Should You Pay Loan Modification Fees?
While struggling homeowners across the country grasp for help from the government
through loan modifications, there is much debate over the loan modification fees being tacked on upfront by some companies that help perform the actual modifications. Loan modification fees are to some a necessity and to others a disgrace. The question remains: Should a company charge already strapped homeowners with a fee upfront or should the company hold their fees until the clients have modified their loans and then redeem their money?
On 7/20/2010, the FTC(Federal Trade Commission) implemented a ban on up-front
loan modification fees set forth by loan modification companies. This rule requires mortgage relief companies to make good on their promised results before charging or accepting payment from consumers. Under the rule, companies cannot be paid until they have a documented offer from a mortgage lender or servicer that lives up to the promises they have made. While this comes as a relief to all consumers due to them not having to to pay yet another fee, some companies are not so happy about the new ban on up front loan modification fees. Their debate shows some merit as well.
See, many struggling homeowners may have not been paying their mortgages for months, and sometimes years. Once a loan modification company gets a client the modification, the client will then be expected to pay the mortgage payments. This, in most cases will leave no money for the firm to collect once the client has completed all the services. In turn, many make the case that companies can not be expected to carry all the costs for months overhead, labor, time, etc. only to have a "chance" of getting paid at the end. Most feel regulations need to be in place in the form of guidelines set up by the FTC, but a blanket ban on fees doesn't seem to answer the problem for both the consumer and the companies.
On the flip side of that argument, there is some that feel (and probably the majority) that the ban is a great aid to the average homeowner under financial duress. Treasury Secretary Timothy Geithner has been quoted as saying, "Far too many homeowners have paid up-front fees to bad actors who promised loan modifications but never delivered. I commend the FTC for proposing a strong set of safeguards to protect consumers from these predatory practices."
The general feeling is that by enforcing this ban on up-front
loan modification fees many of the "scam" artists and bad actors will fall by the wayside. Under the new rule a company may set aside escrow reserves for the debts and their fees, but may not collect fees until the debt is settled. The company must also be transparent, showing a true and documented date to substantiate their claims of success.
While these guidelines may be exactly what the small companies worried about the new rule are looking for, only time will tell if the ban will crush them or simply help to weed out the dishonorable companies. Nonetheless, decisions as important as your home mortgage should be talked through with a loan modification specialist such as the ones you can find at
Fast Loan Modification Help. Go there and enter your contact information and you will be put in touch with a Loan Modification Specialist that can address any concerns you may have.
Should You Pay Loan Modification Fees?
By: John Hughes
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