Finding a Loan Modification Company: 5 Things to Watch For

Month after month, we hear countless horror stories from homeowners about deceitful loan mod programs that didn’t get them results, or even worse, the companies were shut down by authorities. It’s not the homeowner’s fault. In fact, consumers typically don’t have the information needed to properly assess loan modification programs.

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Whether you’re just starting the process of evaluating a loan mod program or law firm, or you were already a victim of a dishonest one, this post covers five ways to weed out the good from the bad, and enable you or your loved one to confidently choose a company to assist you.

1. Be aware of the laws.

The Mortgage Assistance Relief Services Rule bans loan mod companies from collecting fees until homeowners have a written offer from their lender or servicer saying they are a candidate for a loan mod. This is a federal ruling, and state regulations may also apply.

Most attorneys were made exempt, but still, don’t send money to a law firm until they have shown you written documentation to verify the results of their service or strategy. Anything other than written documentation is worthless as evidence of success.

2. Be wary of promises.

If it sounds too good to be true, it probably is. And when it comes to a loan modification, it’s ultimately up to your lender to determine what program you qualify for and which terms you’ll get.

If someone is guaranteeing you a 2 percent interest rate for 40 years, a principal reduction or loan mod in 60 to 90 days, you may consider reporting them to The Feds (no joke!). If they’re giving you misleading info, they may be giving others the same bad advice.

Also, don’t be mislead by a 100 percent money-back guarantee, since it may be difficult to get your money back, especially if the company goes out of business.

3. Be careful of deceptive marketing.

You might get deceptive mail from loan mod companies or attorneys that looks official and tells you to act quickly before you forfeit legal rights, or face statute of limitations and government program deadlines.

It often looks very similar to legitimate correspondence from your lender. It could even have your bank name and loan/account number on it, because this is public information. So be sure to scrutinize the letter. Somewhere there will be fine print that discloses it’s an advertisement.

4. Watch out for recommended lawsuits.

Some attorneys may suggest lawsuits called “Mass Joinder” and “Mass Tort.” These are like class-action lawsuits against lenders with upfront fees, so it’s a risky investment that’s often misrepresented as a slam-dunk deal. No one can guarantee how a judge will rule, so it’s not the best alternative to the other options you have, like finding out if you are truly eligible for a loan modification.

Also, look for misleading lawsuits by attorneys who claim they can “quiet the title of a property” or get you a “free and clear home.” Cases like these are often misrepresented to the people and the risks aren’t fully disclosed. “Quiet title” success is few and far between.

In recent times, this has become a mass-marketed strategy to lead people away from pursuing loan modifications. But no one has been able to provide us with written documentation to support this as a viable option. Ever.

The California Department of Real Estate has repeatedly warned consumers against these types of strategies because there are no guarantees.

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5. Get it in writing.

Every verbal claim made by a mortgage relief salesperson, whether it’s a customer service professional or high-profile attorney is worthless unless it’s also in writing. When you’re having conversations with potential companies about your mortgage, it’s a good idea to make note of all verbal claims and compare your notes to the written agreement provided by the potential service provider.

Make sure you understand the contract you are signing and what you are agreeing to, not what the representative told you on the phone. You might find out that the contract states there aren’t any refunds, even if you were told otherwise.

Keep in mind that if the company is hesitant or resistant to cooperate with you when you question the terms or claims, there’s a good chance they’re hiding something. Consider this a red flag.

We hope this helps you in your journey to evaluate a loan modification program. Don’t hesitate to contact us if you need more assistance.

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