How do I know which Loan Modification company's are a scam ? I have been asked this question numerous times.
Unfortunately, there ARE a lot of companies who are in this new industry to scam people (approximately 75%), and some aren't educated enough to know that they are hurting people instead of helping.
This is what I found during my research:
Tell tale signs of a Loss Mitigation Scam:
- Charges a huge upfront fee :
There are some Loan Modification companies who will charge sometimes up to $7500 to contact your lender and ask for a loan mod, and in some cases, when turned down, they will keep 1/2 your money and return the rest, or may return nothing to you by claiming they did their job and are entitled to that fee. There should be a money back guarantee and have other alternatives for you.
- Collects upfront fee with out explaining the process, or does not seem interested in your circumstances .
Anyone legit will listen and care about what your going through, and will explain exactly what you are paying for and what to look forward to while on the program. There should be no unanswered questions.
- Does not stop the foreclosure legally
If your home is in foreclosure and a company negotiates on your behalf, what if the lender takes a long time to respond? Your may lose your home.
- Will accept the first proposal from the lender
You pay an upfront fee for a Loan Mod, and with in 90 days your bank comes back with a modification that does not suit you or your budget. or worse had not even been contacted. Basically you bought yourself 3 months and most likely will find yourself in the same situation. Problem is, you may only utilize a 3rd party negotiator once, and you could have negotiated with your bank on your own with out the fee and ended up with the same terms. If you are working with an attorney based legit company your loan mod should turn out significantly better.
How would you feel if you went with a company that had no real office to visit and may be working out of their basement. This is a question that needs to be asked and verified.
If you are being promised an interest rate, or and exact prinicple reduction amount, most likely you are just being told what you want to hear. Please note that no one can promise you anything without negotiating with your lender.
- Is there an approval process?
Before you agree to paying any fee at all, there should be an application process which would determine if you qualify for this assistance. This should not include credit qualifying. Credit is not a determining factor. The application should include, your budget, income, property info, and hardship, basically an entire package should be submitted and reviewed before the loan mod company decides to take on your case. Your approval should not be determined on the first phone call.
- Can not find them on the BBB, or anywhere else for that matter.
Most companies who have been in business for at least a year will have a rating with the better business bureau whether they are a member or not. There are companies popping up left and right. You want to make sure you are working with a leader in the industry. Simple research can help you determine this. If you are working with an Attorney you should be able to verify his or her license through the Bar Association.
On the other hand, there are some legit companies who do what they say they will do. But just be cautious while looking for help. This is a booming industry and there is a lot of greed. Doing this kind of research can be exhausting. You may still find that after researching them you are still unsure. It is very tedious work and does take time. Aside from researching them, you should know what questions to ask review your documents carefully. I have provided some resources for you to begin your search. Better Business Bureau, Federal Trade Commission, Consumer protection agency, and rip off report.
I have done extensive research, reviewed contracts, and asked imperative questions with many Loan Modification Companies and Attorneys. I have a handful that have passed my legitimacy test, and am now directing distressed homeowners to them and participating during the process.
I have complied a handful of companies who:
1. Are members of the BBB with a Good rating or in good standing with the Bar Association if they are an Attorney
2. Are attorney based or a Law Firm who oversees the files or does the actual negotiating
3. Have proof of success
4. Have passed my legitimacy test (scam free, and researched thoroughly through reliable resources, contracts reviewed, and imperative questions answered)
5. Have reasonable fees and have a Money Back Guarantee
6. Have the clients best interest in mind
7. Are structured and organized
8. Are in compliance with federal regulations and guidelines
9. Are helping homeowners in the State you reside in
As you can see this takes a lot of footwork and many hours to develop. Each company is unique in their own way and offer different services and have variable fees. After speaking with you about your unique situation and having evaluated your circumstances, I will suggest someone who suits your needs, explain the process, and will be there every step of the way.
There is assistance available to everyone in any state.
This is what we do for our clients:
- We will analyze your situation and take an application to see if you qualify for free. We will not accept any funds until we have issued an approval which means your file has been underwritten and our attorneys agree to take on your case.
- Our Attorneys Legally place the foreclosure process on pause
- Increased time to sell or rebuild your financial situation is an inherent benefit (Sometimes we are able to freeze your payments for up to 6 months depending on your hardship.)
- Help stop harassing phone calls( tell your lender to contact your attorney who will speak on your behalf)
- Formulate a plan that fits with in the home owner's budget (reduced rate, 30-40 fixed term)
- Work to have missed payments moved to end of the loan
- To work with your lender to provide you with the best modification that fits with in your budget
- Work to reduce or eliminate 2nd or 3 rd mortgage, or ask for a principle reduction if you owe more than your loan amount
- To keep your family in your home and avoid displacement.
- To do everything possible to work out a solution. If your lender is unwilling to work with us, they need to provide a good explanation as to why. We will then talk to you about some other foreclosure prevention options that are available to you. Our mission is for you to keep your property, but this may not be beneficial to everyone.
- Provide you with a money back guarantee if for some reason we are unable to work out a solution that improves your current situation (which is about 2% after being approved though our 12 step approval process), no questions asked!
The Fees are about the only thing competitive. You may think that having a team of Attorneys and Real Estate experts, and underwriters assisting you would be very expensive. This was one of the hardest part of my research. Finding not only legit help for my clients, but to make sure the fees are affordable was very challenging. The fees happen to be very fair and competitive with others who don't even come close to providing you with an array of services. You get more bang for your buck, that's for sure. The best thing is, your going with a trusted company who has credentials to back that up.
I pledge to be 100% honest, diligent, and treat you with integrity.
More Useful Blogs:
Loan Modification FAQ's
Investors Facing Foreclosure
Why won't my lender won't work with me?
www.KeepYourProperty.info
Choosing a Loan Modification Company
If you feel this information was useful, please comment
C Thompson
Loss Mitigation Case Manager
407-219-8739
Toll Free: 1-(877)-646-4331
www.keepyourproperty.info
Pre-Approval Loan Modification Application
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Hey callie thanks for the Info, this is a very serious issue and people like you need to shine a light on these SICK companies.
I WILL SPREAD THE WORD!!!!