Everyone seems to have an opinion about loan modification. If you ask a politician, government official, or member of the media most of them will tell you that obtaining a loan modification from your lender is as easy as picking up the phone. In the very next breath they will tell you that all loan modification companies are scams and if you pay an upfront fee you will get ripped off. Unfortunately, for millions of distressed homeowners across the country neither of these statements is completely accurate. This is a story from an April 17th investigative report on ABC News:
Maxine Waters, a California Congresswoman, recently attempted to help a few of her constituents get a hold of their banks in order to re-negotiate the terms of their loan. What she thought would be a simple telephone call turned in to hours of being placed on hold and speaking mainly to automated voices. After hours of trying to help Congresswoman Waters said, “The average American trying to negotiate a loan modification will not be able to get it done.” While the federal government and banks say they’re trying to help homeowners avoid foreclosure through various help lines and more, an ABC News investigation has found that the process of reaching out for help can be disorganized and frustrating, hardly consumer friendly, even when a prominent member of Congress is on the line.
I went through a very similar situation with my own home. When I fell behind Indy Mac Bank said because of the type of loan I had all I could qualify for was a repayment plan. I was told I would have to make a $3,200 payment for six months. This was twice the amount of my original mortgage payment.
That’s when I decided to take a calculated risk. Even though the Arizona Attorney General’s Office, the Arizona Department of Financial Institutions, and the federal Making Home Affordable websites all told me not to pay an upfront fee to a company to keep my home from going into foreclosure and modifying my loan, I did it anyway. Why? Because everything they told me I was supposed to do (attempt to refinance, call my lender, and apply for the Making Home Affordable Plan) wasn’t working. I figured I may as well take the opposite approach.
But, I didn’t just run out and pay the first loan modification company I found (they are easy to find these days – you’ve probably seen all the billboards, the annoying little roadside signs or heard the radio ads or seen the TV commercials – its no wonder the industry gets such a bad rap). No, I did what every smart consumer should do before making a buying decision:
- I got a referral from someone I trusted.
- I reviewed the business’s proof of performance information (i.e. approval letters from lenders).
- I checked for complaints.
- I toured their place of business.
- I talked to their employees.
The company checked out. And guess what happened with my loan? They stopped my foreclosure, obtained a more favorable repayment plan for me and are now modifying my loan.
As for all of the warnings from the government…remember what Thomas Jefferson said, “I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.”