If you’re facing foreclosure in New York or considering seeking a loan modification for your home in New York, then here’s one more reason to stay away from loan modification companies (as if you should need any more convincing).
According to a piece in The New York Times, many of the companies offering to help you with loan modification are, in fact, the same people who were running the subprime mortgage business. (“Subprime Brokers Back as Dubious Loan Fixers“)
Hey, who knows how the whole racket works better than these guys? And who knows better how to exploit people’s fears and anxieties, whether it’s fear of missing out on a good deal, or fear of losing your home?
According to one guy interviewed in the article who was one of the founding partners of a loan modification company called FedMod, “We just changed the script and changed the product we were selling. Now we’re able to help you because we understand your lender.”
This make-a-buck approach apparently carries through to their service, because according to the New York Times’ investigation, many loan modification firms fail to actually provide any loan modification. The sales agent’s goal is to get the up-front payment from the struggling homeowner. After that, they have little incentive to make sure you get your money’s worth.
One additional twist that’s a bit scary: A significant number of these loan modification companies have organized themselves as law firms solely to allow them to collect upfront fees, though the lawyers are for the most part not involved in working with the clients. (Note: Real lawyers don’t pressure you into paying up-front fees.)
The bigger picture point is that the loan modification business works in an environment of lax regulation. The FTC and various state agencies are starting to crack down, but they can’t keep up with the volume of loan modification scams popping up.
How do you know if you can trust someone? A common sense rule of thumb should be: If someone is advertising themselves primarily for their loan modification services, that’s a red flag and you should run away as far as you can.
A much better and safer approach is to work with someone you know has been around for a long time and has a good reputation. And if they claim to be a law firm, try to find out the ration of lawyers to other staff. For example, the New York Times article points out that FedMod had 9 laywers out of over 700 total staff members. That should raise an eyebrow.
Of course, no loan modification company is going to willfully share this kind of information with you. And typically they’re talking to homeowners who really have their backs against the wall and are scared, using high pressure sales techniques.
If you’re facing Brooklyn NY foreclosure attorneys or you’re considering a loan modification for your home in New York, I encourage you to get in touch for a free initial consultation. (FYI, any lawyer worth their salt will provide you with a free initial consultation. You should never feel pressured to make a payment up front by a lawyer, a loan modification or anyone else who says they want to help you with foreclosure, loan modification or bankruptcy issues.)
There are options and solutions for dealing with mortgage and foreclosure problems. A good and experienced lawyer is generally the best option and will save you a lot of money and hassle in the long run.
