BiggerPockets

First, I do not nor have I ever done loan mods. So I can not speak about them with 1st hand knowledge.

So, I will focus on what I do, short sales. Yes, a homeowner can trust my company. When we engage a property and make the business descision to pursue the purchase, we will not stop until we are finished. For us, selling the property is a secondary step, but the primary step is to purchase the property. So with that, we work to the best of our ability to accomplish what we set out to do. Sometimes things do not work out, but it is never a surprise to us or the property owner. If we are unable to purchase, we offer several solutions. Not the best end result, but it is adequate.

Your next question; does it bring added stress? I can not see how us stepping in to purchase the property being or bringing any added stress. If it has brought any added stress, I have never had a property owner tell me such.

Hope this helps!

I agree with Jon that loan modification companies are scams. A short sale is a different beast, and should be looked at as such.

An example of a modification company "scam":

Customer authorized me to speak with a lawyer who was going to do the loan mod for him. I called him every day for a month without him getting back to me or forwarding me any paperwork. The mod was pushed to another month causing additional legal fees, delinquent interest, and late charges to acrue on the account. I finally get the financials, but the lawyer will not return my calls or answer emails with questions that were pertinent to getting the deal done. I simply put together the best deal I could based on the hardship and the financials. I proposed to my management to reduce the interest rate to 4.5% (commercial loan). Management deemed that there was too much equity in the property (48% LTV) and said that the best we could do is 6.5% or we will foreclose on the property.

I relayed this information to the lawyer, who for the first time in this process called me back. He told me that unless I can do better, his client is going to tie the property up in bankruptcy for as long as possible and not pay me. I told him that was fine. He hung up the phone on me.

2 minutes later, the customer called me and told me that he does want to keep the property and does not want to go into bankruptcy. I told him that if he would work with me, and I could substantiate a lower interest rate, I would be happy to try. No guarantees, but I would try to get an approval. He said he would appreciate that.

I am working directly with the customer now. The lawyer called me yesterday and asked if I had completed a modification. I told him to speak with his client. He asked me why, stating that I had authorization to speak with him. I told him that since he misrepresented his client to me, I did not feel comfortable speaking with him any further about the customer's loan, unless I received further authorization from the customer to do so.

He got mad and hung up the phone on me. All he wanted was to get paid. Never had the customer's best interest in mind.

You do realize that when one brand new member, Brown Hayward, asks a question in his very first post, and then another brand new posts, Fred Marin, gives an answer that neither of you has any credibility, right?

Just about all loan mod companies will be going out of business because of stricter laws from the DRE. Good thing too. NEVER pay a fee up font for a loan mod. You will regret it.

I completly agree with James and Jon as far as Short Sales are concerned. I humbly disagree that all Loan Modification companies are scams. (I've never attempted a Loan Modification nor do I have any desire to, and I'm not endorsing one)

Although the majority of them are scams, there are definitely some that are legitimate. As with any profession there will be individuals that conduct business in an ethical and professional manner and there are those that do not.

There are laws and regulations in place, and if a company abides by them, then they cannot be considered a scam.

A homeowner always has the right to contact their lender to attempt a loan modification. These same homeowners can also contact their lender to attempt a Short Sale.

Most seek out help, because they do not completely understand the process and feel more comfortable working with a professional.

For a long time I thought loan mod companies were scams - but it was thinking like Audley's that changed my opinion, a little.

A homeowner can do their own plumbing, fairly easily I might add, are plumbers all scams? Surely you would say that gardeners are all scams, and Realtor's, well ..... Of course my point is to back Audley's - some people want to pay others to do things they would rather not or feel would be better handled in the hands of a professional.

I do not believe this is very smart but ----> There are mod companies that charge up front - maybe $3,000 - if the homeowner gets to stay in the home for 4 or 5 extra months then some may feel it's worth it. Of course I feel they should short sale in order to address the problem and get on the road to recovery sooner but that's another topic. The homeowner is free to make these choices.

As for the loan mod companies that do not charge unless they have some sort of success - those may be a little more disingenuous. The homeowner believes they are going to get a principal reduction etc or they do not pay. The mod company comes back with a forbearance agreement with no reductions and then charges their fee.... at least the homeowner "knew the play" up front with the upfront fee company.

As for trusting short sale companies - it all depends on the company. There are legitimate ones that take care of all parties and then there are fly by night people that are doing things "by the seat of their pants" and putting the seller in jeopardy.

For example, when I see posts here on BP that say "The trustee sale is tomorrow and the negotiator was not following up and not the deal is lost" - I want to throw my computer at the wall - Forget your "deal" or your "profit" you just destroyed your seller!.

If you do not know what you are doing - do the deal with someone else for the first few times until you learn. It is unconscionable to leave a seller "high and dry".

So the answer to the original poster is - Yes. Some of them.

Many many loan mod companies are scams, and the homeowners should NEVER pay an upfornt fee. For disclosure I do not do loan mods, but have owned a mortgage company and worked for lenders. To Audleys point, the typical homeowner would have no clue as to what deal to present to a lender for a likely modification and would not understand ratios, etc. (similiar to having little chance of getting through a short sale) Let the pros do it, especially when dealing with such an important issue. Just be very careful in selecting them and make any fees strictly contingent upon success.