First come the radio spots, then TV commercials, then infomercials – the first indication that a new industry has been born from a changing economy. The housing crisis and woes faced by a plethora of borrowers about to lose their homes has begat the newest craze – Loan Modification Services.
Opportunity or Opportunistic?
We are now seeing a proliferation of firms that charge fees for what they promise will be quick results to negotiate with lenders to get affordable loan terms. Unfortunately, some less-than-ethical folks see this crisis as a way to scam desperate homeowners with false promises of modifying loans. In many cases, the firms take the homeowner’s money but never deliver the services promised.
Considering jumping onboard?
This offers an interesting opportunity for real estate agents to help clients and friends – by providing a referral to a valuable service, and the opportunity to earn some extra income.
Avoid the charlatans!
After watching a local investigative-type journalist outlining an above-board company, I spoke with Cynthia Mitchell an affiliate for Home Loan Preservation a nationwide legal network that specializes in Home Loan Modifications. She offered a few pointers for agents that want to point people toward a legit company, or become an agent and earn some residual income “It’s important to ask the following six questions. If the company answers ‘no’ to any of them, do not use them”
1. Will a licensed attorney be contacting my lender on my behalf?
2. Are fees guaranteed as fully refundable if the attorney is not successful in modifying my loan?
3. Will I have constant, transparent communication/updates from the attorney to track progress?
4. Is the company registered and compliant with state and federal departments?
5. Will all fees and timelines be disclosed up front?
6. Should I continue to make payments?
Conflict of interest?
I could see it argued both ways. Mitchell has seen a comfort level among agents in making referrals to homeowners in search of the service “The real estate agents we work with don’t have the sense the homeowner blames them for their issues. It seems that is typically directed toward the bank.”
Is a service necessary?
According to William Apgar, a senior adviser to Shaun Donovan, President Obama’s new secretary of housing and urban development “Borrowers don’t need to pay anybody.” Ironic, that many have made the same argument around realtor’s service. But I digress …
“I find Mr. Apgar’s point of view interesting,” Mitchell commented, “we continually hear that the problems homeowners now face are due in large part to homebuyers’ naiveté in the home buying process. If one has difficulty making a good decision on a purchase transaction, how can we expect them to understand the legal intricacies in the loan modification process? How can they be sure their interests are being served without a lawyer driving the transaction? You know the banks have plenty of lawyers guiding them.”
Time will tell
Unfortunately I know a number of people that have tried and failed to contact their lender directly, or, were told the lender wouldn’t discuss options until the loan was in default. I’m sure both scenarios will be played to death by the media in the coming months.
What do you think?
Will you take a page from big companies to “expand your share of wallet” by expanding your service offerings? Is this something you’ve considered as an extension of your services? Or do you see it as a conflict?