This recent NY Times article Back to Business: Subprime Brokers Resurface as Dubious Loan Fixers is proof positive that the real estate loan industry cannot police itself. A scorpion has to sting and Loan brokers continue to channel Calvera, the chief bandit from the Magnificent Seven, played by Eli Wallach: “If God didn’t want them sheared, he would not have made them sheep."

FedMod is only one example of how many of the same people who dispensed risky mortgages during the real estate bubble have disguised themselves as a “new industry” focused on selling (but not so much obtaining) loan modifications for the same crappy loans they sold earlier. This just the same con: only this time conning the very people who have already been badly burned the first time around.

“We just changed the script and changed the product we were selling,” said Mr. Soussana, who ran the Los Angeles sales office of Federal Loan Modification Law Center. The new script: You got a raw deal, and “Now, we’re able to help you out because we understand your lender.”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.“Our job was to get the money in and then we’re done,” said Paul Pejman, a former sales agent who worked out of FedMod’s two-story headquarters in Irvine, Calif.

Take the Money and Run. Sound familiar?

Pejman recounted his experience, he said, because “I really feel bad.” “I had people calling me crying, and we were telling them, ‘You can pay me or you can lose your house,’ ” Mr. Pejman said. “People were giving me every dime they had, opening credit cards. But I never saw one client come out of it with a successful loan modification.”

And that is the one glimmer of hope in this story: that an agent had a conscience. He felt bad. I’m glad that he came forward so that others can be warned against this rapacious thievery.

Mr. Broughton, 49, had worked in the mortgage industry since the mid-1980s. As the market ground to a halt in 2008, he founded FedMod with two Los Angeles entrepreneurs, Steven Oscherowitz and Boaz Minitzer. Mr. Broughton sought to distinguish his company from the unscrupulous ventures that dominate the industry.

Let’s take a look at how Mr. Broughton “distinguished” this company.

“You had a lot of these modification companies that were subprime guys,” he said. “All they cared about was making quick dollars.”

Uh huh.

The partners [of FedMod] entrusted Mr. Soussana with FedMod’s Los Angeles sales office precisely because he had proved adept at selling the sorts of loans that now required modification. In 2006, Mr. Soussana, then 30, was listed as the nation’s sixth most prolific mortgage broker by Mortgage Originator, a trade magazine, brokering $318 million worth of loans. The same year, he paid $1.8 million for a house near Beverly Hills.

“He was one of the biggest guys in subprime mortgages,” Mr. Minitzer said.

So in other words, they distinguished themselves from the unscrupulous practices of the industry by bringing in a guy who was best at playing the game. Continue.

The three original partners brought in Mr. Anz to gain a crucial asset: his law license. Having a lawyer in charge enabled them to market their venture as a law firm and thus collect upfront payments under California rules.“Jeff asked me how I could, for lack of a better word, legitimize it,” Mr. Anz said.

I’m knocked over by the scruples, aren’t you? When do any ethical bells start ringing for these people? Do they have any ethics? Apparently scruples are merely something to be discussed as a marketing ploy as part of a script. The new lesson these wolves have learned is that obtaining someone else with a law license gives you a new license to steal.

The California Department of Real Estate warns consumers that many dubious loan modification companies have organized themselves as law firms solely to allow them to collect upfront fees, even though the lawyers have little, if anything, to do with the services provided. The department cautions consumers against hiring such companies.“

To Mr. Anz’ credit, he has taken over operations of the firm, stopped taking new cases, and is trying resolve the thousands of files amassed. Do read the entire New York Times article for the details.

They basically told us, ‘Do whatever you need to do,’ ” Pejman said. “ ‘It’s a sales floor. You’re here to sell.’ People would quote success rates and just pull them out of thin air. People would say 60 percent, 80 percent, 90 percent. To the average Joe in Kansas, that sounded great. But the reality is that 50 percent were immediately declined by the lender.”

By March, sales agents were inundated by calls from furious clients who had paid long ago, but not heard from anyone. Some called from motels, their belongings piled in boxes, weeping as they recounted losing their homes.The agents let most calls go to voicemail, playing the most dramatic messages over speakerphones for communal amusement, Mr. Pejman said.

“Guys would sit there and laugh,” he said. “‘This lady’s going crazy,’ that sort of thing.”

As highly paid pundits continue to regale us with tales of economic recovery and positive indicators, all I can see is that the human indicators continue to be a bit more dire. Unemployment is still getting worse only more slowly and foreclosures are ripe for the picking.

When will we stop thinking about "markets" and start thinking about people?