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This FAQ concentrates on the process of hiring a professional mortgage modification company. For a discussion about using a mortgage modification firm versus a free do it yourself mortgage modification, or general information about help stopping home foreclosure read those specific articles.


  • I just got a notice the bank started a foreclosure on my house, can one of these mortgage modification companies really help save my home?
  • Avoiding mortgage foreclosure by hiring a professional mortgage negotiation firm not only can work, it represents the best opportunity to keep your property as long as you hire a competent reliable company and stay away from modification company scams.

  • I know I should not attempt the mortgage modification on my own, in fact I tried and spent weeks without even speaking to a human being at the bank, but how do I know which loan help firm to trust?
  • Let's start with some basic things to look for and then proceed to recent FTC guidelines designed to help you avoid scams. The hiring of a mortgage modification firm should involve many steps, first establish the modification company candidate or candidates you wish to evaluate.

  • How do I find these people in the first place?
  • You can search on the internet yourself, use services to help find mortgage modification companies or let them come to you.

  • How will they know who I am?
  • While you move from your first missed mortgage payment or two through serious mortgage arrearage and into the foreclosure process your information becomes more and more public. Many people will try to contact you from people who may want to buy your home to real estate agents to mortgage modification companies to the scamers.

  • Can I trust these firms who track me down?
  • The same as any other but use the same screening systems we will outline in this FA

  • Should I just wait until I hear from mortgage modification negotiators?
  • I do not suggest that, more based on the timing. The earlier you deal with your mortgage payment trouble the better. Waiting until a stack of foreclosure prevention businesses fill your doorstep might mean you waited too long. As time progresses your potential options evaporate.

  • OK, figure I know some mortgage modification companies who want my case, how should I proceed?
  • I like to start with the BBB, in fact you might look there for companies in the first place, except sometimes the BBB searches rely on geography and that does not really matter.

  • Don't I want to make sure I hire a mortgage modification company from my own town I can meet face to face with?
  • No, dealing with the bank negotiating an approved modification and achieving the best deal stand as your goals. You want firms with the contacts to speak with the banks directly, not the ability to greet them in person. The mortgage modification process takes place by telephone and fax. The only reason at all to use someone local involves your artificial desire to find someone you can look in the eye. Unless you just happen to live in a spot where a great mortgage modification business happens to be, look for the best company you can find without regard to where in the United States they might be located. The lender does not care where the mortgage modification professional sits and neither should you.

  • You were talking about the BBB, what should I look for there to spot a scam or just find reliable mortgage modification companies?
  • Start with the rating. The BBB issues marks to businesses just like grades in school with A+ being the best and F as a failing grade.

  • Should I only hire a firm with an A+ rating from the Better Business Bureau with no complaints ever?
  • You need not go quite that far. The nature of mortgage modification means some customers will complain no matter how good the service might have been. If complaints exist try to figure out what the number of complaints means and more importantly how they dealt with the problems.

  • How would I know about the outcome of a complaint?
  • The BBB report will tell you if complaints were resolved to the satisfaction of the BBB. They act as a consumer advocate, but also as an independent third party, so I'm more interested in if the BBB thought the company did all they could to resolve an issue rather than a specific customer.

  • What about the number of complaints a mortgage modification firm might have against it?
  • Try to look at their size and years in business. Three complaints against a one person operation in 2 years ranks them as a worse bet than a company with 10 complaints over a 7 year period for all 100 of their employees. Dig a bit deeper to understand what the numbers really mean.

  • How about on the grade, I know I never got all A's in school, should I demand an A+ now?
  • Each item we review in this FAQ about hiring a mortgage modification firm should be used like a clue in a mystery. At the end of the story you look at all of the evidence and decide on an outcome. Some items play a major role and some a minor roll, some evidence stands as direct and incriminating and some circumstantial or trivial. You certainly do not need to eliminate every firm from consideration unless the BBB gives them an A+ grade.

