Since the housing market crash began in 2008, we have seen the rise of mortgage loan modifications as a tool to help troubled homeowners stay in their homes. If a homeowner qualifies, the loan modification can be a great way to catch up monthly mortgage payments that are behind and actually reduce the regular monthly payment. However, the process for obtaining a loan modification is often frustrating and has led a lot of homeowners to turn to companies offering assistance with the loan modification process in return for a fee. While there is nothing wrong with receiving a fee for services rendered, a lot of these companies are making false promises to homeowners guaranteeing a loan modification and providing risky advice to stop paying the monthly mortgage payment in order to qualify for a loan modification. Often the result is the homeowner pays thousands of dollars to one of these companies and yet ends up facing foreclosure of their home.
The reality? A loan modification assistance company is doing no more than what the homeowners themselves could do directly with their mortgage company, i.e. submitting the same qualifying documentation that the homeowners themselves would submit. Due to the significant increase in scams in this area, the Federal Trade Commission has put in place a rule to govern legitimate mortgage assistance programs: A homeowner is not required to pay any money for the services of a loan modification assistance company until a loan modification offer has been received from the mortgage company in writing and the homeowner has accepted the offer. (Federal Trade Commission’s Mortgage Assistance Relief Services Rule or MARS issued November, 2010). If you are dealing with a company that is requiring money from you BEFORE a loan modification offer has been made in writing to you, it is a strong indication you are not dealing with a legitimate loan modification assistance company.
Chapter 13 bankruptcy can often be a far better option if you are behind on monthly mortgage payments. It provides a vehicle to catch up mortgage arrears over an extended period of time while starting back with regular monthly mortgage payments. While the Chapter 13 itself cannot change the amount of the monthly mortgage payment, the bankruptcy code does allow the homeowner and mortgage lender to enter into a loan modification agreement if such an agreement can be reached between the parties. A bonus is that an experienced Chapter 13 bankruptcy attorney is familiar with the loan modification process and can assist and advise you in this process. If you are facing a foreclosure from your mortgage lender or behind in your monthly mortgage payments and need assistance, please contact one of our locations nearest you for a free, confidential consultation with one of our experienced, licensed attorneys.