Don’t Get Burned By a Loan Modification Firm
Check out any Loan Modification firm before you have them represent you. There are many scams. There are also firms whose employees do not know the law completely and end up costing their clients money…
There have been numerous stories of people in foreclosure who have been ripped off by these firms. There also have been numerous times where the settlements they got for their clients were not the best and their charges were outrageous.
Let me tell you about the experience a friend of mine had with one of these firms. I was unaware that he was in foreclosure and that he had contacted this firm. Prior to the modification being agreed to he told me what it was.
The deal the Loan Modification firm worked out for him with his lender was that he would pay them $5,000 upfront to have his mortgage reinstated. The monthly payment on his mortgage would drop by $100.
Here’s the kicker – The $100 drop was in the escrow portion of his payment. He bought cheaper insurance which brought the payment down $100. The principal and interest portion of his payment was remaining the same.
The Loan Modification firm charged him $1,500 for their services. As far as they were concerned, they had earned their fee. They did get his foreclosure stopped.
There was one other issue. He did not have the $5,000 to pay the lender. He would have had to borrow it from family or friends or take it from the money he was using to pay other bills. Neither one of these were ideal for him.
If he borrowed the money from family or friends, he may have damaged his relationships with them. There was no way that he would be able to repay them quickly.
If he took it from the money he had allocated for other bills, he would fall behind on his payments there. He would end up late on all those payments too.
When he told me the arrangement the Loan Modification firm had worked out, I asked him if I could see what I could do. I got on the phone with the lender. I used what I had learned about the law to negotiate to my friend’s advantage.
I got them to accept $1,000 rather than $5,000 to have his mortgage reinstated. I also negotiated a savings of $150 in his monthly principal and interest payment. My friend still had the $100 a month savings on his insurance. So his net savings each month was $250.
Are you ready for the sad thing? If my friend asked for my help right at the start, I may have been able to save him more money. However because of the botched job the Loan Modification firm did, my hands were tied.
I don’t want to see the same thing happen to you that happened to my friend. If you decide to use a Loan Modification firm, make sure that they are reputable. Then make sure that the modification they get for you is the best that they can get.
You don’t want to be burned in a scam. You also want them to get the best arrangement for you that they can.
Much Success,
Mark Elkins