  • On the other end should I forget about a company with an F rating?
  • Don't forget about them; etch them in your mind because you want to stay far away from them. Some companies may come up in your search multiple times. Keep track of bad ones as well as good ones. You may find it helps learn more about the F rated firms to see examples of bad companies. Learn what they did to make them bad; it gives you better insight as to know what to look for and stay away from in your exploration of a firm you want. The more you know about mortgage modification scams the more you can be sure to ignore those companies.

  • So exactly how should I treat these BBB grades?
  • Figure a mortgage modification company with a grade of A or A+ looks fine as far as the BBB criteria. A grade of B or C should alert you to find out why they didn't earn a better grade. A mortgage modification firm with a BBB grade of D or F should come forward with some other very good reasons to stay on your list otherwise eliminate them from consideration.

  • Part of the information offered by the BBB involves the number of years a company has been in business. How should I use that fact?
  • Obviously the longer the better, but for mortgage modification companies I look for some deeper specific timeframes. Figure the mortgage crisis started about 2008 or 2009. Anyone actively involved in the mortgage modification business even before that, and still in business now, gets a few extra brownie points.

  • No one on my list started their business that long ago, do I need to find someone more established?
  • Companies in business a short time might be fine. Firms who started way before the mortgage crisis and still operating may number just a few in the whole country.

  • So you are saying years in business of a company do not matter?
  • I'm saying that experience matters a lot, but years of experience a company has been established may not matter as much as the collective experience of its employees. I would rather work with a company just starting up where its key employees started in the mortgage modification field 6 years ago opposed to a company already 6 months old where no one knew anything about mortgage modification before they opened the doors. When you find a company established in business for a while, with key employees working in the field for years, so much the better in terms of qualifications.

  • What if the BBB displays a "No Rating" or does not even list the firm?
  • Try to find out why. Sometimes they lack the information either good or bad to issue a rating, other times while the company waits for a review they remain at NR status. Sometimes the BBB may just want the company to be in business longer before issuing an initial grade.

  • Does it matter if the mortgage modification firm actually joined as a member of the BBB?
  • Similar to most of the other items in this FAQ, being a member of the BBB stands as a better indicator than not, but this information by itself becomes another piece of your puzzle or clue in your mystery.

  • Do red flags exist that might tip me off that I'm looking at a disreputable mortgage modification company or even worse just an outright scam?
  • Yes, several, and we shall spend most of the rest of this FAQ reviewing those. Unfortunately many bad firms exist and end up giving the industry a bad reputation when good firms really do provide very valuable services.

  • Well, what does a company have to do in order to become a mortgage modification negotiator?
  • Nothing and that represents part of the problem for consumers right off the bat. To open your doors as a mortgage negotiator you just need doors.

  • So a scam company could rent an office someplace and that's it?
  • You do not even need an office, look for that too. Check the address of the firms under consideration, when you find one that looks like it's in a residential neighborhood or an apartment building you learned another tip you might not want to hire them. Some people just operate out of their house or apartment and I generally do not view that as a good sign.

  • How might I know if the companies really just represent people working from home?
  • Look up the address of the mortgage modification comapny, if they do not list an address, ask them. Then look the location up on a map program. If it shows up on a main street downtown it looks like an office. On the other hand if it turns up in the middle of a residetial area you might have a scam or a less professional firm. This method offers something rough, but its better than nothing.

  • What kind of education do you need to modify a mortgage?
  • None, the experience doing it counts the most, and of course the more education the better, but no law requires a specific education to negotiate mortgage modifications let alone a law degree.

  • Do you need a license for hold yourself out as a mortgage modification specialist?
  • Once again, no. You can see why it becomes so important for individual consumers to learn as much as they can and look out for their own best interests.

  • Are there any regulations at all that control the mortgage modification industry?
  • In February 2011 Federal Trade Commission rules set standards for marketing and dealing with consumers, on one hand the FTC outlined what to do and what not to do, but on the other hand they left ways for companies to operate outside of the FTC guidelines.

  • How about starting by going over what the FTC wants mortgage modification firms to do or not do, because I would guess that any company specifically engaging in practices the FTC tells them not to should get black marks on my list or get knocked right out of consideration.
  • For many items that would stand as correct, especially the truth in advertising aspects.

