Everyone has read about loan modification companies who charge you upfront fees to do your loan modification and then they never hear from that company again. Unfortunately this is becoming a common predicament for homeowners who are desperate to save their home. A lot of our clients come to us after having aid thousands of dollars in upfront fees to another company.

While the media tells you that you should handle the modification yourself, that is not necessarily good information either. If you have tried to handle the loan modification yourself, you know what I mean. First, you have to get through all of the red tape with your lender: making multiple calls, sitting on hold forever, sending and re-sending documents, and listening to every employee at the lender telling you something different every time you call. This can go on for months and if you fail to give them a document they need in the time that they allow, your file will be canceled promptly. The lender will also try to give you terms that are not as favorable because they know you are desperate to keep your home and will do anything to do so.

All that being said, here are some red flags that it could be a scam when dealing with Loan Modification Companies:

1) The company is charging you money up front. Even if the company has an advance fee listing agreement, you should not pay money up front. If you look at the fine print in your contract, even if your modification does not get approved, you will get very little money back from them.

2) The company says they are backed by attorneys so you have an advantage over everyone else and that is why their fees are higher. Attorneys can be helpful but 99% of loan modifications do not require an attorney. We have attorneys on our staff and they get involved with a limited number of cases because most loans need a true modification, not legal action. This is just another way for a company to get away with charging you up front and they typically charge you more money than competitors because attorneys are more expensive.

3) If the company is making any promises or predictions on your file, don’t use them. If they tell you that you should qualify for a 3% rate, they are not telling the truth. Only the lender can make that determination and your file has not even been submitted to them yet. Companies, especially those charging up front, will do anything to get your business. They are in sales and the commission on your service. They want to convince you to use them and what better way to get your attention than to promise a very low rate and payment. It sounds great but as the saying goes, “if it sounds too good to be true then it probably is too good to be true.”

4) If the company says they don’t collect a fee until you are approved for a modification, be sure to get clarification on this. For example, are they pre-approving you or is it your lender approving your modification? These companies can easily “pre-approve” you and then charge you a fee. This is the same thing as paying upfront fees because only your lender knows if you will qualify for a loan modification and that process takes on average of 90 days right now (if you are in foreclosure, the process is much faster). The company pre-approving you has no idea if your lender will approve your modification but the homeowner does not know any better so they pay the fee to the company thinking they are approved for a modification. If they approve you, then what are the terms and can they put it in writing? They won’t do this for you because they can’t since the lender has not officially approved your modification.

I know everyone likes to do their research but be smart about it. You shouldn’t care what the company says if they are charging you money up front. What is the incentive to get your modification done if they have already been paid? When it just doesn’t add up, it should be a warning signal to you to not do business with them. Don’t get me wrong, I think homeowners should use an outside company to assist them, but it doesn’t have to cost you all of your savings without even knowing if your lender will approve you.

Finally, I realize this is a stressful process but don’t let yourself be sold to. If someone has to sell you on why they are so great and why their upfront fees aren’t as high as someone else’s so they must not be bad, don’t let this fool you. Go through the process with your eyes and ears open in order to make a rational decision. I realize keeping your home is a priority so make the decision to keep your home in a rational manner and not based off fear or empty promises that cannot be backed up.

For additional information or to get your question answered, go to: www.LoanModificationFoundation.com

 

Posts Coming Soon:

How do you know the company is NOT a Scam?

How Do You Get Your Money Back from a Loan Modification Company Running a Scam?