Lawyers Involved With Loan Modification Schemes Receiving a Growing Number of Complaints

It is sad how, in the country’s economic state, some people can still think of taking advantage of those who are on the verge of losing their homes. State and federal laws included a loophole that attorneys are now using to milk some cash from homeowners who are struggling to keep their homes.

When the financial and mortgage crisis settled in, loan modification schemes started flourishing as well. To avoid cheating people out of their money, Illinois passed legislation in 2006 that banned charging upfront fees when handling bankruptcy and foreclosure cases. Lawyers were exempted though as they have never been linked to loan modification schemes and it is already their routine to accept upfront fees.

Having seen this loophole, some attorneys are now just collecting the fees and don’t lift a finger in helping out the poor homeowners. Aside from attorneys now setting up their own shops to run this scheme, some mortgage rescue firms are now also recruiting lawyers solely to collect upfront fees. And they have a lot of business in their hands: one in 10 Illinois home mortgage loans became delinquent in the last month.

The homeowners, trusting that the attorneys and the mortgage rescue firms are going to help them keep their homes, find out too late that their issue has not been fixed and only does so when their homes are already in or near foreclosure.

Of the mortgage foreclosure companies that have complaints under their names, 30% have lawyers linked to them – this is according to a report from the state attorney general’s office. The attorney general’s office admits that they cannot regulate the practice of law. Though the agency already filed cases against 34 companies and individuals, it says it cannot go after lawyers except for obvious fraud cases.

James Grogan, the deputy administrator for the Attorney Registration and Disciplinary Commission, revealed that they have received numerous complaints on lawyers regarding the said loan modification scheme. He, however, refuses to reveal the exact number as cases cannot be made public unless an attorney will already be charged.

Complaints do not stop there. Even the Illinois Department of Financial and Professional Regulation has received a total of 28 complaints in the past year but not one attorney has been disciplined.

Even the state bar commissions are strained with the number of complaints on attorneys’ involvement with loan modification schemes. Some attorneys have already resigned and been disbarred after collecting money and failing to do loan modification work.

Attorney General Lisa Madigan is condemning the scheme, saying that lawyers are asking for money for work that people can get free. There are programs by the federal government and assistance offered by nonprofits and neighborhood groups, says Madigan. Even her office, she further states, gives free loan modification assistance.

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