Question: There are absolutely no words that can describe how stressed out my wife and I have been these past few months. Our financial problems are taking a huge tole on our relationship as it is getting very difficult for us to keep up on all of our responsibilities, especially our $3,500 a month mortgage payment.
I have come to the conclusion that I’m not going to be paying the mortgage after this month and save up the little funds we have to pay off other debts. However, I have no idea what to do or whether or not I should hire a loan modification company to help me out?
Answer: Please be aware that a significant amount of these loan modification firms will often times advertise their services as a non-profit, or sometimes a money back guarantee service to attract as many homeowners as possible. You will find many of these websites that display fake testimonials where the homeowner received a principle reduction, or an amazing low 2% fixed interest rate for the life of the loan.
However, the biggest red flag of all should be those companies that say they have a 100% success rate and that a loan modification is guaranteed.
Stay away from these companies! A great majoprity of them are bait and switch scams.
Anyone that promises a service that is too good to be true is a scam! They have successfully ripped off thousands of homeowners over the last three years and hundreds of these firms have been shut down and their owners fined heavily or sent to prison for their unscrupulous ways.
Most states such as California have banned these firms from charging an up front fee for their service. This means that no company offering loan modification or foreclosure prevention services can charge a fee before services are performed.
So before you even obtaining a company to perform a modification, be aware that there are tons of scams out there and also this is most definitely possible to achieve on your own. There is nothing that these firms can do for you that you cannot accomplish on your own. Please do not let them sucker you into their services, especially if they are promising you will be approved for assistance.
It is true that there are some legitimate companies out there that offer this type of service for a fee, but they are very far and few in between. Your risks of getting scammed are very high, and a significant amount of firms that were legitimate have now left the business due to the image this industry now has.
Since you are struggling to maintain your monthly mortgage payments, the first thing I would suggest to do is to contact your lender right away and apply for a modification. You will be required to send in a couple months worth of recent paystubs, two most recent months bank statements, tax returns, hardship letter, etc. Your servicer is going to review your entire financial situation to determine whether or not you qualify. Do not hold back any information in regards to additional loans or high credit card bills because they are going to pull your credit report to see all of the debts you have acquired.
Also I would first suggest to review the Making Homes Affordable website because your lender is first going to review your account for the government’s Home Affordable Modification Program (HAMP). Here you can find all the basic eligibility requirements so you can determine whether or not you meet those requirements. If you do not meet the requirements of this program then you will need to apply for a traditional in-house modification.
Here are five key tips to help avoid these loan modification scams:
1. Deal only with non-profit agencies or counselors approved by the US Department of Housing and Urban Development.
2. You do NOT need to pay anyone thousands of dollars to help you achieve a loan modification or prevent foreclosure. Remember this can be done on your own or with the help of a non-profit agency.
3. Stay away from any company guaranteeing foreclosure prevention or loan modification services.
4. Make sure you carefully read and understand anything you sign.
5. If the services being offered sound too good to be true, they most likely are!
Hopefully now you are aware that these firms are many times scams and that you can accomplish this on your own. We encourage anyone that is struggling to make their mortgage payments to please join our free forum here on LoanSafe.org that now has a community of over 32,000 members and continues to grow. Here you will find all of the information you can possibly need in regards to modifications, short sale, deed in lieus, refinance, and anything else that has to do with home loans.
Here are some free loan modification sources for you: