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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.

READ  My Chapter 7 Bankruptcy Discharged My Mortgage. Can I Stay and Keep the House? - Greg

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.


  • I was expecting to get an answer from my post, but I will respond to yours.

    We do not work with any homeowners who have Notice of Defaults filed on their properties. And yes, for all our clients we provide a contract with a money back guarantee. And we have refunded several clients where the lender refuses to budge. These clients then usually sue the bank with an outside law firm, or foreclose.

    In regards to the new regulations, I agree there should be regulation as there a lot of scams. I’m not sure how the new regulations are going to separate the scams from the legitimate companies. Either way, my firm is not located in CA.

    I don’t think people are aware of exactly how bad it is out there. People are not foreclosing because of loan mod companies. They are foreclosing because the banks came out with loan products that should have never been created. Then they lied about them to homeowners or told brokers to lie about them. Now, they are not making it easy to avoid foreclosure.

    Have you ever called a bank to try to get a modification? It’s a nightmare…an absolute nightmare. On average the bank will probably lose a file at least 3 times before anything happens. Or, magically pieces of the file go missing, so you’re forced to resubmit and wait the “average 60-90 period.” Problem is, you’ve been in the process with that lender for the past 4 months. Yet on this call, they can’t find your file at all…so the past 4 months were all for nothing. Or, the bank just declines a file because they don’t understand why a mortgage at 1200 per month can possibly be hard to afford (the answer, is because that 1200 per month is going to be 3600 per month in 3 months).

    I can say without reservation that I cannot think of one of our clients who would have avoided foreclosure if they decided to try on their own and not use us.

    Now, I’ll be honest with you. The loan modification business is not a good business…if your honest and actually work on the files. We work so hard to get these done. The CA attorney general says that loan mod companies charge these huge fees. We are talking 3 to 5 months worth of work. Hard, complicated, frustrating and tiresome work. These really high fees that they are speaking of barely pays for the office, let alone the employees who work from 9am to 8pm every day trying to talk some sense into these lenders.

    • Lee,

      I agree, this all begins with loans and loan products that were bad news to begin with and the wave is continuing with these option ARM deals.

      I can appreciate how much hard work it is and I also realize that many people don’t realize that one of the hardest things to do is to persuade creditors to take money.

      As long as you are working in an industry that is infected with so many scammers and charlatans, and more coming online every day, you will get painted with the same broad brush. This is not personal about you, it is the symptom of an industry in trouble. And those bad actors will drag you down by association, not reputation.

      If federal legislation was passed to regulate the loan modification industry to create a fair and level playing field for consumers, that would be a good start.

      Be careful on that California thing if you take on any California clients. California and other state AGs are looking to make examples of loan modification companies to shut down the industry, don’t let it be you.


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