There are lots of offers for loan modifications out there right now. The come-ons are enticing and if you've heard the spiel, they sound a little too good to be true.
How it's supposed to work:
You contact a loan modification company and pay them an up-front fee (anywhere from $1500-5000). They contact your lender and "professionally negotiate on your behalf". Then, your mortgage payment is slashed down to a new interest rate and sometimes, a reduced principal loan amount.
The theory behind this industry is that lenders would rather have you pay less on your mortgage then go through the expensive and so inefficient short sale and/or foreclosure process.
The reality:
I have yet to hear of a successful loan modification! A colleague of mine bit and sent in a check for $1500. I warned him not to because there were no results that were publishable, no testimonials with contact information and other red flags. He told me that they would refund $1000 of his money if they couldn't make it work!
A month later, they won't return his calls and he is going after them as best he can legally, though his options are limited. They took his money and didn't even contact his lender. The only work they did after they received his check is put his name on the blacklist.
DO NOT go through a loan modification middle man. If you want to pursue a loan modification, speak to your lender directly.
DO NOT pay an up-front fee. Most scams ask for money up front, so this carries over into other industries.
DO look into refinancing! The Housing Stimulus package makes it possible for people to refinance their first loan for up to 105% of the home's value at today's historically low rates.
DO contact Eddie Pfeifer for all of your real estate needs: (858)525-3258 or Ed@EdPfeifer.com You can also visit my San Diego Real Estate site.
Tuesday, April 21, 2009
Subscribe to:
Posts (Atom)
