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.

Recent goings-on in the financial markets, particularly the government take-over of Fannie Mae and Freddie Mac, made mortgage rates more affordable but loans less attainable. So what should you do if you don’t have a cookie-cutter file, with 5 years on the job, 20% down, and perfect credit? Are the days of 40 or 50 year terms, interest-only or payment option ARMs over for good?

According to Bloomberg, probably–at least at your larger banks. “Tighter standards assure the loans are less likely to fail, but also have had the unfortunate effect of limiting the ability of some first-time home buyers to enter the market,” said Sara Tinsley Demarest, spokeswoman for the Washington-based Mortgage Bankers Association.

Those who financed their homes with Alt-A or non-traditional products have a lot to worry about. If they are facing significant rate resets (which they fully expected to avoid by refinancing or selling) and have not been aided by an increase in home value, they may find it difficult to get out of their loans. This is where, while a bank may not be able to help, a broker may. Non-traditional mortgages are still available. Just be prepared to look harder, pay more, come up with higher down payments, and have better credit. A broker with access to a wide variety of programs may be better equipped to help you with this than a large bank with its conservative offerings.

Look for a loan officer you trust and see what’s available now, and what you may have to do to qualify for it (save more money, show more income when you prepare your taxes, increase your credit score, or pay down your debt). Many feel that in the future, Alt-A programs will make a comeback, though in a more conservative guise. But if you do what you can to make the grade now, you won’t have to rely on the industry changing to accommodate your situation.

Bankers and brokers have been throwing the same arguments around for years. Brokers claim to be better because they have access to programs offered by many different lenders and can therefore find the best program for you. Bankers claim they have more control of the loan approval and funding process and can offer lower rates. Both arguments are true to some extent. However, it really depends on the size and reputation of the institution involved.

Brokers According to Bankers: For example, bankers like to characterize brokers as fly-by-night opportunists who don’t care about their conduct — by the time the borrower realizes that he’s been taken advantage of, the broker has left the business and begun a new career selling cars or Amway.

Bankers According to Brokers: Brokers prefer to portray banks as moss-covered behemoths that only offer two programs and charge outrageous fees.

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