There is a lot of bad press against loan modification companies. It is further heightened by the FTC putting out bulletins stating that modification companies that charge up front are a scam and that they will prosecute them.
I work for a loan modification company that has a 100% guarantee. Not a guarantee that we will get the modification, but rather one that states that it will cost nothing if we don't.
The problem is, if we don't charge up-front, once the client gets their modification, there is absolutely no way to collect any fees. It is completely at their discretion. Most clients that are in default on their mortgage and seeking a modification don't' really care about their credit, so getting a judgment against them isn't much good. We hold the money in a separate account and don't move anything to operating accounts till the client receives a modification. We have an attorney on staff that could set up an Trust account of some sort and the money will be held there until we are successful. But this is the only viable way that we see of proceeding.
We have helped hundreds of homeowners to-date and hope to help many more. In order for us to continue doing what we are doing. To continue educating the borrowers on the options available. To continue reviewing client documents to see if they qualify. To continue preparing Broker Price Opinions of value on their properties. To continue to work vigilantly on our clients behalf, we must have some sort of policy in place to ensure that once we are successful that we will get paid for our services.
Question: Is collecting fees into an Attorney Trust account until an offer is received from the bank still considered charging fees up front?
Since this issue sounds very technical, I suggest that you should consult a lawyer.
hink having fees placed in trust with a third party bank account is a gret idea. Part of the contract with your client would stipulate the terms under which you would be entitled to recieve payment, and any fees paid go into a third part account similar to escrow until such time as your loan modification service has been copmpleted to agrred terms.
It's a shame that many oprtators in the mortgage, refinance and home loan related fields have had thier reputations stained by sharks. The market is highly risk averse and many people only apporach thrid party provider such as yourself out of desperation when foreclosure looms and they have been unable to refinance on their own.
One thing though - you'd need to make the option open to the customer as to who would hold the funds. you can suggest lawyers, but people will hold the perception that they are not impartial if you're suggesting them so you'd always have to make the option available to the customer to nominate the lawyer who hold the funds.
hink having fees placed in trust with a third party bank account is a gret idea. Part of the contract with your client would stipulate the terms under which you would be entitled to recieve payment, and any fees paid go into a third part account similar to escrow until such time as your loan modification service has been copmpleted to agrred terms.
It's a shame that many oprtators in the mortgage, refinance and home loan related fields have had thier reputations stained by sharks. The market is highly risk averse and many people only apporach thrid party provider such as yourself out of desperation when foreclosure looms and they have been unable to refinance on their own.
One thing though - you'd need to make the option open to the customer as to who would hold the funds. you can suggest lawyers, but people will hold the perception that they are not impartial if you're suggesting them so you'd always have to make the option available to the customer to nominate the lawyer who hold the funds.
Some people are just taking it upon themselves to try to get results from banks by themselves and modify their loan. These guys are encouraging it loandoctorsfl.com. Seems like the borrower would have to learn to do a lot of reading heh.
---This post was edited to remove a commercial link. Read our discussion policies for more Community best practices.
ChristineL | Former Moderator | 2/18/2010 - 1:19 pm
mrhelpful | Contributor | 2/28/2010 - 5:23 pm
saffrizzle | Window Shopper | 3/1/2010 - 10:19 am
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