"Can't Pay Your Mortgage? Don't Pay a Fee For a Loan Modification Until You Read This!"
by
Darlynn C. Morgan, Esq.
If you are having trouble paying your mortgage or afraid you might be in trouble once your adjustable rate mortgage (ARM) resets, you are probably noticing advertisements for companies claiming they can help you get your loan modified.
Before you pay anything to anyone, make sure you have the real scoop on loan modification. Here's what you need to know:
1. What is loan modification?
Loan modification means your lender has agreed to reduce your interest rate or stretch out the length of your loan, thereby reducing your payments. This reduction can be a permanent reduction or it may be a short-term reduction. All of the terms of a loan modification are negotiable.
2. Can you negotiate your own loan modification?
Yes, you can negotiate your own loan modification. If you have the time to focus your energy on this and you feel confident in your negotiation skills, give it a shot before paying someone else to handle it for you.
3. Should you pay someone to negotiate your loan modification for you?
If you do not have the time or do not feel confident negotiating your own loan modification, you can hire someone to negotiate on your behalf.
There's a lot of companies springing up and jumping into the loan modification business. Over the weekend a friend told us that his gardener is now in the loan modification business. IÕm not kidding. Do not pay anyone other than a lawyer to negotiate your loan modification!
In some cases, we are seeing people pay up to $5,000 to these companies just to have them send out a single letter to the lender requesting loan modification, get denied and say "Sorry we couldn't help you!" and then you are stuck in the same situation as before, but with even less money.
4. Who should you hire to handle your loan modification?
You should hire a lawyer who has experience reviewing loan documents and negotiating loan modifications and has a proven track record in the community.
You see, in many cases the loans were not issued properly and a lawyer who knows what to look for in the loan paperwork may find defects that can be used in the negotiations.
Plus, your lawyer is in a fiduciary relationship to you. This means that your lawyer must act in your best interest, not her own, or your lawyer faces losing her bar license. These fly by night loan modification companies have no real risk if they mess you up because chances are they will be out of business within the next three years anyway. Not your lawyer.
5. Should you pay upfront for loan modification services?
You should only pay upfront for loan modification services if you are working with a lawyer or someone licensed by your State to accept upfront payments for loan modification.
6. How much should you expect to pay for loan modification?
Loan modification handled by a reputable lawyer is likely to cost between $3,500 - $5,000. There are companies offering loan modification services for $1,500 - $2,000, but look out because oftentimes homeowners are finding that these are "take the money and run" kinds of places.
Darlynn Morgan is an attorney at Morgan Law Group. Contact us at 949.260.1400 for assistance.