Loan Mod Fraud
I had missed this excellent story in the NYT by Peter Goodman about the dubious loan modification companies that have emerged out of the mortgage industry. They ask people to cough up money and promise to negotiate for lower rates with lenders. Once they get the money, they vanish.
It makes for harrowing reading to see how voracious businesses can be and how people who are desperate will go for anything, even bankrupting themselves in hopes of financial salvation. It reminds me of Michael Covel's movie and its explanation of why people keep going for the lottery despite their near-zero chance of winning.
Stories like this are alarming but do they make a case for restricting business? No. For as terrible as all of this sounds, it is a pale imitation of federal rackets like Social Security or the bailout itself, and, moreover, the underlying cause here is the cheap money made available via the central banking system that is sustained by government grants of privilege. It is the Fed itself which is the font of this kind of corruption. Fiat money spreads a financial virus throughout the social system.
Comments (6)
Bill Kruse
Ah, it's not fiat money itself that's the problem, as a government-backed chain of outlets - we might call them banks, we might not - with the authority to create money could spread it to local businesses in the way Obama and Brown are hopeful (ha!) the banks will receive quantitative easing now. The banks we have now are for the most part private and they serve their owners, not the community. Fiat money isn't bad in itself. It needs to be regarded as nutrition; too little starves a community, too much will lead to inflation. But it needs it, always, under a system where the principal bartering is done with money.
BB
Published: September 29, 2009 12:25 PM
Andrew_M_Garland
These fraudulent loan modification companies are helped by the aura of government regulation. The government advertises constantly that it regulates and protects the little guy, without doing anything close to that.
I suggest that people have heard of the government loan and loan-mod programs, then they assume these companies are licensed and approved by government. This makes it much easier for a sham company to call up and get money.
If the government were organized, it indeed would regulate and license its partners, and advertise just as heavily a web site that gave the name, address, and phone of all participants. This would offer some protection through validation.
But, this is a messy technicality that would require real organization and planning by the government.
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I hate being called by the companies that robo-dial to offer lower credit card interest rates. Sometimes, I string them along to waste some of their time. Eventually, I would say plainly that they might be crooks, so how would I know that they arent?
Their answer: There are credit laws specifically against credit fraud, so I could easily sue them (!) to get my money back if they do anything wrong. This is the showcase example of how the false promise of regulation is used actively by the crook to extract money from the mark.
The government is so effective that it hasn't yet shut down the robo-dialers, although this is clearly against current communication law, and thousands of people have complained.
Published: September 29, 2009 1:20 PM
Seattle
Bill:
The word "fiat" means "an authoritative decree, sanction, or order." The problem isn't that we use money as a medium of exchange, but rather we're forced to use the money the Government says we will use. In a free market we could switch to another medium of exchange if something happens to the current one. The dollar is being destroyed and there's nothing the victims can do about it.
Published: September 30, 2009 12:41 AM
Rockon
I suggest that people have heard of the government loan and loan-mod programs, then they assume these companies are licensed and approved by government. This makes it much easier for a sham company to call up and get money.
Published: October 1, 2009 1:12 AM
James
After seeking information about federal loan modification law I found this article that is very informative. A great article like this should be share with anyone that needs it. It’s valuable and useful.
Published: October 2, 2009 12:25 AM
Krista Railey
James, you posted a link to an attorney that is under investigation by the California Bar. There are many great articles that provide helpful information that is not posted to the website of an attorney under investigation.
Published: October 3, 2009 2:05 PM