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Three face decades in prison for multimillion-dollar modification fraud

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Mortgage Professional America | 15 Jun 2015, 07:00 AM Agree 0
Three Californians could potentially spend the rest of their lives in prison for their roles in a modification fraud scheme that claimed more than 4,000 victims
  • Dave in Chico | | 15 Jun 2015, 10:15 AM Agree 0
    Good. They deserve the maximum penalty, along with a whole raft of others who'll never get touched.
  • Ken M | | 15 Jun 2015, 11:44 AM Agree 0
    Glad to see this sort of thing finally catching up too the "smaller" criminal. NOW, let's see if OUR criminal justice system will finally set their sights on the major violators that crippled our economy. The cronyism on Wall Street. Nearly a decade and no prison time for anyone???!!! Really!?
  • Natzarim Smith | | 15 Jun 2015, 04:46 PM Agree 0
    Natzarim Smith, Consumer Advocate

    These clowns took a honorable endeavor to help others, and turned into a criminal enterprise, that by all conventional wisdom all along had a pre-determined outcome, caught in the cookie jar to the demise of others.
  • Francine | | 15 Jun 2015, 04:47 PM Agree 0
    Nearly a decade and lots of "guilty" admissions. Fines by the billions - but not one CEO has missed a bonus or served a single day in the slammer. Cronyism? No - this goes way beyond that - it's massive corruption. These guys make the Mafia look like choir boys!
  • | | 15 Jun 2015, 06:15 PM Agree 0
    There have been so many scams exposed but it seems no one gets sentenced accordingly. Spending tax payer dollars and not recovering stolen monies as well as not hard jail time just doesn't make sense. Send them away with restitution Isn't this what laws are supposed to do. ?????
  • SoCal resident | | 17 Jun 2015, 09:14 AM Agree 0
    They definitely deserve time in prison for their crimes but considering they would never have the power to do anything like this again, why do we want to spend tax payer money to have them locked up for life? 15-20 years will do them justice.
  • so cal 38 year mtg brkr | | 25 Jun 2015, 10:19 AM Agree 0
    No bankers have spent a second behind bars and they that created this mess ,robo signing they were falsifying and recording false documents and the courts let em get away with it .
  • Jake - Short Sale Expert | | 26 Jun 2015, 12:51 AM Agree 0
    Agreed - just wasting more money on these losers. Put em in jail for 10 years and intensive probation for 10 and they'll be living in poverty and shame for the rest of their lives with no shot at a job besides cleaning the streets literally.
    As a realtor who focuses on short sales, I tell every client or potential client who asks me about modifications to first of all, use an attorney, not a "mod guy" if they reallyyy want to keep their distressed property. However, I also recommend to avoid modifications altogether UNLESS they are going for a "principal reduction" modification. These are mods that, if successful, lowers the actual amount owed down to a fair amount for the property as it should have been valued, thereby eliminating some or all of the inflated portions that never should've been lent to them in the first place while also lowering the interest rates AND the monthly payments.

    The majority of modifications are just flat out poor financial decisions. The reason I say this is because a large majority of people who seek out modifications are emotionally attached to their homes, and because of this attachment - due to either their memories there, or keeping the comfort of "home," or their kids in the school district/neighborhood - many homeowners are willing to pay as much as DOUBLE that of their neighbors for, in many cases, literally the exact same house. This is due to the inflated prices those people paid during the mortgage boom and ridiculousness of the 2004-2008 real estate market. (I'll note here that investment properties from that period shouldn't be modified in my personal opinion UNLESS the owner has had a resurgence of wages/salaries AND their tenants are working, trustworthy & credible people who are paying fair market value rents which actually produce net profits for the homeowner).

    Although I can totally understand that emotional struggle with letting go of their primary residences in a distressed ownership situation, homeowners must realize that if they bought during the insanity of 2004-2008, the majority of modifications that do NOT permanently lower the principal balance due on the mortgage, create a "rent for more" type of ownership. What I mean by that is, even though their monthly payments may be decreased, the amount owed on these people's mortgages (especially those who have racked up late fees/arrears for late/non-payment) still outweighs the market value of the property itself. Any monies not being paid each month due to the slash in the payments are often just added onto the back end of the newly-constructed mortgage - so they never really "catch up" or gain equity in the property for themselves or their children. In essence, they are practically renting their own homes, paying more than what the same house would cost to rent in today's market AND still not capturing any equitable ownership in their homes.

    On the contrary, many of these people should go with the short sale approach on their primary residences, as these homeowners can have their mortgage balances - and even a lot of their additional debts such as credit card judgments or city-issued violations, etc - wiped away permanently (AKA with no "deficiency judgments"), AND in many cases receive substantial relocation money from either the gov't-sponsored HAFA program (currently paying up to $10,000 in relocation assistance), and/or money from the servicing bank itself. In addition, there are now regulations, put in place a short time ago by FHA/HUD, that grant these primary residence short sale participants the ability to purchase a new home with a favorable mortgage in as little as a year to 18 months after the successful completion of the short sale process. When you compare these two different solutions to a distressed-ownership scenario, the short sale offers so much more, wiping the slate clean, costs zero dollars, AND even gives financial/monetary assistance -- whereas modifications keep the borrowers in a hole (even if it may be a shallower hole), and TAKE money from these homeowners in amounts averaging $3000-$4000 or more for a modification professional, even the reputable ones.

    If you are a New York homeowner and are underwater on your mortgage, behind on payments, on the verge of falling behind on payments, or have been denied a modification -- whether it be an investment property or the home in which you live -- contact me for a free consultation and we will discuss the details surrounding your unique situation and I will explain everything related to the short sale process, what you can expect to gain from your particular servicer (or the lender whom they represent), other debts that are weighing you down even more, and much more. The consultation AND the entire short sale service are both 100% FREE, always, no matter what, no catch or gimmicks. I have helped hundreds of homeowners accomplish exactly what I described above through a short sale and any would be willing to provide a review of my services and their satisfaction level. To everyone else, good luck and God Bless!

    - Jake Small
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