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Mortgage Modification: Avoiding the Traps

The Washington Post recently ran a piece that warned of some of the pitfalls that await borrowers who wish to modify their mortgages. In particular, there are many unscrupulous operators who are willing to take substantial sums in upfront fees, but who then fail to deliver the most appropriate modification.

In fact, the worst for-profit modifiers often do not deliver anything at all. They just take hard-pressed borrowers’ money and run.

If you’re thinking of modifying your mortgage, you may find that a nonprofit advisor can help you for nothing. But–unsurprisingly in this climate–many nonprofits are overwhelmed by demand, and simply cannot respond quickly enough to urgent cases.

That’s when for-profit advisors may be the only alternative. By all means use one. But be very careful who you choose, watch them like hawks, and try to make sure that the bulk of their fees are paid only when a good deal is actually in place.

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2 Responses to “Mortgage Modification: Avoiding the Traps”

  1. PaulMolinaroEsq Says:

    Words from an Opinionated California Lawyer

    In California, the Department of Real Estate website (www.dre.ca.gov) lists the companies that have DRE “permission” to modify loans… add to this list any licensed California attorney, and that is where you should begin your due diligence when you seek help in California. Other states probably have similar laws, so check with your own state DRE.

    My law firm has been getting more and more calls recently from homeowners that were victims of predatory lenders who put them into an unaffordable loan and now fell into the hands of those same people who sold the toxic loans but profess to be saviors… DON’T BE A VICTIM TWICE!

    Do your homework and THOROUGHLY investigate any firm before hiring them to save your biggest asset and the place you call “home.” These scammers are popping up like dandelions on a freshly mowed lawn. They advertise on the Internet, freeway billboards, radio, television, and print media everywhere. Make no mistake, in many cases, these are the exact same loan officers and mortgage brokers who fleeced homeowners the first time around. After losing their jobs with the crash of the mortgage industry, they have found a new way to make ill-gotten profits from hard-working homeowners through loan modifications.

    In California, with very few exceptions (and attorneys are one exception), it is against the law for anyone to take money up front for helping a homeowner who is in default. Don’t trust a company that begins its relationship with you by breaking the law.

    Of course, this is one lawyer’s biased opinion, but one based on many distressing calls to my office every day. And, yes, my firm does take cases against loan modification companies who have violated laws. This field is quickly becoming one of the fastest growing sections for our mortgage law firm.

    - Paul J. Molinaro, Esq.

  2. S Landrum Says:

    I applaud your advice for homeowers to do their homework before commiting themselves to lender. I would like to add that borrowers can also access the DRE website, http://www.dre.ca.gov, to check on the licensing of the loan officer they are working with to make sure they are in good standing with the DRE.

    I would also like to mention that any reputable lender will provide a Good Faith Estimate and a Truth in Lending to a borrower within three days of taking an application.

    Borrowers, Paul is right. Be smart and take precautions with your homeloans. Do your homework!

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