With the serious need that many homeowners now have for relief from high adjustable rate loans, looming foreclosures, and mortgage loans higher than the home’s value, many opportunistic companies who have jumped onto the loan modification bandwagon.
of these companies are legitimate; however there are a number of scam artists and boiler room operations who are taking money from people who are in need of real help, and not delivering on their promises.
do you determine who is genuine, and who you can trust with the most valuable asset you have, which is your home.
Here are some questions you should consider before contracting with a loan modification company:
- What type of company are they? Are they a law firm, or a broker, or independent processing company?
Only a law firm is bound by a tight set of legal and ethical rules that brokers and others do not have to follow. You should always do a thorough background check before you give money to anyone who wants to modify your loan.
- How long has the company been doing modifications? Do they provide other services?
You should only deal with a law firm that has extensive experience in real estate law, and dealing with financial hardship matters for at least 10 years. Only an attorney can act on behalf of a homeowner who has received a Notice of Default.
- Is the company licensed or bonded?
Do not deal with anyone who is not licensed by the state and bonded.
- Is there a written contract that spells out exactly what the company will do?
You must receive full disclosure, prior to making a commitment, about all actions that will be taken on your behalf.
- Does the company have a Dept. of Real Estate approval to collect fees for loan modification?
If a company has not been certified to collect fees upfront you should be very suspicious of their status.
- Does the company negotiate directly with the lender or do they out- source this function?
Many companies farm out processing of your modification and do not have real control of the process.
- What kind of evaluation is done of your situation before asking for money?
Your specific situation and objectives should always be reviewed by an experienced and knowledgeable attorney before a decision is made to proceed. An ethical company will not take a case unless it meets the basic criteria for a successful modification.
- Does the company guarantee specific results?
If any company does this you should not just walk away, but run away immediately. No legitimate company can guarantee what a lender will or will not do.
- Does the company provide regular updates on the progress of your modification after the process starts?
This should be spelled out in your contract along with a specific individual who will be your contact for questions, etc.
It is crucial that you do your homework and ask the right questions before committing to pay for service that can have such a significant effect on your home ownership.
