Unfortunately, companies exist who are in this business simply to scam homeowners. What's worse, some people from these companies you speak with are not informed enough to understand they are hurting some people more instead of helping to save their home.
Tips to See Through If is a Loan Modification Scam:
• Charges homeowner a large upfront fee : Some loan Modification companies will charge up to $7,500 to negotiate on your behalf with your lender for a loan modification. In some instances, if they are denied, the company will keep 1/2 your money and return the leftovers. There should be a money back guarantee as well as other choices.
Does not legally stop the foreclosure process (if your home is in foreclosure and a company negotiates for you, what if the lender delays their response? Your home could be lost to foreclosure)
• Will accept the first offer from the lender (You pay an upfront fee for a Loan Modification, and your bank responds to the 3rd party company you hired with an offer that is not helpful for your situation. So, basically, you are in the same situation but now you are closer to foreclosure.
On the other hand, there are some reputable companies who do what they say they will do. But it doesn’t hurt to be cautious while searching for assistance.
Most loan modification companies can assist homeowners in any state.
What you should look to have done from a reputable loan modification company is:
• You will have a free consultation by phone to go over your financial situation to see if you qualify. Normally, no funds are required until the agent/consultant or attorney knows they can actually help you achieve your modification. After all, their time is better spent helping their current clients versus ones that are borderline and beyond help.
• An attorney-backed company who can legally stop the foreclosure
• More time to rebuild your financial situation
(ability to freeze your payments up to 6 months due to financial hardship.)
• Stop annoying phone calls by your lender (your lender will have to contact your attorney on your behalf)
• Design a plan that meets the homeowner's budget and objective (a low rate with a 30-40 fixed term)
• Ability to put late payments back into the loan to avoid derogatory credit
• Ability to reduce or get rid of 2nd mortgages, request a principle reduction if you owe more than your loan amount
