No Help from Legal Aid of Marin

Marin Family Action/Families Fighting Foreclosure Helps Saves Homes!

Excerpted from an article in the June 24, 2010 Point Reyes Light
by Kyle Cashulin

Thousands of Marin homeowners facing foreclosure are presented with a myriad of companies, firms and services claiming to renegotiate mortgages, resolve debt and steer clients back towards the path of righteousness. But almost none of these options have shown to provide systematic, reliable way to help people keep their houses.

Government and nonprofit groups have also garnered scorn from homeowners—around 30 Marin families involved with Families Fighting Foreclosures in San Rafael, including homeowners from Bolinas, Inverness and Woodacre, have sought help from government-sponsored groups without success. And worse, many of these services have been identified as elaborate and large-scale scams.

“Nobody is getting anything done,” said Brennan Newsom, who was ranked the fifteenth loan specialist in the nation by Mortgage Originator Magazine in 2000. “They all promise the moon, then give you the shaft,” he said.

Mortgage attorneys are often among the worst scams to plague desperate debtors, Newsom says. “They charge these big fees up front, knowing that they won’t be able to help you,” he said. “They’ll take the six grand and go through the motions, but you’ll never get your modification.” Many attorneys have cornered the growing foreclosure market by offering to negotiate a mortgage with the banks directly.

Attorneys often directly solicit clients from public lists of homeowners in foreclosure. They promise a 30-year fixed-rate home modification with low monthly payments, and say that their legal team has an extremely high rate of success. For instance, JL Richman & Associates, a mortgage firm that operated all over California, claimed “Our team has ten years of success in negotiating 90% of all mortgage loan modification requests to a successful outcome…For the modification requests we accept, our failure rate is less than 1%.” Most lawyers agree this is a preposterous statement.

Mortgage modification lawyers promise that they speak the bank’s lingo, and know how to work the system. But Russell Marne, a bankruptcy attorney from San Rafael, believes that this doesn’t matter. “You don’t have a prayer. You don’t have a prayer even if you went to Harvard,” he said. “At the end of the day, you signed a contract with them and they have no interest in modifying that contract.”

These attorneys often advise their clients to stop making mortgage payments while they negotiate the modification. Ultimately, however, the modification never happens.

Adella and Steve Rockwell, a couple from Fairfax, California, believes they were victimized by a Los Angeles-based mortgage adjustment scam. Attorney Arthur Stockton contacted the Rockwells in 2008, promising them an attractive loan modification. Eager to avoid foreclosure, they paid Stockton a $6,000 fee.

“He didn’t do anything at all,” Adella said. “He told us not to pay our mortgage, so we didn’t for a whole year. It’s really killing us. We’re still in our house, still making large payments. It’s pretty bad. We don’t know how much longer we can do this.” Stockton could not be reached for comment.

Lawyers like Stockton eventually got the attention of California Attorney General Edmund Brown, who has made it unlawful for lawyers or companies to demand payment upfront for a possible future loan modification. Brown ordered 386 such loan consultants to post $100,000 bonds last year or risk jail time.

But it’s difficult to identify lawyers who are breaking mortgage negotiation law. “They’re like the purple-spotted dodo,” Marne said. “You hear about them constantly, but never know who’s doing it.”

Jane Smith, a Novato homeowner that insisted on hiding her identity, feels she was victimized by Mortgage Modifiers, Incorporated, a company based in Petaluma. Last January, Smith saw an article in the Novato Advance extolling Mortgage Modifiers. The article explained how banks only modify loans when confronted by a staff of experts. They also said that the company doesn’t charge their clients unless they successfully negotiate a modification.

Smith made an appointment with Mortgage Modifiers, in which they promptly asked for a $1,395 fee. When Smith asked why the article claimed the company didn’t accept up-front payments, an advisor told her it was a typo.

“They said my stuff looked really good and they were sure they could get me a modification,” Smith said. “They weren’t very good at returning my emails or phone calls, but I figured they were a busy company.”

Smith didn’t hear any progress from her advisor until that April, when she demanded a face-to-face meeting. Her advisor didn’t show up for the meeting, and the office in Petaluma was abandoned. Smith finally reached her advisor again, who profusely apologized and asked to reschedule. The advisor also asked Smith to bring her tax returns as a crucial next step in the process—original returns only, no photocopies.

