Loan Modification Companies – Information For Consumers

Posted by Law Article on July 10th, 2009 at 08:56pm

It’s like the “perfect storm” for ex- mortgage brokers and ex-cons alike. All of a sudden we have thousands of “loan modification experts” hitting the internet. The truth is these guys have absolutely no clue and no leverage with your lender. The best most of them can hope for is an unaffordable forbearance agreement or a loan mod under a government or FDIC backed program that you can probably do yourself. The truth is most of these struggling homeowners end up losing their home to foreclosure because they fell for some gimmicky website, a smooth talking ex- loan officer promising a super low interest rate, and a promise of principal reduction and no payments for 6 months or your money back ( minus a small processing fee of course). At the end of the day they have divulged all of your financial information to the lender, only to get turned down and unfortunately lose their home. The truth is most of these guys who boast “attorneys” and whatever else they can throw at you, are nothing more than beat up loan originators running around town trying to find someone… anyone cheap…,,(usually an ex-loan processor)  to send your file to the bank and see what they’ll do. Common sense should tell you to pick up the phone and call your lender or mortgage loan servicing company and if you don’t like what you hear, then hire an attorney! Yes, when you are in trouble hiring an attorney to fight for you is what one does for the best possible results.

Do NOT buy a “do it yourself book” and do not trust a loan modification company or send them any money to negotiate with your lender. There are about 10 mortgage shops in all of California (most loan mod shops are in California) that have advance fee agreements, see http://www.dre.ca.gov/mlb_adv_fees.html for details. The California Department of Real Estate does not endorse these companies; they only try to regulate them. The rep from these companies must be licensed as well.  Also, you should take note that these companies have been doing loan modifications for less than 6 months, but of course, they are all experts. Yes, I believe some mean well, but the truth is even if they have an attorney on staff, he is not your attorney… and he does NOT represent you at all. Look, you can put a Ferrari emblem on a Ford and it’s still a Ford with a Ferrari emblem. There are just way too many loan mod companies using words like legal and law in their name or boasting they have “in house attorneys”.

You can expect to pay somewhere in the neighborhood of $3,000 to $5,000 with these companies which is general the same amount you will pay to an attorney. If you are in default or foreclosure, only an attorney may collect upfront fees to help stop a foreclosure and save your home. If you don’t have all the money the lender wants to reinstate your loan, an attorney can usually negotiate with the lender to modify the loan, waive the arrearages, and even modify the principal balance to make the loan affordable. There are several laws in place that make it difficult for a mortgage loan servicing company to foreclose on you and have the investor take a huge loss through foreclosure. A good attorney understands how to work with the lender to stop a foreclosure and the lenders… recognizing when someone ‘knows their stuff’… will generally respond to reasonable offers made by a law office for their client. I am confident in saying that as a law firm, we have secured modifications for our clients that neither a loan mod company or homeowner dealing direct, would have been able to secure   For more information on loan modifications go to www.feldmanlawcenter.com or call Mr. Steven C. Feldman at (800) 527-8497.

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