Real Estate Marketing & Beyond
Following a year-long investigation into a total of 80 loan modification firms, serious problems within this industry have been reported by the National Fair housing Alliance and other groups that took part in the operation.
Rejected. Image courtesy of Investutah
Some of the investigations findings have been mind-blowing, with over 50% of loan modification firms demanding an upfront fee from homeowners before they take on their case. While this might not seem such an unreasonable demand to make, it is in fact quite illegal in many U.S. states.
Meanwhile, nearly half of all firms investigated (43%) claimed that they could guarantee a loan modification despite not even seeing the homeowners’ financial or mortgage details, which makes those guarantees an extremely dubious claim.
Waste of money? Image courtesy of My China Connection
Probably the most disturbing finding however, is that 19 of the companies under investigation actually told their clients to default on mortgage repayments. This incredibly disturbing advice has resulted in a number of homeowners suffering severe damage to their credit ratings or worse, ending up in the very foreclosure they are trying to avoid.
Of course, any loan mod company will deny such a thing, but several of those investigated were caught on tape recommending this course of action, saying such things as “It’s breaking the law to tell you this, but friend-to-friend, if you are not behind on your mortgage repayments there’s no way you’ll get a loan modification.”
President Obama's HAMP is also coming into question. Image courtesy of Stop the Hype
The Federal Home Affordable Modification Program, or HAMP, was not part of the investigation, yet President Obama's much vaunted program has also been swamped with numerous complaints from people who feel they have been cheated or disadvantaged by the program.
The investigation has in our opinion, brought the whole practice of loan modifications into question. While it seems like a good idea on the surface, the practice is fraught with danger – it encourages homeowners to get into trouble so that they can qualify.
It is clearly very difficult to provide assistance to those who genuinely need it without tempting others to ‘play the game’ with questionable firms so that they can get lower rates too.
Perhaps the very existence of home loan modifications needs to be looked at more closely?
I tried to get this through Bank of America but was told since my husband died two years ago, its too late now, had to be done within 6 months,, well I used his life insurance to help me make it this long now is when I need it not a year and half ago.
The bank also told me if I miss a couple of payments to try then, they cannot help me unless I am behind, THIS WAS BANK OF AMERICA NOT TRYING TO HELP THE BANKS DO NOT HELP THE CUSTOMERS AT ALL