When the advisor wouldn’t return her tax returns, Smith realized it was a scam. She contacted David Ball, the consumer protection coordinator with the District Attorney. Mortgage Modifiers soon offered to refund Smith’s money, as long as she would retract her complaint. The company could not be reached for comment.

“I’m absolutely furious,” Smith said. “I have this white-hot anger towards the people that did this. If they’ve done it to me, they’ve done it to a hundred other people, and that pisses me off.”

Most homeowners in foreclosure are also dealing with a mountain of other loans and credit card debt. Debt consolidation companies advertise that by consolidating loans, a consumer can make one manageable payment each month while effectively paying down the money owed. The companies also put a stop to hostile debt collection calls. Theoretically, this would allow clients to worry less about paying down smaller loans and focus on dealing with their mortgage.

“I figured, ‘Why not?’ It sounded so good!” said one Larkspur resident. “It would get those horrible debt collectors to leave me alone for two minutes, and also let me catch up with my mortgage.”

But while not technically illegal, these companies are less than truthful with their customers. They make a new payment plan for the customer, and begin depositing their monthly payments into a separate account. Then they call each of the client’s creditors and tell them that the client is in bankruptcy, which immediately stops all collection calls.

The statute of limitations for debt collectors is four years in California. So after about 50 weeks, the debt consolidator will close out the client’s accounts with each credit card. This drops the interest rate to zero, and the client can then make minimum payments until the loan is repaid. In four years’ time, the company will have taken thousands of dollars of fees.

Aside from being detrimental to the your credit rating, it is relatively simple to close out credit card accounts without using a service—while saving several thousand dollars in fees to a third party.

Although not criminally fraudulent, public aid agencies have proven equally disappointing to homeowners facing foreclosure. Many homeowners have sought help from the newly formed nationwide HopeLine program, a round-the-clock housing service that claims to help people avoid foreclosure through education and counseling.

“I call it the ‘hopeless’ line,” said Manny Fernandez, director of Families Fighting Foreclosures in San Rafael. “You call, and some guy in Ohio picks up who doesn’t even speak English. All the HopeLine is there for is to give people hope, and that’s about it.”

When homeowners call the HopeLine, they are usually given a timeline stating where they are in the foreclosure process and how much longer they will be able to keep their home. “It’s a total waste of time,” said one Mill Valley resident. “I didn’t learn anything new, and I had to wait on hold forever just to listen to some guy across the country that doesn’t really know what he’s talking about.

Legal Aid of Marin Does Not Save Homes!

Legal Aid of Marin, a firm in San Rafael that provides legal representation and advocacy to low income and senior residents, has also gotten a lackluster response to their foreclosure program.

“It’s completely worthless,” said Ursula McComas of Mill Valley, who said that her lawyer from Legal Aid of Marin didn’t show up at her hearing. “The judge ruled in favor of the lender, First Federal, the night before the hearing.” While she was at the hearing, First Federal employees went to change the locks on her house.

Even though many people go to Legal Aid of Marin before settling on a different course of action, the firm does not claim to be a mortgage adjustment service. Legal Aid focuses on homeless prevention and eviction defense services, labor disputes and health care claims. When it comes to mortgage counseling, they are restricted to giving clients a brief overview of the foreclosure process, and giving clients a timeline showing when they will eventually have to move.

“It’s very limited what we do,” said Paul Cohen, executive director of Legal Aid of Marin. “What we tell people is we provide legal advice and information. It’s a completely unbiased, unfiltered look at what is happening to them.”

Marin Family Action Helps Save Homes

Cohen also refers people to other litigators, or to advocacy groups like (Marin Family Action’s) Families Fighting Foreclosures, which have seen strong success in saving homes.

Around 30 families have gone to Legal Aid of Marin seeking mortgage help before becoming members of (Marin Family Action’s) Families Fighting Foreclosures.

But McComas is still resentful (about groups such as Legal Aid of Marin). “They have inexperienced people that just passed the Bar,” she said. “You have to be a barracuda to deal with these banks.”