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Loan modification company seems to have influenced the Nevada state congress to protect industry and not the consumer
ShareThisLas Vegas TV News 3’s Jim Snyder and the Saving You Money Team have been investigating a new state law, one that is supposed to protect consumers from home rescue scams and loan modification cons, a huge problem Nevada.
It is Assembly Bill 152. But, the law Nevada got in the end is nothing like what went into the assembly at the beginning.
“We’ve received hundreds of complaints for loan modification fraud,” says Attorney General John Kelleher. “We have approximately 130 complaints against companies that we received in our county alone. The problem is a lot larger than the public even knows. It’s an epidemic.”
These complaints came from homeowners who paid thousands of dollars in upfront fees yet received no help. And these upfront fees make it too easy for scammers to take the money and run.
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This is why the federal government is considering banning them outright. 20 states already do so; Nevada did too – or at least it looked like we did. But a new law passed in 2007 banned foreclosure consultants from charging fees.
“I thought at the time we had taken care of this entire problem,” says Assemblyman Marcus Conklin.
But companies found a way around the law, reinventing themselves as loan modification consultants. They targeted struggling homeowners who weren’t technically in foreclosure since they hadn’t yet received a notice of default.
The Nevada Division of Mortgage Lending and its commissioner, Joseph Waltuch, decided that loan modification was a grey area so the law didn’t apply. Those loan modification consultants were then free to take money upfront.
“His office interpreted the law so narrowly that it only covered people who were in foreclosure that minute, not people who were going to go into foreclosure. So the law had to be rewritten and I was so frustrated,” says Assembly Speaker Barbara Buckley.
Last legislative session, Assemblyman Conklin sponsored a bill requiring all consultants to be licensed and banning them from collecting money until they produced real results.
“So this bill is really designed to ratchet down on companies that makes a promise and takes money,” explains Assemblyman Conklin. “You got to be able to deliver. Anything else, as far as we’re concerned, is a scam.”
But again, not so fast.
By the time the bill became a law, it had changed dramatically. Somewhere along the way it was amended to allow upfront frees as long as the company was licensed – something Conklin’s original version specifically outlawed.
Assemblyman Conklin: That’s the bill we started with.
Jim Snyder: And that got flipped.
Assemblyman Conklin: No bill starts and ends in the same form. It rarely happens.
Jim Snyder: But it’s exactly opposite. From no fees to go ahead and charge fees?
Assemblyman Conklin: Well, I wouldn’t say it’s opposite.
Jim Snyder: It’s exactly opposite.
It was clearly a major change from the original version. The Saving You Money Team began looking into when the bill was changed and who was there when it happened. One name kept coming up: Mandy Peacock.
She just happens to own a loan modification company here in town. Peacock went to Carson City and pushed for big changes in the bill, testifying for 30 minutes before the Senate Committee on Commerce and Labor.
“(Mandy Peacock) was there a lot. I think at least in the Senate she made a compelling case,” says Assemblyman Conklin.
And while she talked a lot about protecting consumers, the changes she pushed for seemed to be more about protecting her industry and allowing upfront fees.
“The services spoken of in this bill are necessary ones to keep people in their homes,” Peacock testified. “Regarding upfront fees… loan modification consultants, we must collect directly from the consumer.”
News 3 asked her what she added to the bill that actually protects consumers.
“The two main things that helped the consumer was one allowing upfront fees so that they have option to obtain third-party services if they chose to do so. It’s a Constitutional right, which our country has gotten away from, what our forefathers developed for the USA,” Peacock argued. “However, people have a right. If they want to pay – why not?”
So why not allow consumers to pay after the deal is done?
Peacock: In this situation, we’ve got consumers that are having a hard time paying their bills and so there’s no control as to us getting the money unless we get it from them to start with.
Jim Snyder: As we look at the law that passed, a lot of the things you suggested ended up in the final law.
Peacock: I would say, conservatively, that we amended about 50 percent it.
Although Mandy Peacock had every right to make her voice heard, questions remained as to if lawmakers listened a little too much to someone who had so much to gain.
Assemblyman Conklin: She was at my doorstep, probably, every day for two months. So she was definitely there. Definitely aggressive for her issues.
Jim Snyder: Every day for two months you saw her?
Assemblyman Conklin: That’s what it felt like.
Jim Snyder: Does that wear you down after a while?
Assemblyman Conklin: Yes, it does.
Jim Snyder: Let me ask you, Assemblyman Conklin, your personal opinion: As sponsor of AB 152, the final version, are you happy with it? Does it protect consumers?
Assemblyman Conklin: Well, time will tell. I’m going to watch it closely. This is probably something we’re going to have to work on again next session. As we look at how people respond to these rules, there are some other rules that may need to be changed.
Source: http://www.kvbc.com/Global/story.asp?S=11408083
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