Loan Modification Scams
I am constantly seeing things on the internet about Loan Modification and Loss Mitigation. Much of it is just too hard to swallow for me. I am not sure how many of you have read my blogs, but I am a true go to the source kind of guy. I do my due diligence in most anything I decide to take part in. I am not one to hear a guy say "my friend is making $ 7500.00 a week on this deal; you need to get in now". Not only do I want to see the check, I also want to get the guys phone number so I can call and ask him a ton of questions. I too in my early years got scammed into the get rich quick deals. Sure people got rich quick, but it was usually the owner of the companies.
I am now being solicited by people wanting to help me set up a loan modification business to add income to my Mortgage business. The fees are as much as $ 1995.00 + 395.00 per month. Others I have seen chage as much as $ 1495.00. I am told that those costs are for training and certification. Still seems a bit steep to me. Many offer to pay the Loan officer submitting the Loan Modification $ 2000.00 and up. To me that does not seem like it is helping the client out of a shabby situation. Is it so bad to get paid maybe $ 500.00 to do a deal like that, and then have a client come back later for a refy. Or refer you more business, that can help others out of the future potential of a forclosure. I understand that there are liabilities when doing loan modifications, so make sure that you work with seasoned companies who know what they are doing. I just do not think those that charge huge fees to warrent the high cost to client are the way to go. So be very leary of the "We will make you RICH! in Loan Mods". You can make some good extra income doing them, you just do not need to buy a business package such as these.
I remember one time I was asked to sell jewelry via network marketing. It was a company called Jewelway. I bought around $ 750.00 worth of jewelry and recruited a few people. Then about 4 months into things the owner of the company fled to some islands in the Caribbean with $ 5,000,000.00 of the companies money.. So I take the " Make tons of money doing nothing" with a grain of salt. Are there legitimate opportunities to make a lot of money out there? Sure there are. I know at least 4 people personally who are making over $ 250,000.00 per year with United 1st Financial. I personally have 3 friends in Pre-Paid legal who earn over $ 500,000.00 per year. Will everyone do that? Probably not. Can they if they do enough research and leg work? SURE. But most people do not want to work.
Now this leads me to my topic of this Blog. Loan Modification Scams. Now that we have the most number of Foreclosures at one time ever in our Nations history, it seems that all the scammers are coming out of the wood work. I would like to give you some insight on what types to get involved with and who to run away from.
Look for a company that is reputable, will train you and will not charge an arm and a leg to use their services. You can google "loan modification opportunities" just research them and ask lots of questions. Those who give moneyback guarantees should be Looked at with Caution. There are reputable companies that will give your fees back if they are unable to do a Loan Modification. However there are an equal number of unethical companies who are using the term "Guarantee" as a hook, to get people to do business with them. There are no guarantees that the lender will accept the offer the Loan Mod specialist offers.
Currently you do not need any kind of license to do modifications, in most states. However California and Florida require you to have a Real Estate or Mortgage License. Other states may be passing new legislation in this area due to the large numbers of fraudulent deals going on in this business. You will also need to find a company that will train you. Many have extensive online or powerpoint training. They will help you understand what documents you must get from the consumer, what questions to ask them about their situation, and overall help in finding people facing forclosure, pre-forclosure or notice of defaults. There are many companies who have been doing Loan Modification for a few years that will hire you either as a 1099 or W-2 Employee. If you would like to know how to contact them, then give me a call and I will be happy to tell you about them. Just don't go overboard on some of the hype out there about ALL the money you can make doing Loan Modification. It is not as easy as some state, you do have to do some work, and don't beleive you can get paid $ 2,000.00 per deal and just sit back and enjoy your new found bank machine. This is just my opinion from my research, and I am still doing research. But just don't go out and follow the cows to the edge of the cliff. Stop to smell some roses along the way and make an educated decision.
Here is my list of do's and don'ts
When looking for a company
I do not believe you need to spend thousands of dollars for a so called Loan Modification business. There are several companies out there that you can work for as a 1099 employee, who have just as good of programs as those charging enormous fees to be a part of.
Work for a company that utilizes Short Sales as part of the process. Many companies will only do Loan Modification, well if the client does not qualify for the Loan Modification, they are out of luck. I want to be able to help my client keep from foreclosure at all costs. If I do they will do business with me again in the future.
If the company is charging double what the clients house payment is, then you should have your client keep looking.
A good Loan Modification company will do the Loan Modification for about 1 Mortgage Payment or a $ 1500.00 minimum. Most reputable companies are charging between $ 2500.00 and $ 3500.00 for deals under $ 500,000.00. I see some that advertise $ 7500.00, that is highway robbery and probably a scam. Or they will charge $ 6,000.00 and guarantee ½ the fee back if they do not do the loan mod. The whole purpose is to just submit a single offer, then tell the client they can not do it and refund the $ 3,000.00. They just profited $ 3,000.00 for doing nothing more than contacting the lender with a throw at the wall modification offer.
Loan Modification is a process that will be around for at least the next couple of years, due to the large number of defaults, and ARM recasts. But make sure you guide your clients to the right person, or they may never come back to you as a client again. A very good friend recently told me of a story of an 82 year old woman in Las Vegas. She answered an ad stating they could save her from forclosure. She sent them $ 3500.00 as requested with NO Contract what so ever. This was over a month ago, and she has yet to hear back from them. And above all DO NOT, DO NOT DO NOT and I will repeat,
DO NOT ever allow anyone to convince you or your client to sign the deed over to them. This is a scam, scam, scam and there is no real benefit of doing it, except for the person you are signing it over to.
You can add Loan modification to your practice and make extra income and help your clients, but make sure you do your homework when it comes to working with a company.
You can make around 25-50% commission on a Loan Modification, depending on the company you work with. On an average deal with a fee of $ 2,500.00 800 - $ 1200 in your pocket. Not a bad addition during these hard times in Real Estate. About those companies offering to pay you $ 2,000.00 to send them a loan mod client? Are you helping your client or actually becoming part of the problem? For more information on loan modification or how to add legitimate additional financial related products to your business give me a call
I have now complied a list of loan modification companies. The list has over 295 companies.. 90 % of them are just scams.. if you would like the list feel free to email me your request.. there are two lists. One that offers affiliate programs to realtors and loan agents, and one that just has info for consumers.. please let me know if you are a consumer with the need for Foreclosure help, or and agent looking to add these services to your business.
Thomas Hargreaves is a Financial Planner and Mortgage Broker, And understands how education fits in to the practice of building wealth and saving taxes.
You can reach Thomas at: Phone: 541-844-1830 email: agentshelper@gmail.com www.NationalCreditWestCoast.com
Hi Tom- As you know I am a Loan Modification Case Manager and we have held conversations several times. I was actually part of your research and provided you with all facts.
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Great information Thomas. I appreciate you sharing it with us. I am looking at this closely with the idea of adding it to my business.