Loan Modification Companies Continue to Tarnish Mortgage Banking’s Reputation

http://www.nytimes.com/2009/07/20/business/20modify.html

The New York Times featured a story today on its front page about the companies which have sprung up to “help” people with their loan modifications. I cannot comment directly on any of the companies mentioned, but they are accused of some horrible behavior. What I can say is that in my former (?) profession as a securitization professional I came into contact with plenty of unsavory characters in the mortgage brokering business, and these are supposedly the same people who are setting up these modification companies.

I am in no way against people reinventing themselves. I may have to do the same myself. What I do have a big problem with is the way people supposedly in our industry continue to prey on the uninformed. They are giving us all a bad name. I have spent the better part of the last two years defending my profession, banking and Wall Street in general, and these low-lifes do nothing to help the cause.

Unlike many, I don’t blame the terrible lender for giving out subprime or Alt-A loans to an unsuspecting public. To a point, I believe in caveat emptor and too many people simply got in over their heads due to their own inability to control their materialism, but I have no intention of rehashing that debate here. What I want to loudly condemn is the practice of selling someone a service to perform a task the buyer would be better off doing themselves – for free!

You would think the regulators – whoever they are – would have started cracking down on these abusers much earlier. I surely hope they get more aggressive in the future.