11/6/2009
I think your reply is perfect. My husband was considering paying over $2,800 to a so-called loan modification company earlier this year. Of course, they wanted the money upfront - nonrefundable - and they would not "guarantee" any particular outcome. I had to talk myself blue in the face to get my hubby NOT to pay for this. I did so much research on the internet about these companies and was finally able to prove to my husband that he was better off contacting our lender himself. (From what I've learned about our lender, they would not have agreed to a modification anyway, so we didn't ask - but at least we are not out $2,800 to find out the same thing!)I've also heard that many lenders refuse to deal with a third party regarding these issues. It's really sad that many thousands of people have probably been scammed by these loan mod companies.
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11/6/2009
Robert,
The company has an F rating because they have complaints from their clients that they've ignored.
It's tempting to buy into the line that one needs a lawyer on their side to get the best results from a loan modification attempt. You'd logically expect that an attorney will do the normal things attorneys do when they represent a client like analyzing the facts, conducting an extensive review of documents, interview the client extensively, develop a strategy, etc. From what the BBB has seen, few lawyers in the modification business do any of this. In fact, the vast majority of people we've talked with haven't even spoken with a lawyer. Typically, the interview is conducted by a lay person whose job is to get the money and collect basic information to submit the cookie cutter modification request to the lender.
People think that the lawyer will do a forensic audit on their documents and perhaps sue the lender. This doesn't happen especially when the fee is $1,800. You should also know that there's no law requiring a lender to modify a loan. Anyone who tells you that they can put their knee on the chest of the lender to force a modification is probably selling snake oil.
Here's something else to consider: Believe it or not, few people are actually receiving principal reductions or permanent interest rate reductions. In the few cases where this occurs, the reductions are typically temporary and the "savings" are tacked onto the end of the loan. All modification companies make big claims but they're really not true.
Some states like California have outlawed the practice of collecting advance fees for modifications. These laws also extend to lawyers who's principal practice is doing modification or foreclosure work. Also, the FTC and some state attorneys general have brought actions against modification companies and law firms engaging in this work.
Before you hire anyone, call your lender and discuss your situation with them. There's no silver bullet here; the lender will most likely respond the same way to you as they will to any third party and because you have the greatest interest in this matter, you're likely to get the best result from your own efforts.
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