Red Flags when choosing a loan modification company.
It is difficult to decipher reputable and reliable loan modification companies from those that are just concerned with the dollar value. There are a few signs to look for which may indicate that a company is a scam. First, companies that requires all service fees to be paid up front, and then promise to refund the money if they are unsuccessful. Legitimate companies will likely ask for payments, one to begin the process, one after preliminary approval from the bank and a final one once the loan modification has been successfully completed.
Now, a successful loan modification does not necessarily mean that the borrower will have all their requests fulfilled; it simply means that the terms of the loan will be re-written hopefully to benefit the borrower. Second, not all borrower’s will be eligible for a loan modification, therefore, a company that offers its services without taking an in-depth look into the borrowers financial situation may be doing so only to benefit their own pocket book. A legitimate company will ask the borrower to complete a detailed application out lining their income, monthly expenses, mortgage information, and information about the economic hardship they have experienced. Based on this information the modification company will decide if the borrower is a good candidate for a loan modification. Third, if you have already tried to get a loan modification independently with a lender and have been denied chances are that a company will not be any more successful. However, loan modification companies claim that they will be more successful than borrowers on their own. In some cases this is true because legitimate loan modification companies have skilled workers who specialize in loans, but if a borrower is not eligible for a loan modification that is the bottom line.
Like I said, not all borrowers will be eligible for a loan modification, so it is very important that the loan modification company you choose takes a good like at your financial situation before making any promises or collecting any money. Fourth, if you have had a loan modification done in the last year and a loan modification company promises to get you a better modification, again, chances are they will not be successful. Borrowers who have already accepted a loan modification will likely have a fixed interest rate for a fixed period of time which makes it next to impossible to have a loan modified. Finally, each company should be licensed to and qualified to conduct loan modifications.
Any company that suggests that a loan modification is guaranteed should not be trusted. Since this is such a new industry there is no state or federal regulations dictating the practices of loan modification companies, therefore, there can be no guarantees. Be sure to check out several loan modification companies before you decide on any one. Get advice from a number of different sources so that you are fully informed. However, when it comes down to making the final decision, follow your instincts because they are usually right.