  • What kinds of ads should I look out for?
  • Common deceptive ads include those touting a special "Obama Plan" particularly any that look like they were specifically endorsed by the President himself, representations that the mortgage modification company maintains a specific government connection, statements indicating people have the right to a mortgage modification or the guarantee of a specific payment reduction and refinance rate teasers with very low interest like 2% to 4%.

  • I've seen all sorts of ads with those items, let's talk about each one. Isn't there such a thing as the Obama Plan to save your home and everyone is entitled to it?
  • While an "Obama Plan" modification does exist and anyone may apply for a mortgage modification under the "Obama Plan" few people really qualify under that particular program. Think of mortgage modification more like an ice cream shop, many methods and plans exist for mortgage modification, the Obama Plan stands just as one flavor.

  • Do I have the right to some mortgage modification of some sort?
  • No, absolutely not! The only solution the consumer claims by "right" include the right to file a chapter 13 bankruptcy and in most cases the right to make a full reinstatement. You may find more bankruptcy information in the chapter 13 FAQ area or learn more about full reinstatement in the article on do it yourself or free mortgage help solutions.

  • How about obtaining a mortgage refinance with a rate of 2% to 4%?
  • In rare cases homeowners will indeed find modifications with rates that low. While your chances of getting that kind of mortgage modification look way better than winning the lottery, rates below 4% and especially approaching 2% happen infrequently enough that drawing a person into a contract with the lure of payments that low constitute deceptive advertising.

  • What if a modification company guarantees me a 2% mortgage interest rate?
  • Exactly the type of guarantee that should make you suspicious. Look for more details in an article just dealing with the proper consumer expectations from a mortgage modification, but claims about any specific numeric savings or interest rates likely indicate a suspect firm. Most reliable companies know in the real world such guarantees would be unattainable.

  • So I should avoid modification businesses offering a guarantee?
  • No, you want a company to offer a guarantee. As an educated consumer you want to make sure the warranty stands as something both fair to the homeowner and well as something the company can back up with results. A firm intent of stealing your money anyway can offer the greatest guarantees in the world and beat all the legitimate firms, because the bad guys never intend to do anything but lie, cheat and scam.

  • What type of guaranty would an honest modification company offer?
  • Just that a modification gets done or you get your money back. No specific payments, no particular interest rates.

  • Where would that leave me if they met those minimum standards?
  • Most people looking for a mortgage modification start the process many mortgage payments behind with foreclosure looming just around the corner. Even if the modification only moves the arrearage to the end of the loan and resets the payments without lowering the interest rate or amount due monthly, the modification served to avoid foreclosure, thus fulfilling its primary goal.

  • What if my problem started because I could not afford the payment and after the modification I still cannot afford the payment?
  • Then you may need to generate more income or look into giving up the home. If you need to hit a very specific number on a modification in order to keep the property you must understand you take a gamble by attempting a modification. Unfortunately this gamble often represents the best gamble or even the only option other than walking away from your home, but if a modification company successfully changed your mortgage terms, particularly where they stopped a foreclosure, they did their job and met the specifications of their warranty even if the new payment means you still lose the property.

  • I heard that modification firms will no longer collect fees in advance under the new FTC rules and that if I do not like the modification contract the company offers I get the right to reject it and not pay any fee, is that right?
  • On paper that might stand as truth, but let's look at what the new FTC rules really did to the third party mortgage modification industry, and what you need to look for as a consumer in this new world.

  • But I like that idea, I hire a mortgage modification company, they do all of their work, and if I don't like the results I don't pay, what wrong with that?
  • Imagine you were a cancer doctor. By definition your patients might pull through or they might not, it might be easy or it could be tough. What would happen if the government suddenly said that you could not charge for anything until the completion of all treatments and that if the patient was unhappy at all for any reason, they would not need to pay a nickel? Let's imagine a physician spends months curing a patient back to perfect health, but the patient says they do not like their surgery scar and by rights the doctor gets zero.

