I saw a story about some 30 loan modification companies being shut down in Nevada. And, it does not surprise me. I have looked into several loan modification companies, hoping to find one that I could refer my clients to, the ones who need the service. And, I could not find one that I would refer anyone to – even though they all offered to pay me a referral fee.
The problem is not (always) the intent of the folks offering to handle your loan modification. In many cases, they are good people with good intentions. No. The problem is that banks are constantly changing their own criteria for allowing a loan mod, and the political structure is adding things constantly as well. It is hard to master and hit a moving target.
And loan modification companies nearly always charge a fee, and a fairly substantial fee, paid up front. That makes sense from their point of view, because once they successfully complete the mod, the client is just not going to be real motivated to hand over the $3500 fee. Hey, their loan has been modified and the rep at the mod company cannot change that if he is not paid, right? And, the loan mod rep knows that he is aiming at a moving target, so may not be successful. So, better to get some funds up front, or he could be out of business real soon.
As you can gather, I do not recommend paying a service to help you modify your mortgage.
So what do you do if you cannot refinance because your home is under water? Plan on taking some time out for this purpose, and go through the process yourself with your mortgage company. It is sort of like applying for a mortgage, in reverse.
Or, you can check to see if you loan is owned by Fannie Mae or Freddie Mac – I can check for you, if you like. If it is, then you can now refinance your mortgage even though your are underwater. And, the qualifications for that refinance are fairly easy, and very similar to qualifying for a refinance normally, when your home is not under water.
Oh, and don’t confuse the ownership of your mortgage with the place you send your monthly mortgage payment. That is the ‘servicing’ company, and often they are servicing the loan for Fannie or Freddie, the owner of your mortgage.
Explore that option first. You may be happy, and save a lot of money.
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