A loan modification is something you may apply for if you are facing foreclosure.  It is a change in the terms of a loan, usually the interest rate, payment or term; making the payment more affordable for you and helping avoid foreclosure.  There are certain steps you need to take and things to consider before applying for a loan modification.  Read on to learn more about how loan modification can help stop foreclosure.

©cooldesign - freedigitalphotos

©cooldesign – freedigitalphotos

First keep in mind the goal of a loan modification is to make it easier for you to make your mortgage payments, keeping you out of foreclosure.  Many bank lenders will be happy to look into loan modification options for you, since they want to avoid foreclosure, just as much as you do.  But getting a loan modification, can be a process and there are certain things you need to watch out for and to protect yourself from scammers.

Unfortunately there are people out there that want to take advantage of you in your time of need and may try to scam money out of you.  These people are using the good intentions of your loan modification for their own personal gains.  Make sure you do your research before you work with a loan modification company.  Look online for reviews about them, make sure previous clients have been satisfied with them and they don’t have any negative comments to say. Or at least make sure they have more good reviews than bad. Not everyone can be helped in these situations and sometimes people may be upset because they couldn’t save their home. It’s not uncommon for these people to give bad reviews, even when they may have been given a refund for any money they spent. Most reputable companies have an refund policy when they are not successful, but make sure they will stand behind their guarantee.

There are certain key things you can look for to tell if a company may be fraudulent.  First off fraudulent foreclosure help organizations will usually promise to take care of all your problems with your lender and obtain refinancing for you.  They may even ask you to make mortgage payments directly to them.  This will likely be money you will never see again and probably isn’t going toward your mortgage pay off. When someone asks you to start making your mortgage payments to them, run away as fast as possible!

Some “help” organizations may even ask you for the property deed, saying that if you make the payments to them, you can stay in your home.  What usually happens is that the scammer takes all the money and sometimes they will even file a bankruptcy case in your name.  This is because bankruptcy filing can stop a home foreclosure, usually for just a temporary period of time though.

If a scammer files a bankruptcy in your name and you do not participate in the case, the judge will dismiss it and the foreclosure proceedings will continue.  This is one of the worse case scenarios because you will loose all the money you gave to the con artist and you will have bankruptcy on your credit records.

Another thing to watch out for is loan modification companies that say they are attorney based or backed.  A loan modification attorney should be the one doing a loan modification and being backed by one is usually just a play on words and doesn’t mean a thing.  So if a company says we have attorneys that back us, that may mean nothing at all.  Maybe the guy that works there has a friend as attorney for all you know.  This is why it is important to do some digging on your own before working with a company or handing them over any money. Usually when you ask to know who the attorney is, or ask for professional credentials, they will have some excuse not to give you names or license numbers.

You should always work with a loan modification company that have a refund policy, either a partial or full amount will be returned to you, if they don’t do what they promise.  Make sure if a company tells you this, you get it in writing and keep the documentation.  Also never sign any papers that they send, unless you understand every single word on them. One company we refer people to even offers a refund where they will pay you an additional amount if they don’t get the new payment they promised! This is one of the best guarantees we’ve seen.

Your ultimate goal is to save your home, so do the research and talk to the right people.  A loan modification company or attorney may be a good first step.  Most of them provide a free consolation, to start with.  Most attorneys, although expensive, will be legitimate and can provide you will a good service.  Never hesitate to ask questions though if you have concerns and walk away if something feels just not right with a company, it could just save your home.

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2 comments

  1. […] are many options you should explore before accepting a foreclosure.  Talk to your lender about a loan modification or a repayment […]

  2. […] people do get qualified for a loan modification, but then they can’t keep up with the payments, so they find themselves right back in the […]

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