Loan Modification Guarantees lead to rip off for consumers
I had a client last week and he wanted to know if our company could guarantee that the payments he would be making would be $187 lower per month once he gets his loan modification. It seems as though another company not only guaranteed lower payments but also provided a new quote for his monthly payment.
I hated to burst his bubble, but I just had to.
The Federal Trade Commission recently settled a lawsuit that should have sent a stern warning to so called foreclosure consultants. If you are going to take consumers money upfront and you promise to prevent foreclosure, you might want to deliver the goods.
The FTC sued Mortgage Foreclosure Consultants Inc., a Clearwater Florida company. In the suit the FTC charged a "scheme to sell purported mortgage foreclosure services to consumers." In court documents, the FTC said the company provided "foreclosure solutions" for mortgage borrowers and offered a "guarantee of our services."
Many of these same borrowers lost their homes because virtually all instances of foreclosure intervention were pointless or never taken. Except for collecting fees, the company did not prevail in their promises.
In California as well as other states, authorities are taking measures to ensure consumers are protected. But nothing will prevent scams in an ever growing business. In order to help consumers understand the Loan Modification rules, I have outlined the following five commandments.
If you apply common sense and use these commandments, you should be safe when choosing a reputable company to help steer you through this difficult process of modifying a mortgage. Ready? Here goes.
1. Thou shall not give upfront money to a Loan Modification company until work has been completed.
Before you can qualify for a Loan Modification, you are entitled to a financial analysis. Not alot of people are qualified to preform this task, but why pay before you even know if you'll qualify?
2. Thou shall run (fast) if you are ever offered a guarantee that your modification will be accepted by the lender.
There are no guarantees. Period. Too many factors are at stake. Jobs, finances, family, lenders criteria, and finally the ability of the Loan Modification consultant to negotiate properly. There are no guarantees and anyone offering one is lying.
3. Thou shall look for a Loan Modification comapny that has an attorney as part of the company. Not as an outside counsel, but in the office.
A bunch of Loan Modification companies ship their cases out to attorneys who do work for them. This is not the same as having an attorney negotiating on your behalf. In many cases they are simply reviewing paperwork.
4. Thou shall never turn over the deed to your property to a Loan Modification company.
Believe it or not, this is happening. Some companies tell their clients to turn over the deed so they will be in a better position to negotiate. Don't do it. Ever.
5.Thou shall never send payments due the lender to a third party or Loan Modification company.
If you decide to miss payments, set up a bank account and set the money aside so you have access to it. Many times, as part of the modification you will be required to make at least one of those missed payments as good faith. Keep control of your money.
An honest, upfront company will advise you of the same commandments. Legitimate companies don't have to take your money illegally in order to prevail. Use your head and try to seperate fact from fiction. Most reputable companies will offer a free analysis to determine what is the best direction for you and your family.
