With the high unemployment rate, and those who have jobs concerned that they will be losing them, many homeowners are looking for help. One of the most popular ways to get help in making a mortgage affordable is through a loan modification. Loan modifications are granted by a lender intending to help struggling homeowners, stop foreclosure and lower mortgage payments. With this need in mind, many loan modification companies have sprouted in the last few years. However, not all of them live up to the claims they make and many take advantage of already distressed homeowners. To avoid falling prey to these scams, please note there are some things a loan modification company should not do when assisting you in getting approved for a modification.
First, the process should require no up-front fee to work with your lender to modify, refinance or reinstate your mortgage. A loan modification company asking for an up-front fee will likely take your money and do little or nothing to help you save your home from foreclosure.
Second, no company should be advising you to not pay your mortgage company and pay them instead. Despite what a scam company will tell you, you should never send a mortgage payment to anyone other than your mortgage lender. You should not sign over the deed to your home or sign any paperwork that you do not fully understand. A legitimate housing counselor would not pressure you to sign a document before you had a chance to read and understand it, and you should always consult with an attorney before signing any contracts.
Lastly, please be aware that nobody can make a guarantee to stop foreclosure or modify your loan, which are claims that are sometimes made erroneously. The foreclosure process will continue until a permanent resolution is worked out with your lender. When in doubt over things a loan modification company is telling you, speak to your lender directly or to an attorney.
Note that working with a loan modification company to get relief is not a requirement. Often, you can work directly with your lender to negotiate a loan modification. For help with this, consider putting together the necessary documentation at emodifymyloan.com. Although I have no personal experience with this site, Consumer Reports did mention it in an August 2009 article as a site that can help you construct the necessary documents for a reasonable fee.
Other resources for assisting you through the process include the various government-certified housing counseling agencies. At little or no cost, a counselor at one of these agencies may also be able to help you prepare the necessary documents. You can find a list of New Jersey counseling agencies at the U.S. government’s HUD website, hud.gov.