Loan modifications at O’Keefe, Rivera & Berk
Loan modifications are a very popular topic at O’Keefe, Rivera & Berk, these days, and for good reason — a loan modification can keep a client out of foreclosure, lower interest rates, lower monthly payments, and even on rare occasions, reduce mortgage principal. Generally, loan modifications come up in conversations with clients in two different contexts. The first is when we are asked to assist clients with obtaining the modification, or to actually handle the application for modification on the clients’ behalf. The second is when a client has been scammed by a third party who promised to deliver a loan modification and failed to do so, ultimately causing severe damage to the client’s financial circumstance. I want to address both of these scenarios.
O’Keefe, Rivera & Berk will reluctantly handle loan modification applications
Our firm prefers not to handle loan modification applications, but will do so if the client absolutely insists. Why do we prefer not to do them? Simply because there is NO law that requires the mortgage company to issue a loan modification, and we believe clients can handle the applications on their own, or with the assistance of FREE housing counselors.
If the mortgage company participates in HAMP (Home Affordable Modification Program), there are guidelines under which the client will receive a modification, but the loan modification application process is a matter of completing simple forms and organizing documents. Once the application process is complete, the lender makes a decision on whether to approve the application. Generally, this decision is based on formula. If clients cannot complete the forms, generally we refer them to a HUD-certified housing counselor. For a list of counseling agencies, click here: HUD COUNSELING AGENCIES We will almost always recommend that you try counseling first before you engage us to handle the loan modification process.
Loan Modification Scams – Be Aware, Be Afraid
Folks, loan modification scams are out there and are coming for your money. I cannot even tell you how many of our clients have been injured by scams. There are several licensed Illinois attorneys who are complicit in these scams. Please be wary of ANYONE who:
1) promises you a loan modification. No one can guarantee a loan modification – modifications are generally at the discretion of the mortgage servicer and the investor who holds your paper. In fact, you should stay away from any attorney who promises you anything. This is nearly always a bad sign.
2) charges a monthly fee for loan modification services such as a percentage of your mortgage payment. These fees are generally NOT ethical. An attorney fee must be reasonable. These monthly flat fees are not reasonable because they are not related to the amount of work the attorney is doing, and they continue in perpetuity.
To give you one example of many, recently, we had a married couple contact us who had been scammed by a licensed Illinois attorney who advertises his services all over Chicago on billboards. The husband, a pharmacist, makes a six figure income, and the amount of the clients’ mortgage payment was modest in comparison. Three years ago, the attorney promised the couple a loan modification and advised the couple to stop making their mortgage payments (even though the payments were affordable). Fast forward to now, and the couple is over $100,000.00 in arrears on the mortgage, the modification was denied, and the couple is on the brink of losing the home. To make matters worse, the couple has lost over 200 points on their credit score, and have paid over $10,000.00 in fees to the attorney, who is presumably still in the process of scamming clients all over Chicago. We are now in the process of handling a short sale for the clients. The short sale is the only option – as otherwise the property will be sold in foreclosure.
These clients are examples of folks who would have been much better off, had they never heard of a loan modification in the first place.
If you have questions about loan modifications, or are concerned you may have been targeted by a scam artist, please feel free to call our office to discuss. We are not only bankruptcy and real estate attorneys, but we provide general advice and problem-solving services for our clients. The key is to call us first before you make a decision that may jeopardize your family’s financial security.
–Peter L Berk