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Many of the borrowers caught up in these scams failed to realize that Hope Now provides free counseling and assistance to consumers seeking loan workouts, which can include loan modifications that create manageable mortgage terms or modified repayment plans.
Another advance-fee scam has involved a fake specialist providing baseless theories to borrowers about debt elimination in exchange for payment. The specialist would often advise borrowers that two theories govern securitization of property and negate the requirement of repayment:
Redemptionist theory, which argues the federal government assumes responsibility for the debt
"Freeman in Nature" theory, which argues that a mortgage loan is illegal and borrowers have no duty to repay
This past May's FinCEN report calls out scammers and their schemes, both of which deteriorate the mortgage industry's reputation. Although the federal government thus far has determined that loan-modification negotiators don't fall within the "mortgage loan originator" definition for purposes of the Secure and Fair Enforcement for Mortgage Licensing Act, many states have enacted laws requiring licensure as an originator to offer loan-modification services. Accordingly, many unlicensed individuals who provide such services could be, by definition, acting illegally.
In many cases, mortgage brokers are the best individuals to provide assistance. Although free loan-modification assistance exists, many troubled borrowers complain that such assistance is minimal or that the process is overwhelming.
Although some states have capped the fee that can be charged for offering loan-modification services, brokers can provide it as an ongoing service to clients and strengthen their reputation. Providing such assistance could lead to referrals and marketing potential. In addition, when clients are ready to buy or refinance later, they'll be more likely to come back to the broker who helped them.
Brokers also can help by filing SARs voluntarily. Although only certain institutions are required to file SARs -- mortgage brokers and originators weren't on the list, as of press time -- brokers can do so of their own volition. In many cases, brokers can assess and identify emerging fraud trends before regulators can.
By understanding fraud trends and helping put a stop to them -- and by educating borrowers and leading them to successful loan modifications and foreclosure avoidance -- brokers can work for good, promote their services, and position themselves and the industry for long-term success.
Janine M. Atamian is executive vice president of settlement services for Lincoln Appraisal & Settlement Services.
She worked in the mortgage industry for more than 15 years and has experience in origination, processing, funding and compliance. Atamian has handled mortgage-broker, banker and loan-originator licensing in 33 states. She has dealt with regulatory-compliance audits and repurchase demands, and she has extensive experience in all aspects of settlement services. Contact (401) 831-3500 or firstname.lastname@example.org; visit www.lincolnappraisal.com.
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