You can sue in small claims court for breach of agreement -- you agreed that they would get you the modification in exchange for the $3,000, or at least make a serious effort in doing so. You also might consult with an attorney about the prospects for pursuing a legal malpractice claim.

You need to do some checking first:

1. were they operating under the newly amended law that forbids taking money up front;

2. what did they promise to do, both in writing and orally

3. any department of real estate complaints against them

4. any similar lawusits against co. or slaesman you dealt wtih, and if so contact party suing them to find out what happened and what you can argue

4. write them for a refund based upon information you have gathered

5 read at least one book written for non-lawyers as to how to proceed n Small Claims Court including subpoena of records

6.. sue in small claims court

Whenever I hear or read that someone is looking for under $7,500 in monetary relief, Small Claims Court comes to mind....easy to file, cheap, and a much quicker trial. You can get a paperback book describing how to prepare, file and plead your case, along with some help on collecting your judgment (if you get one). I would caution you, however, that the law group you sue will have defenses - wheher valid or not, I of course don't know - having to do with "we only provide a service, we don't guarantee a result" or "we can bring the borrower an offer, but he still has to pay the lender something." Also, maybe the law group will settle with you upon getting the small-claims summons.

You didn't lose the home 'because of' them, but rather because of non-payment of loan. They simply failed to succeed at obtaining a mod. BTW: most mod attempts fail. Many, if not most, such offers to mod are sucker bets to take your money. Have your contract with them reviewed by counsel experienced in the details of the new laws regulating mods, to see if they complied with the contract terms and the laws. If not, you might have grounds for a breach of contract or fraud claim.