There are many loan modification companies that are scamming people.  They charge handsome fees and get the money before they do any work.  First, that is illegal under the law.  These companies are not allowed to charge you before delivering on a modification.  In other words, they only get paid if they are able to get the customer a modification. 

 

Secondly, the law in most states requires that the person handling your loan modification must be a licensed mortgage broker, a licensed loan originator in Arizona by 2010, certain nonprofit organizations, or an attorney who is handling the matter incidentally to work being performed for a client.  Anytime, you have a potential problem with your mortgage where you are facing possible foreclosure or bankruptcy that modification would be considered incidental to the lawyer's work. 

 

Most attorneys would not happily handle your loan modification by itself because they can not.  However, attorneys hire experts all the time.  Therefore, they can hire a company to do the loan modification for you.  When a lawyer hires an expert he is responsible for hiring the person or company after conducting a proper investigation to make sure that the expert is legitimate. 

 

In the context of a loan modification other issues arise that a loan modification company can not legally entertain.  They can't give you legal advice.  Loan modifications are tied to foreclosure and bankruptcy issues.  After you spend your money with a loan modification company and get nowhere you will need to speak with a lawyer regarding foreclosure or bankruptcy.  Dealing with these issues initially avoids the scammers.

 

Anytime a company claims to do loan modifications you should ask:

 

Are you a mortgage broker and what is your license number?

 

Are you a nonprofit organization and may I see your documents for nonprofit status? 

 

Are you an attorney?  Do you have a Registration Number and what state are you licensed in?

 

Are you a loan originator and what is your license Number?

 

The scammers won't be able to answer you.

 

Note that all licenses can be verified via the licensing authority for the particular license. 

This Article is provided for general information only.  It does not constitute legal advice.  Nor does it give rise to an attorney client relationship.