Senator Dodd Turning Desperate Homeowners over to the “Sharks”

Congress is really scrambling. They just realized (or so they would like for you to believe) that we have a real problem in the housing markets. They are just now acting on the huge foreclosure problem that we are facing in America.

Of course, beyond bailing homeowners out, there is not much they can do to solve the problem. This problem could have been prevented had Congress acted years ago and set up proper regulations for the mortgage lending industry. However, that would not have been a good political solution . After all, those loose lending practices fueled economic growth. So the “party now and worry about the consequences later strategy” is now taking effect.

In a symbolic gesture, Senator Dodd held a press conference to discuss the foreclosure problem in America. He also suggested that the Federal Reserve Board should in a sense bail everyone out of this problem. He also announced that they have set up a program to help people out. He wants to make sure that no one goes through foreclosure. So, he announces a program for anyone that is going through this mess. Just call, 1-888-995-HOPE. This was a hotline for those facing foreclosure.

I called the number. To my disbelief, it was a number for an organization that feeds people into companies in the credit counseling business. Yes, the same industry that Congress investigated in 2004 and came to the conclusion that this industry needed reformed. (which little reform actually occurred following the announcement of their findings)

Senator Norm Coleman who headed up that investigation had this to say in his opening remarks:

“Over the past several years, however, the credit counseling industry has undergone significant changes. New and aggressive credit counseling agencies have changed the manner in which consumers are treated. These changes have resulted in consumer complaints about excessive fees, pressure tactics, non-existent counseling and education, promised results that never come about, ruined credit ratings, poor service, and in many cases being left in worse debt than before they initiated their debt management plan.”

“Make no mistake, these credit counseling agencies were designed to sell a product –the Debt Management Plan—not to deliver a service of education or counseling. “ He even referred to this industry as a bunch of "sharks."

Consumer Credit Counseling is just a part of an industry that markets HOPE and sells problems. I have a numerous examples of how in many cases these services not only make the problem worse but rip people off through the use of excessive fees.

So, this is the solution. The industry that Congress said needed reform and is ripping off consumers is now the answer to the country’s foreclosure problem. Although Senator Dodd has presented many bills to Congress and positioned himself as the Champion of the people when it comes to predatory lending, it appears that all of those presented bills as well as what he is currently doing is nothing more than political positioning and resume building. Talk is cheap until he can actually get something done in Congress. A true consumer champion would never have offered this as a solution.

This "solution" should be viewed as an insult to one’s intelligence. The list is a mile long of why these credit fix solutions are dangerous for consumers. These companies are of no value unless they can actually get the mortgage lender to re-structure the mortgage. It will take an act of Congress for that to happen. (literally and figuratively speaking)