In case you have been tied up in the holidays or the great snow storm of "08" you may have missed what's happening in the world of loan modifications.

What started as a lumbering freight train in late 07 has become a high speed train in 08.

A small cottage industry of realtors and mortgage agents hoping to supplement their meager incomes with modification monies and maybe help a few borrowers along the way has moved into a mega industry with volume of money invested and received exceeding both the real estate sales and mortgage industry at this time.  It is now the industry of mega legal firms looking to supplement their practices with massive amounts of money and maybe help a few borrowers along the way.

Somehow it moved from a real estate and mortgage activity to a legal activity.

Very few if anyone is actually familiar with the laws of loan modifications.  Of course why would we and how did it happen.  Somewhere prior to Oct 10 2007 a Legislative bill was introduced simply Assembly Bill 440 covering foreclosure consultants, foreclosure purchasers and foreclosure reconveyances  and now is law under NRS 645.310.

This bill and subsequent law basically makes it impossible or improbable for anyone but an attorney to lead the charge in mortgage modifications.

Only an attorney can collect up front fees for services in modifying mortgages, and anyone who is not an attorney must post a $100,000 as security with the Nevada Division of Consumer Affairs.  And no one noticed this or was aware until it was posted on the Nevada of Mortgage Banking website in late 08.

So now realtors and mortgage agents who didn't really know about loan modifications but knew real estate were trying to help borrowers have been replaced by attorneys that know nothing about real estate and nothing about loan modifications are at the helm.

As a side question, when do we get rid of the Republican Party, the Democratic Party, and independent party and get the Party of Common Sense?

I actually had a conversation Friday with an attorney, living somewhere that likes its self so much that they name it twice, who has a Nevada Attorney license.  He has a phone number with 2 numbers that repeat in neat sequence, several web sites with auto information pages, and his hook is he is going to charge more money than everyone else, because "people will pay more money thinking they are getting better legal counsel".  The crazy part to me.  He has never done a loan modification before and doesn't even practice real estate law.

Lucky for him, Nevada Law allows this to happen.

So now we have gone from a point that borrowers were being ripped off, scammed and screwed out a few hundred dollars by Loan Modification Specialists to the point where they are being ripped off, scammed and screwed out of thousands of dollars by Attorneys.

Don't get me wrong both groups mean well and intend to help borrowers, but this activity is just moving to fast.

Six months ago lenders would tell borrowers there was basically nothing they could do until the borrower was in a hardship position.

Now it has become fairly easy to change a payment, with a phone call.  The problem the change is not great enough and does not clear all of the borrower's problems.  It has been reported by most news agencies that 40-60% of all modified mortgages and there were hundreds of thousands done in 2007 and 2008 are already in default again.  The voluntary modification done by lenders is just not enough.

Anyone doing a loan modification will tell you it takes 60-90 days and 200 days plus is not unheard of.

In steps the attorney issues a 20 day demand letter and results begin to happen.  This is actually a helpful step as it makes the lender respond.  Where it goes array is that the attorney now has no knowledge of what will be helpful to the borrower to solve their crisis.  And believe me borrowers don't know what is best for them either.

Hopefully the positive result is that mitigation and work out departments at lenders begin to respond to everyone sooner, because sooner or later every deal will involve an attorney.

The final solution will be what happens next.  Modifying payments only results in further default in 2-3 years.  Modifying payments, terms, interest rates, time and principal loan amounts corrects the market.

And if you are a real estate agent you may have noticed that more attorneys are participating in the short sale process, once again sending a 20 days letters to lenders demanding an answer to offers made on properties.  The problem is what happens when an answer comes in?

It seems now is a good time for realtors to team up with attorneys.  I think we are seeing a changing of consumer confidence in the market place.  There is none.  Consumers don't trust anyone and why should they.  They have been ripped off by lenders.  Anyone who says this is all the fault of greedy borrowers who over extended is more than welcome to sit with me and I will fill your life with stories of borrowers who were pushed into bad loans.  Any real estate agent who "sat" on a new home development in 2005-2007 can tell you the same stories.  Consumer confidence is at an all time low.  The problem is no one trusts on one.  Realtor, Mortgage Agent, Lender, Title Company, Attorney we are all the same.

Loan Modifications may be the way that we save the economy and restore just a small sliver of confidence in our industry.

We are conducting A-Z Loan Modification workshops.  The workshops are for borrowers who want to modify their own loans or for those interested in assisting others in the modification business.  Remember you need a license for nothing as it is an unlicensed business.

The next one will be Tue Dec 23rd at 1:30 pm, at Coleman Law Associates located at 9708 S Gilespie A-106 (corner of Silverado Ranch and Gillespie).

Other workshops are scheduled for January and a schedule will be available at www.rbrealty.info.

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Modification Specialists and Attorneys will be on hand to guide you and answer questions. 

For borrowers know your rights and what to expect.

For those in the industry The Nevada Division of Mortgage Lending is starting to prosecute and fine violators of Loan Modifications. Don't get caught being unaware of the law.