It’s easy to make you a victim and rip you off with a loan modification. People are willing to believe the wild claims companies make about being able to cut your loan balance or slice your interest rate. It sounds so good when the salespeople are pitching you.
If you received a postcard or letter in the mail claiming you are eligible to have your mortgage modified, don’t forget this is an advertising piece to try to sell you services.
Typically when you respond the commissioned salesperson will tell you they can help you and you qualify for their services. I’ve yet to meet someone that has been told they don’t qualify.
The salesperson may even try to sell you some report for a fee that will show you the problems with your mortgage. Don’t waste your money.
These companies often pretend to be law groups or law firms but most are actually not owned by attorneys at all. They are lead generating sales organizations that get paid to sign people up and sell them the services the company is pitching.
Just because you are being sold something does not mean it is best for you.
Free Loan Modification Services
It is important to remember that no lender is required to modify any loan for any reason. Knowing that, before you pay one penny for loan modification services, you should contact a free HUD Housing Counselor and your mortgage company to review if you even qualify for a loan modification program that applies to you.
A HUD Housing Counselor is a subsidized government nonprofit counselor that can offer you independent advice about loan modification programs you may qualify for, for free.
I’ve not run into a fee charging mortgage modification law firm or company that bothers to tell people that.
They also don’t tell people that the fastest way to get a mortgage modified might just be with a chapter 13 bankruptcy filing. The timelines on the lender response are very tight in a bankruptcy and many are reporting loans being modified in two months or so.
You can click here to find a local bankruptcy attorney and talk to them for free about your specific situation. Get the facts and then you can make an informed and educated decision if bankruptcy is right for you.
Typically these loan modification law firms operate for a while and then close up and disappear with the money consumers have paid. (See what people are saying about Estate Law Group as an example.,) There have also been a number of attorneys that have been disbarred over mass joinder services where the firms charge a fee to sue your lender in a large group.
The FTC Says Don’t Pay an Advance Fee
The Federal Trade Commission says consumers should not pay an advance fee for mortgage modification assistance. They passed the Mortgage Assistance Relief Services Rule (MARS Rule) that says consumers cannot be charged in advance for these services. That’s why many “law firms” popped up, to get around the law.
If the loan modification company says you will be represented by an attorney check to see if that attorney is licensed as an attorney in your state. Check the website of your state bar association.
Also, if you are being sold services that cost thousands of dollars, I would advise you to seek the advice of a local real estate attorney that is licensed in your state before you pay a dime.
Take a close look at the contract the company is asking you to sign. What you will find is they say in the fine print there are no refunds nor guarantees.
If you would like for me to review the client agreement the company is asking you to sign, you can upload it to me here.
I would recommend that anyone considering using such a company should read the following fee guides.
- The Ultimate Consumer Guide to Checking Out a Debt Relief Company Before You Sign On the Line
- How to Check Out a Business or Company to Avoid Getting Scammed or Ripped Off
Here is What the California Attorney General Warned
The Get Out of Debt Guy Mortgage Loan Modification Resources
If you have already been scammed by a loan modification company, report it here.