NY Times- Subprime brokers resurface as fixers

We've previously commented on the presence of folks in the mortgage market who bore some responsibility for the current mortgage crisis. (See Where's there a buck to be made and Would you buy a used loan from these guys?)

Now the Times reports,

From the ninth floor of a downtown office building on Wilshire Boulevard, Jack Soussana delivered staggering numbers of mortgages to homeowners during the real estate boom, amassing a fortune.

By Mr. Soussana’s own account, his customers fared less happily. He specialized in the exotic mortgages that have proved most prone to sliding into foreclosure, leaving many now scrambling to save their homes.

Yet the dangers assailing Mr. Soussana’s clients have yielded fresh business for him: Late last year, he and his team — ensconced in the same office where they used to broker mortgages — began working for a loan modification company. For fees reaching $3,495, with most of the money collected upfront, they promised to negotiate with lenders to lower payments on the now-delinquent mortgages they and their counterparts had sprinkled liberally across Southern California.

Where does it end? That's the same question being raised by actions of the Federal Trade Commission as it brings charges against Mr. Soussana's company, FedMod.

The suit, filed in California federal court, asserts that FedMod frequently exaggerated its rates of success, advised clients to stop making their mortgage payments, did little or nothing to modify loans and failed to promptly refund fees. The suit seeks an end to FedMod’s practices, and compensation for customers.

Other companies are being targeted by the FTC. Read more in Subprime Brokers Resurface as Dubious Loan Fixers.

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