Loan modifications are the big news now, with government programs and complicated rules. Any time big news is accompanied by complicated programs, scam artists come out of the woodwork. It has become so bad that consumer websites are popping up to advise homeowners of what to look for in trying to avoid scams. After all, there are already financial problems involved, thus the need for a loan modification. Compounding their problems with ripoffs and useless excess fees is not helping. Some warning signs include:
- Any guarantee that your loan will be modified, as some do not qualify.
- Redirection of monthly payments to a third party.
- Upfront fees.
- Requirement to sign the title over to a third party.
Generally, the better the deal sounds, the more suspicious the homeowner should be. Many are turning to attorneys who specialize in real estate and mortgage issues. However, some attorneys could be a problem, so still look for the warning signs above. Attorneys who specialize in this sort of thing know the way that banks work and can make a difference, sometimes getting a modification that wouldn't have happened otherwise. One national article quoted typical fees of $1500 to $2000 for their services.
What lawyers can do, and how they can advise a homeowner in this situation is governed by state laws. So, the homeowner should check their state's regulations. This can be important if a lawyer "farms out" some of the tasks to a non-attorney. In some states this isn't legal. It can also result in problems if the attorney isn't overseeing these transactions well.