were doing in regards to collecting advance fees. They stated it was legal.  We were ultimately hung up on by all three law offices after citing points of the SB 94 bill.

Most of these firms were simply attempting to break up portions of the services included in a loan modification and earn the service fee before the modification was completed. SB 94 clearly prohibits this practice. The bill specifically that a person cannot:

“Claim, demand, charge, collect, or receive any compensation until after the person has fully performed each and every service the person contracted to perform or represented that he or she would perform.”

At the end of the day, the decision is up to the homeowner in need of a loan modification. Our goal at American Economic Solutions is to forewarn homeowners as of potential scams that exist in this relatively new industry. While every homeowner has the ability to represent themselves for no charge, American Economic Solutions believes that choosing to work with a reputable firm, like AES, will provide homeowners exceptional services and positive results.

To read the full articles mentioned above please visit the following sites:
http://www3.signonsandiego.com/stories/2009/mar/22/1n22modify00024-loan-modification-business-booming/
http://www.submityourarticle.com/articles/Rey-Berona-5872/no-advance-fee-loan-modification-61694.php