Unfortunately, there are many loan modification scams that prey on the desperation of folks who are facing the loss of their home through foreclosure. It is true that many mortgage lenders themselves are open to modifying mortgages, and that can be a powerful solution for the home owner. The lenders will often roll any arrearages or missed mortgage payments into a new loan, often with a lower interest rate and a lower monthly payment. That can in fact help many keep homes they would have otherwise lost
However, there are many disreputable companies that claim they will help owners navigate the modification process. They tell the owner to start paying the companies monthly payments while they supposedly submit a loan modification application. The owner waits while nothing happens, and it then told the lender is being unreasonable so they need more time and more money. When the lender pushes a foreclosure, they often tell the owner to file a bankruptcy just to “buy time”.
I recently had a client who paid thousands of dollars to an outfit who had her file two Chapter 13 bankruptcy petitions without an attorney. When those bankruptcies were dismissed, it made it more difficult for her to try to save her home once she talked to a real attorney. While some good news is the United States Trustee’s office, who oversees the bankruptcy process on behalf of the FBI, is suing the outfit in the bankruptcy to seek recovery of the money paid and an Order for them to quit doing what they are doing, my client was not able to afford to keep her home.
If you do want a Loan Modification, you should contact your lender directly. They will provide you with forms to complete and return with numerous documents. You should keep in frequent contact with your lender to ensure that they are receiving what they are requesting and you believe you have provided. This can require some persistence as documents can get lost, in which case just patiently provide them again. If the lender refuses to provide a loan modification, you can still stop a foreclosure by filing a Chapter 13 bankruptcy that will immediately stop the foreclosure and will allow you to pay the missing payments over time. You do need to file the bankruptcy before the sale of the home.
By Bill Turner, W M Law Attorney
