It’s always smart to do some investigation before hiring anyone to help you obtain a loan modification. Here are a few things to keep in mind, according to the Attorney General’s office of the state of Washington:
- Scammers will ask you for an upfront fee then provide services you could have received for free through a nonprofit organization or from their lender. It is illegal for an unlicensed provider of loan modification services to collect a fee in advance. There are also legal limits on the fees any licensed providers may charge. The Federal Trade Commission has banned mortgage relief companies from collecting fees until homeowners have received an acceptable written offer from a lender or servicer. Attorneys may be exempt from this rule but they must place any fees they collect in a client trust account and abide by state laws and regulations covering such accounts.
- Be careful if someone asks for your bank account information in order to withdraw funds before they provide service, or if they tell you not to communicate with your lender or servicer.
- If a loan modification company guarantees success in negotiating loan modifications, you know it’s too good to be true. Lenders do not agree to a loan modification in every situation.
- If you choose to hire a loan modification business, check that they have a license at the Department of Financial Institutions website or by calling 1-877-RING-DFI.