Problems Getting Modification?

Posted by kevin on December 17, 2012 under Foreclosure Blog | Comments are off for this article

I meet with people every week who complain that they spent months getting jerked around by servicers and still could not get an affordable, permanent modification on their mortgage loan. They turn to a mortgage modification company with equally poor results. They read in newspapers or blogs that modification companies are scamming the public because they take fees up front and do not get the mod. The prospective client believes they were ripped off because the government tells them that a reputable mod company will get you a permanent mod and not charge you if they fail. In fact, some state statutes require that.

After working in foreclosure defense since 2009, I can tell you that no modification company can live up to those standards unless they represent only the top tier of their customer base. Why? Because the mod companies have little or no control over the process. They are, in effect packagers of information. They are stuck with your situation as far as arrearages, whether you have a job and what your income is, and the value of your property. Then, they are stuck with the critieria and decisions of the servicers over whom they have absolutely no control.

If you spend 8 months of your time trying to get a mortgage mod and don’t get it, how could you expect that the modification company will get the process completed successfully in a couple of weeks? Moreover, how can you reasonably expect the mod company to do thousands of dollars of work for you for free or for a nominal fee on the outside chance that you get a permanent mod. I certainly would not want to roll dice based on a situation over which I have little or no control.

That being said, I would assume that there are legitimate modification companies out there. I also assume there are a lot of less than reputable mod companies out there who prey on desperate people in bad situations. But how can you know who is legit? Mod companies are not rated in Consumer Reports or Angie’s List. So, my advice is to be skeptical. Do not give a mod company a large upfront payment (I heard of people who have paid upwards of $8,000). Make sure that the money you fork over is in line with the work that is being performed. Ask for their statistics (produced not in-house but by third parties) of getting permanent mods . Check on line and with the BBB about complaints. Understand that even a good, honest mod company is not a magician.

Be realistic about what you can get. If you are out of work or get paid off the books, the chances of getting a mortgage mod are slim or none. Do not expect that a mod company can do any better.