I write this first of all because I have experience in mortgage servicing and secondly because people are losing money already,they are losing their homes, and they are being taken advantage of....not by the lending houses, but my so called consumer and homeowner advocates and law firms. I won't say that predatory lending didn't exist, it did and it was wide spread and all were culprits. So were consumers, they actively committed fraud on contracts by stating they had income amounts that they most certainly did not!! However, whatever the issue is, there are too many foreclosures at this time and until the market re-corrects itself people need their loans modified.
My parents received such a letter from the Loan Modification Department telling them that they were about to miss out on the opportunity to have their loan modified based on the federal aid. Of course this scared my parents, who at this time don't exactly need it modified, but if their situation to change (i.e. my father lose his job), they would need help. However, this letter seemed to all appearance to be directly from the lender, GMAC. And it was PREDATORY!!! Low and behold, it was a law firm, their name was not even printed anywhere on the letter, just a short fine print message at the bottom say this was not in fact GMAC and that they had no association with GMAC. They also wanted money upfront to start the process...
OMG - The first words out of my mouth to my parents, was report, report, report! This is predatory. First of all, to go out looking for customer to potentially modify their loans, but for a fee, because they may lose out on the opportunity is fraudulent.
ALL MORTGAGE COMPANIES MUST OFFER ASSISTANCE AT NO CHARGE - FEDERAL REQUIREMENT
There will be fees involved in the actual modification of the loan, because you are altering a contract, it has to be recorded, and it requires witnesses, and such just as was required when you first made the mortgage contract to begin with. What I am talking about is those crooks out there saying pay me and I'll go to your mortgage company and negotiate for you. Pay them for what? You're paying them to send a template letter called a QWR a qualified written request, which they probably got off LoanSafe.org or a similar site. And what is this QWR asking for? LOAN DOCUMENTS! Those same documents you have yourself, personally, in a safe place!!!! Do you know what they are going to do with these loan documents? Absolutely nothing, because they have scammed too many people into thinking that they can help, when they don't have any better chances than you yourselves do. They also believe that if they get enough people to sign up with them, they can flood the mortgage companies with all these requests (which in truth aren't actually QWRs) because due to the RESPA act mortgage companies must acknowledge and respond to these letter or face penalties, fines, and potential law suits. Well if all the petty, greedy little people out there who have jumped on this scam send 30 letters a day, do you believe that the company can faithfully work the issues? HELL NO!
From the lips of those that work for mortgage servicing, a lawyer, an advocate, or anyone else acting on your behalf for a loan modification, will not receive a better deal and will not get it more quickly than you yourself. It will take longer in fact because they have to have your permission, your financials, and all your information that only you can provide. Which means you have to wait for their busy office to sort, record, and file all your information, before sending it to the mortgage company so that they can begin their process.
Secondly, the federal assistance program that mortgage lenders are using does not help you if it is not your primary residence. If the property that you are losing is an investment property, that is your own risk. Do not waste the mortgage company's valuable time that they could be spending actually putting through modifications for those who need it to keep a roof over their and their children's heads. Its shameful! Investment = Risk. Live with it. The only way to modify an investment property at this point is to refinance completely. If that is not possible, then your investment was a loss, you'll live.
Thirdly, you will need to provide accurate and detailed information regarding your finances. Do you really want an unknown third party who popped up overnight, asking for $1,500 of your precious money, to have this information? Do they promise not to sell your information to other companies? If not, what valuable and private information have you provided them that could potentially lead to identity theft? There is a lot to think about, and not simply that you are paying cash, and a lot of it up front. Who are these people, why weren't they here before it got bad? Where will they be in a year from now?
Now I will always come down hard on brokers, because they are sells people and they are shady, and were predatory. From my own experience I do not like them and the fact that they pushed all these Pay Option ARMS and Interest Only ARMS and hybrids just really pisses me off. But these new guys are the scum on the feet of the brokers, praying on those already down and broken. I have not heard a single one that has really assisted a homeowner without a price, that the homeowner could not have gotten the assistance directly with a toll free phone call.
Ohh, and loan audits. Fancy name for looking over a loan history, which you can do yourself and customer service will be glad to answer questions if you have any that you can't identify. Or even try going to a friend who knows a little something about mortgages. But don't put your hard earned money into something that is common sense.