How Much Help Do You Need?

April 23, 2009

Most borrowers, following the steps in The A, B, Cs of Getting Your Mortgage Modified, can handle the modification process themselves. If they have questions as they proceed, they can get answers without charge by calling 1-888-995-HOPE, or from a HUD counselor at http://www.hud.gov/local/index.cfm.

But some borrowers, for a variety of reasons, prefer to be represented, not just counseled. They want someone to "take over" the process for them and follow it to a conclusion. Such borrowers can’t depend on counselors to do this, their job is to counsel, not to act as the borrower’s agent in dealing with the servicer.

Because there is a demand for representation (as distinguished from counseling) services, an industry has arisen to meet it. For a fee payable in advance, these modification specialists will (or claim to) represent borrowers in dealing with servicers. Fees vary but most are in the $2500 - $4,000 range.

Some of these firms may perform a decent (if over-priced) service, but many are scamsters who collect fees and do little else. There is no way for borrowers to tell the difference. I strongly advise borrowers to avoid them.

My problem is that I have not had an acceptable alternative to recommend to borrowers who clearly need a representation service. To meet this need, I have been talking to a firm in an allied field which has tentatively agreed to provide modification services that meet the following specs:

      *The firm would provide a free initial evaluation to determine whether there is a reasonable likelihood of obtaining a modification.

      *If the initial judgment is positive, the borrower would pay a fee of less than $1,000.

      *The fee would be paid into an escrow administered by a reputable third party, and would not be released until the escrow agent had received notice that the modification had been granted.

      *If the request for modification is rejected, all or most of the fee is returned to the borrower.

Keep tuned.

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