Focus On Loan Modifications

You might have heard in the news in the past few months something about how we as a nation have found ourselves in a rough economic patch lately. Either that, or you've been living in a cave. Kidding aside, I think that almost all of us know someone in dire financial straits these days. There's a lot of that going around. People have been getting laid off, small business owners are struggling with declining revenues - it's tough out there. Some of these folks are having trouble with their mortgage payments every month. That's what today's post is about.

One of the things that always seems to pop up in an economic downturn are opportunists. That's not always a bad thing. For instance, the big decline that we've seen in housing prices, while painful to many, has opened up home ownership to more people that could never have achieved that goal in the past. It has also opened up an opportunity for investors looking for someplace besides the stock market to put their money (that would include Diane & me).

Unfortunately, there are also some vultures trying to take advantage of people who are already having trouble enough staying afloat. One of the things that we've been seeing a lot of are companies that have sprung up to "help" people modify their home loans. You might have seen some ads for them in various media outlets, including the internet. What some of these folks have been doing is taking money up front for their services, and then not delivering on their promises. I sometimes think that the background music for their ads ought to be the Steve Miller Band's "Take the Money & Run".

Here are a couple of quick tips for you if you or someone you know is looking for this kind of assistance:

1) Do not pay anybody money in advance, with the possible exception of a nominal amount to run a credit report. If they are legitimate, they will have things set up so that any advance fees for services are placed into a legitimate escrow account with a licensed escrow company, and they only get paid after your loan modification is complete.

2) Check them out. One source for checking on them is the California Department of Real Estate's website. They have a page showing companies and brokers who have submitted their advance fee agreements to the DRE and have had them approved (click here). This doesn't guarantee that they will be effective, but at least they are supposed to be playing by the rules, and they are subject to regulatory oversight. They also have a link on that site to companies and brokers that the DRE has slapped with a "desist & refrain order". If the company you are talking to is on that list, you might want to look elsewhere for a solution.

Our Realtor community recently had a presentation from from Cabrillo Economic Development Corporation on the services that they offer to homeowners. They are a non-profit organization that helps people with home ownership, including counseling for new and prospective home buyers. One of the services that they offer is helping existing homeowners in distress work through the loan modification process with their lenders. If you know somebody who might need help, go to their website, or call their Santa Maria office at 614-0267.

Not everybody can be helped out of this mess. But some can, and it's worth the effort. Just be careful not to dig yourself further in a hole trying to get out.