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I Don’t Want to Pay Any of The Loan Modification Companies Money to Help. – Alexandra


“Dear Steve,

I bought my home in November 2004, by Dec 2007 the 1st mortgage payment increased by $1300 which I found very difficult to pay however stretching the funds of my credit cards I paid both mortgages until march 2008, since then I haven’t be able to make any payments and my house is under foreclosure.

Because of non payment of my mortgage one of my credit card creditors increased the interest rate from 8.99 to 29% making impossible to me to continue making the payment so i felt behind my credit card payments too this year. I owe about $50,000.

I haven’t filed bankruptcy because I’m looking to see if I do qualify for a loan modification so I could keep the house but only making the payment on the first mortgage. I been contacting a lot of companies that promise to help you but as I do have to give them money in advance I really don’t like that, I can’t afford losing money at this point.

Should I call 995 hope and get help from them? Should I call the bank directly? At what point should I file bankruptcy? Thanks for your help


Dear Alexandra,

Smart move. I can’t see a reason to pay anyone to check and see if you are eligible for a loan modification. You can do this yourself by calling your lenders. And don’t worry about the fact that you are behind on your mortgages when you call, they all ready know that.

Call your lender and ask them if you qualify for a loan modification program. If they say that you don’t then your next step will be to seek bankruptcy advice.

Unfortunately your situation has snowballed and from my experience it is very hard, if not impossible, for the average person to dig themselves out from under a second mortgage they can’t afford to pay and escalating penalty interest rates on the credit cards.

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Even when you were current it certainly sounds as if you were able to make the mortgage payments by placing other expenses on the credit cards and increasing those balances.

Do this, call the bank and see if you qualify for their loan modification option and also call some local bankruptcy lawyers and make an appointment to go in for a free bankruptcy consultation to learn what bankruptcy would mean for you if you elected to go that route.

Your answer is going to come through knowledge and you’ll have the answer you are seeking if you follow this plan.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.


  • Steve,

    I am not sure if what you are saying is suggesting or asking if we are doing something wrong. No, people do not need to falsify information. It just needs to be presented correctly to the bank. It also has to be explained to the bank by someone who understands the ins and outs of how these loans work.

    Currently there are 9000 foreclosures a day happening in the United States. A lot of these can be prevented if the homeowner used a professional to work with the bank.

    In fact, they cannot falsify information because the bank checks their paystubs, credit and tax returns. But it is more complicated than that. The people working at these banks are not too informed about how these loans work. Sounds crazy, right? Well,. when Aurora Loan Services, for example hires a bunch of people with no training to be workout negotiators for loans, we run into problems.

    Actually, today I was on the phone with Aurora…and I had to explain to THEM how a negative amortization loan works. Their excuse for declining the file was because the homeowner showed too much of a surplus on their monthly income vs expense sheet. Steve, If I may ask, can you tell me the problem with this logic, and why the homeowner is still guaranteed to foreclose on their house even though they show a surplus on their monthly expense sheet? (They have a Negative Amortization Loan, also known as an option-arm, or pick-a-pay).

    I am curious to see what you say…after your reply I will let you know how I was able to get this file approved after speaking with a supervisor, then a VP.

    • Lee,

      What do you think of the new California loan modification registry requirement. Do you think that will help people tell the good guys from the bad?

      As the state of California said: “Up and down the state, scam artists pose as legitimate foreclosure consultants, promising homeowners they will prevent foreclosure. In reality, these scam artists charge huge up-front costs, but don’t provide an ounce of help.”

      If you help someone with a loan modification attempt but are not able to secure a loan modification or a modification that the consumer can afford do you waive your fee?

      I ask because some of the new legislation coming down will require loan modification consultants to not collect a fee before the service is delivered.

      In fact California currently says:

      “Don’t pay money to people who promise to work with your lender to modify your loan. It is unlawful for foreclosure consultants to collect money before (1) they give you a written contract describing the services they promise to provide and (2) they actually perform all the services described in the contract, such as negotiating new monthly payments or a new mortgage loan.”


  • (not sure what that last line is doing there 🙂

    Anyway, yes there are a lot of scams out there…so be sure to get proof that any comapny you work with has successfully completed modifications with YOUR lender with YOUR type of scenario.

    If you don’t want to pay for help, that’s fine. But to the person who asked the question above…if you don’t want to pay for anything then stop calling companies – you should call your bank

  • That’s exactly what I am saying. Unfortunately, the banks don’t even have the final say. The investor who owns the loan does. To make things more complicated, each investor has their own guidelines for almost every type of scenerio. There are the Obama guidelines too (but first you should check to see if your loan is owned by fannie or freddie) where they take 31% of your gross income and your new payments are based on that.

    The banks check credit and income. But they don’t check how much you pay for utilities, which is a major part of the financial worksheet that every lender makes a homeowner fill out. If you put that you pay 150 a month for electric bills, or gas and get denied…when if you put 70 per month, you could qualify….these are things that can save a house or send someone into a foreclosure.

    The ratios have to be perfect. Not too much of a negative or a positive…depending on the bank and the investor.

    It’s not easy. A lot of people are giving advice “You don;t need to pay anyone to do this.: That’s true. You can try yourself. Just like you can do your own taxes or defend yourself in court…you don’t need to hire an attorney. But I can tell you that (obviously) I work for a company that is doing thousands of mods for people. About 50% of our clients were denied by the bank when they tried themselves. We then have to start all over and re-work the financials to get them approved.

    A lot of people cannot qualify because they put that they pay 150 per month on electricity

  • Ok, well the problem with this logic is that your bank doesn’t even know if you qualify for a loan mod. You have to submit a large package to them…and if the numbers are not filled in correctly to meet specific guidelines (and every bank is different), you will be denied. If they are filled in correctly, then you win. And, it will take the bank 4 months to get back to you. It’s not easy. That’s why people pay professionals to do it for them.

    • Lee,

      Just to clarify, when you say “filled in correctly to meet specific guidelines” are you suggesting that the facts need to be bent in order to qualify or game the system for a loan modification?


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