  • As the doctor that would not seem fair, the services were performed and done well, yet they lose all rights to any money. How can anyone run a business like that?
  • That seems like the FTC concept completely, they essentially outlawed the mortgage modification business without congress even passing a law.

  • So is it the case that mortgage modification companies no longer exist, no one can help me save my home from foreclosure and I wasted all of this time reading for nothing?
  • No, the FTC leaves exceptions for their rules, specifically for lawyers and non-profit organizations. Essentially, any mortgage modification company operating after February 1, 2011 should either be attorney based or a non-profit organization.

  • Could there be some mortgage modification companies out there that just follow all of the rules so well that they continue to operate under the new FTC guidelines without a lawyer involved or working as a part of a non-profit company?
  • I suppose in theory it could happen. It could also be that there really exists honest sad Nigerian guy who legitimately needs to move some money into US funds with your help, but all of these spammers and scammers gave the concept a bad name. I'd say the FTC does not want the mortgage modification business to operate in that way anymore and you should pay attention when they say it. Those loan modification companies who continue to do business today without working through an attorney or a non-profit organization would likely fall under the unprofessional or scam grouping and in either case you should be extra careful.

  • What does it mean to me as a consumer if do my mortgage modification through an attorney based company?
  • Mostly some form of oversight. That may not sound like much, but prior to February 2011 the mortgage modification industry operated without any rules regulations or oversight at all, by forcing attorneys to become involved consumers gain oversight at two key levels. First attorneys generally keep an eye on operations and make sure cases flow as they should and secondly the state bureaus in charge of lawyers keep a watch over the attorneys and the flow of money.

  • What about the idea that attorneys will be doing the modification work?
  • Don't expect that. The attorneys will hire paralegals and experienced mortgage negotiators to perform actual loan negotiations. Lawyers rarely did this type of work personally before and no one should figure that will change.

  • So the biggest change is the lawyers keeping an eye on the mortgage negotiators?
  • No, I think the biggest change comes in the area of the state attorney board's watch over the flow of money. Since they maintain very strict rules over how lawyers handle money, and now mortgage modification contracts must involve a lawyer (or non-profit organization) the money must fall under the rules set out for the attorney's cash flow. In the short run everyone hopes this should almost end cases where consumers pay money for modification services only to see their cash disappear without anything done to save their home from foreclosure.

  • What about that concept that if I'm not happy I don't have to pay anything?
  • Lawyers gain exemption from that rule.

  • What about not paying anything up front?
  • Placing money in escrow to assure the payment of fees later does not count as payment up front, and attorneys are exempt from that anyway.

  • So what the new FTC regulations really did was to create rules that forced the industry to operate under the rules of the lawyers, and in that world the FTC regulations do not apply?
  • That pretty much sums it up, although the FTC outlined some truth in advertising provisions for loan modifications that everyone should pay attention to even if they are an attorney or non-profit organization.

  • Ok, now I can pass a history test on this stuff and I know the background, but how do I use this to hire a mortgage modification company?
  • In addition to everything we talked about at the beginning make sure either a lawyer is involved in the process or that the company is a non-profit organization.

  • Can it be any attorney anywhere?
  • No, if a mortgage modification company operates in your state, you need to make sure they have a lawyer licensed in your home state.

  • Is the fact that they need someone in my state key to getting the modification case done correctly?
  • Not really, it's more about those are the regulations, and you want to make sure your firm knows the right way to do things and does not attempt to short cut requirements.

  • Will I ever meet my home state lawyer or any of these people?
  • Probably not.

  • What about paying money?
  • It might be early to know how this will evolve, but my initial suggestion would be to make checks out to the attorney licensed in your home state. If the main thing gained by the FTC involves that flow of money you want to do your share as a consumer, by making the checks out to the in-state lawyer specifically you insure the flow or money where it belongs, and along with that comes the oversight from the agencies keeping track of the lawyers, which all occurred for your benefit.

  • What kind of results should I expect from a loan modification company, can I rest assured they will stop my foreclosure and lower my monthly payment?
  • Proper consumer expectations of mortgage modification companies warrant an article all by itself.