Loan Modification Rip off or Rescue?

Being that I've been in the real estate and mortgage industry 10+ years I felt like I had seen mostly every scam and fraud out there. Unfortunately not! The number of "Loan Modification" companies popping up out of the blue is litterally frightening. Typically when a homeowner is in need of some type of assistance such as a loan modification the lender holding there mortgage is the first place they contact. Today they are overwhelmed with loan modification offers filling there mailboxes claiming how they can help get them out of trouble for a nice fee of course.

Consumers and homeowners who find themselves unable to make their mortgage payments or who have fallen behind due to some type of financial hardship are like sitting ducks to these companies. They prey on homeowners by searching courthouse records for foreclosure filings and mailing them ridiculous "guaranteed" solicitations to assist in saving there home. Even mortgage brokers and loan officers are getting in on this popular loan modification scam. Usually the fee to modify the loan is equivalent to one months payment or 1% of the balance of the loan. Mnay of these companies require payment upfront and will not refund any amount regardless of the outcome. Homeowners need to be extremely careful in dealing with companies offering to modify there loan for a fee. Doing so could result in them having less money to try and reduce debt which could help the overall situation.

Make sure to explore all your FREE options prior to paying for loan modification services. Many times the result of the homeowner receiving a loan modification is not dependent upon a for profit or a non-profit party working on their behalf.  

Here are some tips when you find yourself in a position where you have to either choose to work with one of these loan modification companies or go it alone:

Look out for unrealistic promises or guarantees- If a company claims that it can stop your foreclosure, modify your loan or save your home prior to reviewing your case there something wrong with that.

Watch out for big up front fees- Many companies who charge these large up front fees take your money and run, don't get scammed.

Call your lender first- How do you even know that you need one of these companies if you have not contacted your bank regarding your loan modification or past due payments. Many times you can accomplish the same thing one of these loan modification companies can if you just stick with it.