Clear Image Financial Group, Inc. shut down by state regulators for loan modification violations

The Tampa Tribune reports that state regulators have shut down Clear Image Financial Group, a Tampa-area loan modification firm.

“We have a lot of people out of work and struggling to keep their homes that are looking for help. Some are paying for services they never get,” said the agency’s Commissioner Tom Cardwell. “It is important that our residents know their rights and the laws that help protect them from being victimized in their time of need.”

The agency’s cease-and-desist order was based on the Clear’s alleged acceptance of up-front fees for loan modification services, which is usually illegal in Florida.

Loan modification failures

The state rarely acts unless it gets complaints from consumers, so it seems very likely that the people who hired this company to help them obtain loan modifications did not get the results they were seeking. Does this mean Clear failed to do what they promised? Possibly, but not necessarily. It’s very likely that, no matter what they tried to do, the company would have been unable to get loan modifications for its customers anyway.

Although there’s a lot of buzz about loan modifications and how they can benefit borrowers, most of that buzz is pushed by loan-mod consultants hoping to charge consulting fees, or from large institutional banks under government pressure to look like they’re actually doing something to help borrowers. The actual numbers are a lot more disappointing: according to the Treasury department, only 116,000 permanent modification have occurred under the entire duration of the HAMP program, but over 240,000 “trial” modifications have not been made permanent (i.e., they failed.) Compare this to the 300,000 foreclosures that occur across the country every month. Loan modification is just a drop in the bucket.

Don’t lose your home waiting for an illusory promise of a loan modification

All too many of these hopeful borrowers are pursuing loan modification as a stop-gap to prevent foreclosure. In the meantime, they fail to fight the foreclosure lawsuit that always comes, sooner or later, because somewhere along the line, someone promised them that their loan would be modified. (I’ve even heard of borrowers who skipped court proceedings entirely for exactly that reason – and then lost their homes because they weren’t there.)

If you don’t fight for your home, then odds are you’re not going to get a new loan to save it either. Don’t rely on false promises of loan modification unless you have someone in your corner who’s ready, willing, and able to fight the banks on the loan mod.