Watch out! Modifying your mortgage is not as easy as they say

By Marrero, Chamizo, Marcer Law, LP,

Are you struggling because of an unexpected job loss or medical emergency? Did a natural disaster – such as a hurricane – wreak your home or business? These things and many others can take a toll on you both emotionally and financially. It doesn’t take long before bill payments are behind and home mortgages are under threat of foreclosure.

Up until December 2016, homeowners could get foreclosure assistance through a federally funded program called the Making Home Affordable (MHA) program. However, this program is no longer accepting applications. Homeowners who are at risk of foreclosure are left on their and told to negotiate directly with their mortgage companies.

Beware the dangers of trying to modify your own mortgage loan

If you are having difficulty maintaining timely mortgage payments, a mortgage modification may be your best option. However, negotiating this change on your own can be dangerous. Watch out for these potential – and very common – scams:

  • Your mortgage company is the only company that can grant you a loan modification. If a third-party company claims they can pre-approve your mortgage modification, it is a scam.
  • Beware of any solicitations claiming to be from your mortgage company. If it advises you to send payments to a different address than you are used to, it is a scam.
  • If you are negotiating on your own, continue making monthly mortgage payments. If your negotiations don’t work out, you may be responsible for penalties in addition to the late payments.

The problem with mortgage companies

While your mortgage company is the only one that can agree to modify your home loan, many people have reported challenges when negotiating modifications. Many homeowners have gone into foreclosure despite their best efforts to adjust their loans.

According to the Consumer Finance Protection Bureau, over 223,000 people have filed complaints against their mortgage companies since July 2001, including:

  • No guarantees: There is no guarantee that you will be approved, even if the person you are dealing with says it will work out.
  • Delays: These complaints allege that mortgage lenders drag out the modification process by asking homeowners to send in the same documents for the modification repeatedly.
  • Dual tracking: Many people found themselves stuck in even worse situations because the lender told them to stop making payments during the negotiations. As the process drags on, payments fall further and further behind. Some of these loans are on dual tracks, meaning that they are in a modification program and foreclosure proceedings at the same time.

Don’t try to modify your mortgage on your own

Help is available. If you are facing possible foreclosure, mortgage modification is still a good option. However, there are too many scams and potential pitfalls if you are trying it on your own. Even if you are working directly with your lender, many well-known mortgage companies have faced scandal and scrutiny for dragging out the modification process.

Homeowners can face many challenges when trying to save their home. To ensure that your mortgage modification request is handled correctly, consult with a knowledgeable attorney who is experienced working with mortgage companies. The lawyers at Marrero, Chamizo, Marcer Law LP will help you negotiate a favorable outcome for your situation.