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The media has been rife with horror stories of scam artists preying on one of the most vulnerable sectors of our population, troubled homeowners and their families. However, many homeowners just haven’t got the message so we shall revise a few of the signs that can help us spot a loan modification scammer.

These leeches of society will ask for exorbitant fees from homeowners too worried or clueless to see they are paying a thief for something they could do for free.

It must be said beforehand that, as in so many other industries, the many pay for the sins of the few, and that most loan modification agents are just trying to make a decent living providing a service.

Scam Alert 1. Charging Upfront Fees.

It is illegal in many states to charge upfront fees, or fees for services that have not been provided yet. Even for states where it is not illegal it is certainly a clear sign you are dealing with a potential scammer. Stay well away from any company that tries to charge you with upfront fees.

Scam Alert 2. They Guarantee They Can Stop Your Mortgage From Foreclosing.

This is another red flag for loan modification companies you don’t want to touch with a seven foot pole. Nobody can guarantee a servicer will provide a loan modification and stop a mortgage from foreclosing. Not even the Government has been successful at forcing servicers do that, it is unlikely your loan modification company downtown is going to be able to.

The truth is that there are free loan modification counseling agencies that will provide you with all the information you need. We are used to paying for a good service and feel that the free option must be in some way of inferior quality than HAMP counselors. These counselors are not volunteers working out of charity; they are paid by the Government, just not by you.

Scam Alert 3. They Ask You To Stop Paying Your Lender And Start Paying Them.

It is amazing that anybody would fall for this, but we do. The companies will claim that you need to be behind in your payments in order to qualify for a certain loan modification or that they will take care of the payments or any other kind of bogus explanation. Don’t believe it. You do not need to be behind in your payments to get a loan modification you just need to have proof that you can’t afford the current payments. Work on your hardship affidavit, but whatever you do don’t stop making payments. It will only make things worse by further dropping your credit rating.

What Should You Do?

Your best option is to call your state’s HOPE hotline at 877-462-7555 and ask for your closest nonprofit housing counselor or check it out yourself here.

Loan Modification Companies will tell you that you need their help to fill in forms and that nonprofit counselors don’t have your interests in mind like they do. It can be faster and easier to use a loan modification company if you can afford it. Just be careful you don’t become another mortgage modification scam statistic.

Related posts:

1. Top 5 Steps to Avoid Foreclosure without Falling Into a Loan Modification Scam
2. Loan Modification Scams And Desperate Homeowners an Explosive Cocktail.
3. How not to be a victim of foreclosure fraud

Related posts:

1. Top 5 Steps to Avoid Foreclosure without Falling Into a Loan Modification Scam
2. Loan Modification Scams And Desperate Homeowners an Explosive Cocktail.
3. How not to be a victim of foreclosure fraud

The million dollar question millions of Americans are asking themselves is “should I walk away from my underwater mortgage?

The situation is so dire that according to Moody’s Economy.com 17.4 million homes will be underwater by the end of 2010.

That is worth reading again: By the end of 2010 17.4 million homes might be worth less than the value of their mortgage.

This presents homeowners with a dilemma. Should they continue making big monthly payments on a home that might never be worth what is was bought for, especially when there are cheaper rentals in the same area?

The answer to that question is not easy; there are many factors to take into consideration before deciding if a “strategic default” makes economic sense.

However many homeowners don’t even consider it an option out of fear and guilt. The moral argument is that when you signed your mortgage you gave your word you would pay for it, so it is your responsibility to stick to your word. Banks like that argument, and most of us can see the logic in wanting to keep your word, that your yes mean yes. However a mortgage is a business agreement and it is not as simple as all that.

When you sign a mortgage agreement you are not accepting charity, a display of trust or blind faith from your loving bank manager. You are entering a business agreement where you agree to pay back the money you borrow with interest. The agreement you sign clearly states that if you don’t pay your mortgage the lender will receive the loan’s collateral in compensation. The bank is required by law to carry out due diligence when assessing the price of the house is fair and that you are capable of paying the mortgage payments.

So when you walk away from your mortgage you are not lying you are simply using an option included in the mortgage, an option you feel is more financially sound.

However, others don’t walk away from a mortgage not because of morals but out of fear the bank will go for their other assets, like a car, a second home or their savings, in an effort to cover the losses of the underwater mortgage.

This is a legitimate concern, but it depends in which State you live in. If you are fortunate enough to live in a no-recourse state like California or North Caroline you have nothing to worry about. Banks cannot claw at your other assets to cover the whole you left in their real estate portfolio. However if you live in a State that has recourses there is a higher risk.

However, lawsuits are rare because they are so expensive and judges tend to empathize with the troubled homeowner before shedding tears for multibillion corporations.

Nevertheless, if you are considering walking away from your underwater mortgage one of the first things you want to find out is if you live in a recourse or no-recourse State.

Related posts:

1. Loan Modifications Are They Worth It – An Overview In Simple English
2. Loan Modification Horror Stories, What Are The Lessons?
3. Loan Modification Alternative by CitiGroup: Refinancing 30 Year Fixed Rate Mortgages

Related posts:

1. Loan Modifications Are They Worth It – An Overview In Simple English
2. Loan Modification Horror Stories, What Are The Lessons?
3. Loan Modification Alternative by CitiGroup: Refinancing 30 Year Fixed Rate Mortgages

How Do Banks Profit From Mortgage Modifications

The beauty of capitalism is that there is some degree of transparency, we expect everyone to do everything for some kind of profit or benefit. As it is often said there is no such thing as a free lunch, the world of mortgages and loans is no exception. Taking aside a couple of laudable nonprofit loan organizations, banks and lenders lend for profit, understanding how and where they make a profit can help you understand how you can save money and get a better deal on your loan modification or mortgage refinance.

Profits for banks can come from  all kinds of avenues when clients modify their mortgage or loan. This article will point out some of the basic you must keep an eye for.

Mortgage modification fees

Banks and lenders make money by moving money and papers. If you modify an option, clause or interest rate on your mortgage it is very likely this will cause you to incur in some kind of fee. This is bad and good news. If a bank is going to make money on your loan modification you don’t have to feel like it is charity, modifying your loan can be a positive thing for both of you, it also entitles you to demand a certain level of customer care.
It is important to note that banks should only include fees in a loan modification that belong to the current loan modification for reports or actions carried for the borrower, previous costs and fees should not be included in the modification.

Extending the length of the tenure.

Making a loan last for a longer time is good news for your bank and can be good news for you, mind you it can be terrible news also.  It is good news for the bank because they guarantee they are going to a return on their investment for a longer period for the same amount of cash.  This is an important point to think about. Some borrowers extend their loans without even thinking twice, not realizing how expensive it can be in extra interest.

Increasing the principle borrowed.

Just as the car salesperson tries to sell you all the extras he can a good mortgage salesperson might try to get you to increase the amount borrowed as part of your loan modification. As you probably guessed, borrowing more money will cost you more. This is fine if you can afford it or you need it very desperately, nevertheless it is worth thinking twice before digging yourself deeper into debt.
As you can see banks can actually make a profit from a modification of your mortgage making mortg

age modifications a potential win-win situation if everybody does their part. Your part is to be informed, understand your options and keep your eyes on the game.

Related posts:

1. Mortgage interest rates drop but illegal mortgage fees could negate savings
2. Mortgage Modifications, Mine Field Or Land Of Milk And Honey
3. Are Loan Modifications Worth the Hassle

Related posts:

1. Mortgage interest rates drop but illegal mortgage fees could negate savings
2. Mortgage Modifications, Mine Field Or Land Of Milk And Honey
3. Are Loan Modifications Worth the Hassle