Record numbers of foreclosure actions are being started every month all across the country. Worse, record numbers of foreclosures are being finalized every month all across the country. These records are being set in spite of the fact that everyone loses when a home is foreclosed on. Obviously, the foreclosure is a tragedy for the homeowners, however most people don’t realize that a foreclosure is bad for the lender as well! Lenders lose millions due to declining real estate values and the costs of foreclosing and then repairing and maintaining the homes. In addition, communities across the country are damaged economically during the process. Loan modifications can be the answer to this problem. Unfortunately, because so many borrowers are in desperate situations and looking for help anywhere they can find it, smooth talking con artists are moving in to take advantage of the situation. Here are 3 tips to help avoid getting ripped off when applying for a mortgage modification.
1. Never, ever, ever pay anyone in advance for helping you apply for a loan modification.
Most loan modification companies are staffed by out of work loan officers. The same loan officers who helped put you into this trouble in the first place. Most often, they don’t have any special knowledge of or experience in the loan modification process. Many states have now passed legislation banning upfront fees and requiring licensing for people who represent borrowers attempting to obtain loan modifications. However, the crooks often ignore these rules and talk already strapped borrowers into giving them large upfront payments. Collecting the money is often all they do to help the borrower with the loan modification process.
2. Contact your lender or mortgage loan servicer directly first.
In the beginning of the real estate crisis, although loan modification was nothing new it was relatively rare. Lenders did not have knowledgeable staff set up to deal with the process. As the real estate crisis has continued, more lenders are beginning to hire and train personnel specifically to handle the loan modification process. Often there is a new special loan modification department. If there isn’t, all lenders have a loss mitigation department that may be able to help. Be persistent. You may have to make an unbelievable number of calls to find a person who can actually help you.
3. Contact a HUD-approved housing counselor
HUD approved housing counselors are well trained and will provide you with free help in obtaining a loan modification They can help you determine if you are eligible for any of the government sponsored assistance programs such Making Home Affordable, HOPE or HARP. You can locate HUD-approved counselors online at http://www.hud.gov/offices/hsg/sfh/hcc/fc/ or by calling 800-569-4287. You can also contact your local HUD office. These counselors will have inside contacts at the lenders to help speed the process along.
The best solution for homeowners, lenders and society is to keep as many people in their homes as possible as long as they can afford it. However, loan modification is still a tough process to wade through. If you feel that you will need a loan modification in order to stay in your home, start the process as early as possible and follow the above 3 tips to keep your money in your own pocket and away from criminals.