Contrary to what most Attorneys will tell you, you can do a loan modification yourself. A borrower’s lender will encourage them to proceed with a loan modification without the use of an attorney so the borrower can save money and have more money to make mortgage payments. A borrower can do their own research and be just as effective, if not more effective than the attorneys. The reason why a borrower can be more effective is because they have a lot more riding on getting the smallest mortgage payment because it will affect them for the next thirty years. Lenders also assume that most borrowers don’t know the ins and outs of the loan modification program and borrowers can use that to their advantage, however, if you know the tricks of the trade you can beat them at their own game. Furthermore, lenders know that attorneys have studied loan modification requirements and know ways to work the system and some may or may not share that advice with their clients, and thus some lenders will prey on a borrowers inability to strike the best deal. In addition, an attorney wants to get paid quickly and will probably try to finagle the system in a way that it works out in their benefit. Below, I’ll show you some examples of how attorney’s take advantage of their clients, and why it’s probably better for you to go after a loan modification on your own.
Here is a situation where the borrower gets the short end of the stick from an attorney: The majority of attorneys will charge a smaller fee or retainer upfront ($500) and a larger fee once the modification is complete ($2,500). So the borrower will pay a large fee once the modification is complete and even if the borrower gets nothing they will be on the hook for at least $500. The attorney might be satisfied with only getting $500 per client because he won’t have to do as much work and they can concentrate more on advertising and less on results. A modification can take up to a year to complete because the lender wants to make sure that the borrower is a able to make the newly modified payments on time for a year before they are comfortable finalizing the modification.
One year is a long time for an attorney to wait on the $2,500 and he would have hundreds of other clients in limbo on their outcomes as well. These same clients would call weekly wanting updates on their modification using up the attorneys resources and making it hard for the office to handle new clients because the old ones keep calling wanting updates. As a loan modification specialist could tell you from experience, knowing how to submit a loan modification application to a lender could make the difference in being approved or declined, and it doesn’t take an attorney to know how to get that done.
Many attorneys are having their clients pay $500 upfront retainers and are sitting on the paperwork to make it look like something is being done and then a few months later telling their clients that they were declined by the lender. And guess who is out the $500 retainer? There is nothing that can be done because the attorney had their client sign a document saying that they were responsible for paying $500 for any outcome of the modification. Unfortunately, $500 is not a whole lot of money to where a person tries to sue the attorney and most people would look at that as another life lesson and move on. After all, what are you going to do, sue an attorney?
Many lawyers and attorney’s want to get paid quickly and will probably not push for the lowest possible payment for a clients modification because that might get turned down and then they would have to resubmit all the paperwork again. The attorneys know the sweet spots where they were able to get previous customer payments modified to and will most likely stay in that range for a fear of denial which will prolong their paycheck. And of course the attorney will have many scenarios of how they were able to save one person a lot of money and of course they won’t be able to guarantee you anything because everyone’s situation is different.
What happens if the attorney is able to get a modification done for a client that saves them $50 a month on their mortgage payment? As soon as that modification is approved, the attorney is then owed another $2,500 and has made a total of $3,000 from the client. $50 dollars is not much of a savings per month but in the contract there is nothing stating that there has to be a certain dollar savings per month rather it says once the modification is approved another $2,500 is owed to the attorney. A modification could be approved with only a $10 dollar savings per month. There are thousands of different scenarios where the attorney makes their money and the client feels like they have been taken advantage of. And most of these scenarios are not going to favor the client but rather the attorney who has covered his tail with contracts signed by the client.
In conclusion, attorneys might be able to modify your home but that does not mean that they will be able to substantially lower your payment and as a borrower you will be obligated to pay the attorney for the full amount of money that is owed to them based on a contract that was signed. On the contrary, people might be sold on something that may happen and then find out that their modification was declined and the attorney kept the upfront money of $500 or more. Although not all loan modification attorneys are crooks, if you insist on using one for your modification, talk to a homeowner who has gotten proven results and use the attorney they used. I would make sure that you get to see those proven results because people tend to exaggerate and you never know who owes who a favor.
Please keep in mind that this article is also referring to loan modification companies when it says attorneys. The article was written directly in regards to attorneys because the majority of people feel safe when dealing with an attorney and some attorneys prey on that.
This article is the beginning of a Do-It-Yourself approach to home loan modifications. Check back often or subscribe to this site to stay tuned for the next article in this series, designed to help you complete a loan modification on your own, cutting out the middle man, helping you protect your ability to stay in your home for the best price possible, and helping you lower your payments as much as possible. After all, nobody will look out for you as well as you can look out for yourself.