Loan modification companies are everywhere. And just like any business, you may come across one or two companies whose sole motivation is to scam you out of your money. Here are some of the things you should ask them before you sign the dotted line.
Background and experience
First, ask how long they’ve been in the loan modification business.
Experts are made, not born. And in most cases, it takes years to become one. It takes experience to learn the ins and outs of the loan modification process. Businesses just starting out may lack the knowledge and skill to come up with different strategies to help you get the fix you want.
Second, ask if they have strong home loan experience.
This is always a good question because the person has to be an expert in all aspects of mortgage lending. When the company has enough experience, in most cases half the battle is won.
Third, get references.
Your clients will be the best resource for how competent you are in handling the case. Don’t settle for testimonials. Ask the names of these people and call them.
Credentials
First, ask if they are registered with the Department of Registered Loan Modification Companies.
This government agency is the only one that handles loan modification companies. They have strict standards, and being registered and properly licensed by this department is a privilege in itself.
Second, ask if they have experience in forensic auditing.
Your company must be adept at forensic audit analysis because an estimated 4 out of 5 loans contain state and federal violations. Make sure your company is an expert in identifying specific crimes.
Legality
Ask them if they are a lawyer based company. More complex negotiations require the expertise of a lawyer, so make sure they have good lawyers on board.
Policies
First, ask if they give written guarantees and if they don’t have back-end fees. Most modification companies provide free advice at the beginning of the evaluation. They shouldn’t charge you a lot of money at the beginning of the meeting.
Second, ask them if they have convicted employees. Background checks are important. If you come across employees with criminal records, get another one.
Third, make sure the loan modification processing is in-house or outsourced. This is something you should ask because it can tell you if the company is just acting as a middleman or just for a referral fee only.
If they say internally, check them out with the state bar. If the loan modification uses attorneys outside the firm, then it can be a telltale sign that they are acting as soliciting agents for an illegal law firm.
Fourth, check if they give any guarantee. If your company offers a guarantee that you’ll get it, be careful. No one really knows what will happen. They can help you get in the door, but what happens next is anyone’s ballgame.
Fifth, ask what their costs are and ask them to put it in writing. Most companies charge a flat fee or a fee based on a sliding scale that depends on the amount of the renegotiated payment or the amount of your first payment. They should give you a specific breakdown; if they don’t, forget about them. A loan modification fee must not exceed $2,500.
Loan modification is an important process that requires tremendous effort from only the best people in the business. Make sure you hire the best people who will collaborate with you in achieving your goals.