So You Want to Hire a Loan Modification Company?

By Aaron Cushman

After having been submersed in the Loan Modification and Loss Mitigation industry it has become apparent to me that not all companies are disseminating the same or even similar information.  This creates confusion on behalf of the consumer and can sometimes lead to a false sense of security and can actually make the process more cumbersome than it already is.  We have created a list of Do’s and Don’ts for consumers who are interested in hiring a firm to represent them in negotiations with their lender.

DON’T hire a modification company if…

• They seem more interested in their fee than in helping you.  Far too often the emphasis within an organization is on the sales pitch.  If you get the feeling they are trying to “close” you, do yourself a favor and run.

• They cold-called you.  If someone calls you out of the blue professing to help you they are a commissioned individual – not a consultant.

• Their payment structure is one that allows them to bill you monthly via credit card with no end in sight.  Their should be a cap on their service fee that is reasonable and limited in time otherwise they could bill you forever with no incentive to complete the task.

• They hold themselves out as something that they aren’t.  I see countless clients falling victim to companies that pretend to be the government via a clever mail piece or an auto-mated phone call that makes it seem as though they are the government, when in fact they are merely a boiler room or private company soliciting you for the fees.

• They sound too good to be true or sound fishy.  Modifications are the flavor of the day in the boiler room business.  It used to be commodities, then stocks, then timeshares, now its modifications.  If they are hyped up with canned responses and no real substance to their conversation with you then once again the fee is all they are concerned with.

• They make false promises.  This is perhaps one of the biggest.  The “money-back guarantee” is often an elusive proposition and is used as a flimsy sales tool to give you a false sense of security.  Problem is once the money has transacted you may find it EXTREMELY difficult to get your money back, either because they cant afford to reimburse you or they may have a different opinion than you with regard to whether the fee was earned.  Furthermore, how can a company guarantee results on a mortgage note they don’t own.

• They say you are “approved” or give you some sort of warm and fuzzy without knowing enough details to logically come to this conclusion.  If they rush you through a couple of questions and are quick to congratulate you on your candidacy for the program chances are once again they are merely interested on your fee.

• They try to take your credit card number to get started.  It may seem obvious but it is far too common for people to get sold a bill of goods and pay for it via credit card in the heat of the moment when they don’t really know what they are getting into.

• They seem pushy or abrasive and threaten things like foreclosure, lawsuits, etc.  Yes foreclosure and curing a default is time-sensitive issue but you shouldn’t rush to decision.  If they aren’t comfortable giving you time to feel comfortable with the process then again they are more interested in the fee.

• They cant provide references or don’t have an informative website.  Now is not the time to be entrusting in a rookie sales organization.  You need someone with experience, credentials, and history.

• They are the cheapest on the block.  Paying $1000 for nothing is A LOT more expensive than paying $2000 for good results.  NEVER PUT PRICE BEFORE VALUE.

DO hire a modification company if…

• You get a good vibe.  Go to their office and see their operation if possible.  Call back and try to speak with a different consultant.  If their stories match up then that could be a good sign.  TRUST YOUR GUT.

• They have been around for a reasonable period of time.  Seems most of these companies popped up in the last 6 months and unfortunately probably do not know what they are doing.

• They have proper licensing.  Whether it is a legal designation (which doesn’t automatically make them ethical or good) or a mortgage license, ask to see their credentials.

• They have a solid reputation with the BBB or other third party review company.  This should at least provide some form of indication that they are on the up and up.  Usually where there is smoke, there’s fire.

• They are inquisitive about your situation and go over your specific case.  Perhaps the most important aspect of the process is the fact-finding portion in the beginning when your employment, liabilities, lender details, and hardship.

• They don’t charge up-front.  Florida has laws in place preventing non-attorneys from collecting fees prior to work being performed on the file.  Regardless of who you hire you shouldn’t give money up-front blindly without first reviewing your case and you establishing some form of trust with the firm.

• They have experience in the mortgage business.  Seems like an obvious statement but a surprising number of firms engaged in this business have never underwritten, originated, or understand what a loan is made of.  This is a case where experience does matter.

• They are willing to give you time to review your options and are not trying to “close” you.  If somebody is not comfortable giving you and your family time to make an educated decision then chances are they are more interested in their fee than your success.

• They have the capacity to provide a multi-pronged approach.  This may mean an in-house attorney, a forensic document audit department, a mortgage license and ability to close a loan, or an in-house real estate department.  There is no one size fits all solution to getting a modification so it is important that they are able to find a solution that fits for you.

• They process their files in-house.  As it turns out a lot of companies sub-contract the processing and essentially act as a “middleman” in the equation.  This could be a potential disaster so make sure they process their own files.

• They don’t try to use scare tactics to force you to hire them.  Yes you may need to act urgently depending on your case and how far behind on payments but if someone is trying to get you “hire me today or else” then you should get a second opinion.

• They have a proven track record with credentials to back them up.  Any claims they make are easily documentable ad provable.  Ask to see results.

As with any business exercise caution with whom you do business.  Now more than ever you should do your homework and not listen to flimsy sales pitches.  This is part of the reason we are in this mess to begin with.  Thankfully there are legitimate companies available to help you but finding may prove difficult.  Whatever you do don’t hire a firm based solely on cost or a high-pressured pitch.

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