Many people that we talk to every day are in a situation where “loan modification” is the best possible option for them. They have little or no equity in their home, they are in an adjustable rate mortgage and they have had a reduction in income. As a result of one, two or three of these things, they are not able to meet the current underwriting guidelines to refinance their home.
So rather than lose their home to foreclosure, they are looking for alternatives.
One possible solution is to work with your current lender to modify your existing loan. Another possible solution is to find a HUD-approved Housing Counseling Agency. Another is to work with a well-respected loan modification company who charges money for their services.
Apparently, there are some “loan modification scams” that are going on and you should be aware of what these look like.
A great post by a well-respected mortgage professional was posted recently here — and while it has become a conversation for mortgage professionals more than consumers — the point is this:
As a consumer, you have options to try to get your loan modified for free without paying a large amount of money to a loan modification company.
From the post, my favorite paragraph was one that someone asked the author to bold:
Consumers reading this blog:
Loan modifications are performed by a lender with no fee to the homeowner. HUD-approved Housing Counseling Agencies perform loss mitigation/loan modification services for free. These agencies are supported by our tax dollars.
As we have mentioned before, we currently recommend people to one loan modification company and do not get involved other than just referring them and allowing them to decide on their own whether or not working with a loan modification company is right for them.
I can say that with the number of people who contact us that are in a tough sitaution and looking for help, it is clear to me that the more help you can get on your side, the higher your chances of a successful outcome.
Many people who call us have already tried to get their lender to modify their loan and have been unsuccessful. Very few people have talked to a HUD-approved Housing Counseling Agency, so maybe that is a next-best step before deciding to go with a loan modification company to help them.
But one thing is clear: the absolute worst thing that someone can do who is in danger of losing their home is nothing.
Learn How To Do Your Own Loan Modification Without The Help of a Loan Modification Company
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Words from a Very Outspoken and Opinionated California Litigation Attorney
Here in California, our Department of Real Estate website (dub dub dub dot dre dot gov) lists the companies that have DRE “permission” to modify loans… add to this list any licensed California attorney, and that is where you should begin your due diligence search when you seek help in California. Other states probably have similar laws, so check with your own state DRE and state bar.
My law firm has been getting more and more calls recently from homeowners that were victims of predatory lenders who put them into an unaffordable loan and now fell into the hands of those same people who sold the toxic loans but profess to be saviors… DON’T BE A VICTIM TWICE! What’s that they say, “Fool me once, shame on you, but fool me twice, and I’ll sue your butt!”
Do your homework and THOROUGHLY investigate any firm before hiring them to save your biggest asset and the place you call “home.” Scammers are popping up like dandelions on a freshly mowed lawn in April. They advertise on the Internet, freeway billboards, radio, television, and print media everywhere, not to mention spamming your email box with those third-world widows needing someone to receive three million dollars for them. Make no mistake, in many cases, these “loan modification experts” are the exact same loan officers and mortgage brokers who fleeced homeowners the first time around. After losing their jobs with the crash of the mortgage industry, they have found a new way to make ill-gotten profits from hard-working homeowners through loan modifications.
In California, with very few exceptions (and attorneys are one exception… no coincidence there… attorneys make the laws), it is against the law for anyone to take money up front for helping a homeowner who is in default. Don’t trust a company that begins its relationship with you by breaking the law.
HERE’S THE BOTTOM LINE!
Hire an attorney – and not just any attorney either – one with experience in mortgage law, not just one with real estate law experience but one with experience in both FEDERAL and STATE litigation against mortgage companies, one who doesn’t also do family law, criminal law, admiralty law, and immigration law as well, one who limits the practice to mortgage law (or at least a great majority of it), one who has the experienced staff, training, and know how to take on the big lenders and their top notch lawyers (lenders have attorneys – and darn good ones – check out their counsel on the web – big names top schools, shouldn’t you have a lawyer too?).
We are not talking about a refund on your broken television here, we are talking about hundreds of thousands of dollars and your HOME – if you don’t think this is the time to hire a highly educated and experienced professional instead of a weekend schooled, almost out of work, broker slash loan officer slash “expensive water in a wine bottle with alleged magical curative powers” salesperson, I don’t know what would make you take things seriously.
Of course, this is one obnoxious lawyer’s totally biased opinion, but one based on many many distressing calls to my office every day. And, yes, my firm loves taking cases against loan modification companies who have violated laws. This field is quickly becoming one of the fastest growing sections for our mortgage law firm.
- Paul J. Molinaro, Esq.