With foreclosures moving at breakneck speed, panic-stricken homeowners are desperate to hang on to their properties. But, at what cost? Sinister predators are ready to take your last stash of cash for promises they cannot deliver.
There are honest and reputable companies out there who want to help you and truly can. However, chasing the unsuspecting homeowner, are liars, crooks, and thieves. Firstly, loan modifications in California are regulated by the California Department of Real Estate. The DRE has given license to mortgage professionals to modify a loan, but they must deposit the client’s upfront payment into a trust fund. Until the modification has been performed successfully, the loan provider may not touch the money. If the modification cannot be done, the check is to be returned in full to the client, devoid of any service fees. Check with your state’s real estate regulators for special conditions and operational laws for the home loan modification companies. As you search for a home loan modification company, regard these three red flags as a warning that you may fall victim, rather than victor:
1: Watch for a written or verbal guarantee that the modification will be successful. The negotiating process is done through private banks, each holding their own set of criteria for candidates. The loan modification company may guarantee a diligent effort , but can not promise the outcome.
2: If a processing fee is attached to the contract, walk away. It is likely to be in fine print at the bottom of the contract and the processor will assure you that it’s just a safety measure and will not be used. The homeowner is counciled that they will qualify for the new loan, and when that doesn’t happen, the company returns the client’s check, minus the deposit,whereas the modification reps have just earned their real income. Skirting around culpability, the scammer says that the homeowner failed to provide sufficient documentation, hence their rejection for the new loan. Money is made by volume, as the scammer will accept an application from anyone who applies, assuring them of relief while knowing that their income is insufficient to sustain a new loan, in which case, the processing fee, ranging from $595 to $1000 is pocketed by the company.
3: The loan modifier will put fear into the homeowner that they cannot do this process themselves, as any mistakes made cannot be corrected in time and will expedite them into foreclosure. This is not true, in fact, anyone can modify a loan by checking interest rates from the banks and offering to bring them your business. For borrowers who can provide documentation that they can make the new payments, they become the bank’s new and preferred customer. In some cases, working with your own bank is the best route as missing a few payments or mitigating the financed balance is a better option for the bank than foreclosure. The bank does not want the property. Every day a payment of some kind is not made, the bank receives zero toward the balance and they’re responsible for the property taxes. By contacting your current lender, you may be able to modify the loan on your own. For those who wish to take charge of the situation themselves, free government prepared manuals and counselors are available to assist you from HUD, serving all fifty states.
For those who prefer to let a professional handle the matter, choosing an attorney is the best option for your peace of mind and security, as they’re not likely to disappear with your money or make egregious mistakes. Lawyers have their good name and reputation to protect and will not jeopardize their standing with the Bar. If after a consultation, you believe they should be checked out, contact your state’s Bar Association for a record of any disciplinary action against them. Also, many law offices are registered with the Better Business Bureau where you may obtain feedback on any complaints. The same higher standard is found with mortgage brokers, who are familiar with all aspects of the home loan industry, and accountable to the Department of Real Estate.