The Loan modification Industry

Hi robyn,
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There are many scams but right now there is a loan modification/mortage issue with SOME companies, any of them charging you a fee up front: scam - for instance. Here is the FTC page about these Loan Modification/Foreclosure Rescue scams including the history of the FTC's suing some loan mod companies in Federal court - due to ripped-off consumers filing complaints with the FTC.
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Hope this helps

I would say that it is helpful, but I think that you are discounting any of the mitigation companies that do, and always have charged upfront for their services. I work in the industry for a firm that has been in business for 9 1/2 years and I am always curious to hear where we get our bad name from? I personally have helped save dozens of home from being foreclosed on and taken from the bank. I have watched people's principal balance be reduced by 20 - 30%. That gives them 20-30% off of their mortgage payments. Their interest rates become FIXED and lowered by 3-4%.

Its smart business to charge upfront. Some of our clients haven't paid their mortgage in 7 months. Why would they pay us after they've signed off on their modification? We offer a service. We don't have time to chase outstanding bills around. Just because someone charges upfront doesn't make them a "scam." We don't consider any other pay before you use services a scam, do we? Sure, the results vary, but inevitably, by the time a homeowner gets to us, they have already tried working with the bank, re-defaulted or were denied, and either need to hire a moving truck (which is also paid upfront) or work with a company like ours. We DO give their money back if we are unable to modify their loan. And I have people get denied all of the time. We can't help everyone, and we know that and won't charge them because of it. With all of the new stipulations and guidelines, anyone looking to modify their loan should talk to a professional. Start with your lender. Most likely they will tell you that there is nothing that they can do or make you jump through a million hoops to give you a temporary fix which in the long run, doesn't help at all.

I agree with the Guest above me.

I too work for an attorney that does loan mods. Again, we are too 100% money back guarantee. I don't think there is anything wrong with trying to go at it yourself first. But then again, sometimes getting an attorney involved can be a huge help in what the loan mod turns out to be.

is there a general percentage or fee that most loan modification attorneys charge?

Fees vary depending on the company you use. I've heard of some companys charging a flat 3500 fee. The vary. I work for a loan mod attorney. He charges 1% of the loan balance or a min. 1500 fee.

Then you should know that the Federal Trade Commission *is* advising people to avoid any foreclosure rescue/loan modification company that charges a fee up front. It is the 3rd item in their list of Red Flags. Even stronger wording is on their video (on the link I provided above) (19 seconds in) "anybody who charges you money up front with the promise that they are going to keep your home out of foreclosure is running a scam - don't fall for it. Advance fee - tip off - problem."

The FTC is on the warpath right now! Obviously we are not talking about *every* organization, but they are aggressively investigating and trying to convince people not to go to these companies, but to avail the services themselves for free, especially because of the new Economic Stimulus package (one of the GREAT things on there). On Apr 6, they announced more lawsuits, and they sent Warning Letters to 71 Loan Mod companies.

I'm just saying tread carefully.... Under normal circumstances, it would probably not be much of a problem, but the American Recovery and Reinvestment Act of 2009 does include special provisions for this. The FTC suggests that people go to the HUD-sponsored http://www.makinghomeaffordable.gov/ or the HUD approved http://www.995hope.org/ both of which provide assistance for distressed Mortgage holders for FREE.

I agree with you Chris. I do not work for a loan mod company. I work for an actual real estate attorney that assist clients and getting a loan mod. Depending on if your late and how late you are, he always suggest that a client attempt it by theirselves first. As an attorney, the fee he charges is a retainer fee that he will refund in the event he is unable to help a client. He has taken on many clients that have been duped by so called loan mod companies.

Brandy,

How is an attorney charging upfront any different than a company charging upfront? Both are offering the same services. A good one is also working under the review of attorneys. There are a lot of scams out there right now, I agree, but there are also a lot of good people just trying to help and earn a living at the same time.

And for those who are counting on the new Economic Stimulus package... Make sure you check and see if it even applies to your individual case. In many situations, it does not.

Robyn, I'm not trying to come down on the company you work for. There are some legit companies out there. There is a difference in someone retaining an attorney to assist them in something as oppose to someone that works under the direction of an attorney.

Question.....How is it that you came to this site?

just learning about my industry.

I ask because most of us on this site are on here because at some point in time we found ourselves in financial crisis. The info on this site helped us manage the financial mess. I just happened to be a loan officer and work for an attorney as well. I am on here to offer my knowledge to anyone that needs it. Free of charge. I am not on here to get business. There are a few on here that will tell you that I have tried to help them with a loan mod without them having to go through the expense of hiring someone to do it for them. It is my way of giving back since there were so many on this site that helped me when I would sign in as a guest.

Girl, I'm in financial crisis right now! Laid off from my job early last year, boyfriend laid off day before Thanksgiving. He's in construction and still not working. Upside down on my house over 100,000. Don't qualify for any kind of help, paid or otherwise. There's just nothing I can do for myself. That's how I ended up doing what I do and am more than happy to help anyone in any way that I can.

Hi Robyn,

An attorney is different, their charge is a *retainer fee* which is charged by every attorney (AFAIK) that is not working pro bono. So you can technically say it is not a fee for work done, but a basic attorney representation fee.

*That* is the difference. Normally you can't even speak to an attorney without that retainer fee, unless they offer a free consultation - but in that case, you are not hiring them yet. You are paying that fee for services, not for a specific service. The "about.com" definition: "A retainer fee is a fixed amount of money that a client agrees to pay, in advance, to secure the services of a consultant or freelancer. The fee is typically not associated with the success of a project or based on achieving particular results."

Hope this answers your query.

Guest,

I don't understand, how are you not qualified when both of you are out of work and so far upside down?

Yes there are many scam thats why you have to be careful whos the person will help you modifying your loan. Marc Tow is my lawyer I hired him because he was referred by my good neighbor and I got my loan modification last month.

Personally i never been scam yet but im not wishing to happen. my loan has been modified by the help of marc tow.