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Some Attorneys Involved in Loan Modification Scams

Posted on in Bankruptcy

The Lawyers' Committee for Civil Rights Under Law is warning consumers not to be taken in by bogus home loan modification scams. The organization is seeing more and more attorneys lending their name to fraudulent companies promising owners loan modifications and lower mortgage payments in return for thousands upfront. But the companies fail to deliver and the homeowner is out all the money they put up.

Lawyer's Committee recently filed a lawsuit against one of those attorneys, Rory M. Alarcon, a New York licensed lawyer. They say that Alarcon defrauded 17 homeowners out of tens of thousands of dollars by promising loan modifications with lower mortgage payments. The alleged victims are claiming losses from $2,500 to $8,000 apiece.

Of the seven loan modification lawsuits that the committee has filed in New York, this is the fourth one involving an attorney. Attorneys involved in these alleged scams appear to have found a legal loophole that enables them to charge upfront fees – a practice that is prohibited by the Federal Trade Commission. However, attorneys may charge clients in advance for assistance if the service is part of their general practice of law, and not outside of that practice.

In an interview with the New York Times, Linda Mullenbach, a senior counsel at the Lawyers' Committee, said that although many lawyers provide legitimate foreclosure-avoidance services, she advises consumers to be wary, “When you go to a lawyer and his sole business is a loan modification, that's a real signal,” she said.

When you are struggling with financial problems and need to make decisions, such as bankruptcy, make sure you consult with an experienced Illinois attorney you can trust.

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