Scams prompt call for licensure in mortgage-modification business

On its Web site, Your Credit Angel LLC promises to help financially struggling consumers get home loan modifications.

One Idaho consumer didn't think the Nevada-based company was delivering on its promise, and the Idaho Department of Finance agrees.

In April the department ordered the company to stop offering mortgage loan-modification services in Idaho without a license.

The Idaho department cited the case of an Idaho consumer who paid $1,495 to Your Credit Angel but received no services and could not get a refund.

"Homeowners can save themselves a lot of heartache and loss by avoiding unlicensed mortgage-modification companies that too often turn out to be phantom companies interested only in picking distressed homeowners' pockets," Idaho Finance Department Director Gavin Lee said in a statement. The company did not return calls for comment.

The Nevada Legislature this year showed it wants to regulate the loan-modification business when it passed Assembly Bill 152. The bill, sponsored by Assemblyman Marcus Conklin, D-Las Vegas, requires both mortgage modification and foreclosure consultants to obtain state licenses.

An earlier law required foreclosure consultants to obtain licenses, but some operators argued that they did not need a license until the client's home went into foreclosure, said Bill Uffelman, chief executive officer of the Nevada Bankers Association.

The new law appears to close that loophole by requiring consultants for loan modifications and foreclosures to obtain licenses from the Mortgage Lending Division.

The division today will take comments on proposed regulations under the law. The meeting starts at 9 a.m. on the second floor of the Bradley Building, 2501 E. Sahara Ave.

State consumer advocate Eric Witkoski said there are "huge" problems with how mortgage loan modification and foreclosure companies operate now.

Mandy Peacock, managing partner of AAA Home Rescuers, disagreed. Banks are trying to make it seem as if loan-modification scams are common because bank officials don't want to deal with professional loan-modification representatives, she said.

"There have been a lot more success stories than scams (in the mortgage-modification business)," she said. "We need this industry, and it needs to be regulated."

Michele Johnson, chief executive officer of Consumer Credit Counseling Services of Southern Nevada, welcomes the new law.

"It certainly is a step forward in providing protection to consumers as long as there is enforcement," Johnson said.

Tisha Black, an attorney with Black & LoBello Inc., also favored the new law, although attorneys are not required to obtain loan-modification licenses. The law also doesn't require licensing for consultants who negotiate commercial mortgage modifications.

"I hope that the legislation weeds out some of the bottom dwellers and gives those of us who are really trying to help people some validation," Black said. "I do think it's a good thing to have some regulation and some layer of oversight. I just hope the implementation of it does not bog down the system too much."

Homeowners can do 90 percent of the work on loan modifications without help, Black said. However, she said homeowners need to make sure their interests are protected before they sign contracts with lenders.

"It takes a lot of patience and tenacity," Black said. "You have to go through a litany of lawyers. You get punted around from person to person."

Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.