• Main Page
• Our Story
• Our Purpose
• Our Services
• FAQ’s

Beware of Predatory Loan Modifiers

In a recent NY Times article, Swindlers Find Growing Market in Foreclosures, the author sheds light on the growing problem of predatory loan modification businesses.  A major problem with the practices of these “swindlers” is that time is of the essence in the loan modification process.  Many of the people reaching out to loan modification companies do not have time in their favor. They are in desperate need of some source of monthly financial relief and their mortgages tend to be the most significant drain. Loan modifications aren’t an overnight process. Making the initial contact, obtaining guidance, understanding the process, gathering materials needed for submission and the negotiation process with the lender all take significant time.  The predatory companies make it appear that they are acting on your behalf, however, it may be weeks to sometimes months before the consumer knows they have been taken advantage of.  This passing of time creates an even worse set of circumstances for the borrower.  The victims of these scams are put further into a financial hole with the passing of time and the potential for losing their home grows.

Another issue that is created by these swindlers is the negative image their behavior permeates across the industry.  This is like any other industry where a number of bad apples are spoiling it for the whole bunch.  As a legitimate loan modification company, we completely understand the damage that is being done.  For many people, a bad taste in the mouth already exists due to their original experience with obtaining a loan on their home. These individuals feel like they were taken advantage of by their lender or mortgage broker and did not clearly understand the payment or loan structure they were getting. In some cases, they shouldn’t have qualified for their loan in the first place. This lack of knowledge and affordability has led to the growing financial predicament being faced.  Couple this with a loss of a job or an increasing adjustable rate mortgage and the financial requirement becomes impossible to meet. Now, these same people are faced with the prospect of modifying their mortgage or potentially lose their home.  The feeling that they can’t find someone they trust to help them save their situation is just exacerbating their problem. 

Unfortunately, this sentiment and attitude makes it difficult for legitimate companies to produce and assist the consumer.  There are a number of good loan modification companies out there who are trying to help the consumer and, in turn, positively impact the economy.  Let’s be clear.  Housing and credit are two key components that are at the core of the economic mess.  At Loan Mitigation Advocates, we believe strongly that we won’t begin to see significant changes that take us out of this recession until more foreclosures and short sales are prevented.  One primary prevention practice is the loan modification.

Here are a few solid ways to help identify the loan modification predators from those legitimate loan modification businesses:

1. Upfront Fees – If someone is charging an upfront fee, check into this further. 21 states, including California, prohibit loan modification companies from collecting an advanced fee until their services are completed.
2. Illegally Operating – Determine if the company is operating legally.  Many states require a broker’s license or an attorney to be involved with the company. Call your local Department of Real Estate or Attorney General’s Office to find out your state’s requirements for a company running a loan modification business.
3. Talk to the Owners of the Company – speak to the central figures running the company.  Don’t settle for talking to an order taker.  Demand to speak with someone higher up who will be directly negotiating with your lender.  A number of these companies have a system setup like an order taker at your local drive thru fast food restaurant.
4. Identify a Track Record – ask for a track record of success and references from past clients before signing a contract. If possible, obtain previous clients contact information, call them and ask what they thought of the process. Treat this like any other service you would hire.  Ask questions and become informed of the process.

At Loan Mitigation Advocates, our policy has always been about informing the client.  Knowledge is central to the consumer’s comfort level. We advocate answering your questions and personally walking you through the entire process. We won’t start the process until your questions have been answered and your expectations have been understood.  If you are interested in obtaining our services, please do not hesitate to make contact with us.

Comments