The WAVE is upon us. And like villagers on the beach watching the wall of water from the approching tsunami - we're scrambling for shelter - clinging to a tree, and many of us are being washed hopelessly out to sea.
But it doesn't have to be that way. For every loan modification scam that exists out there, there are an equal number of real professionals who are providing good and valuable services that are helping homeowners avoid foreclosure. The key is to being able to tell the difference when you are clinging to a branch for safety.
Personally, I don't view the "loan modification industry" as a suitable place for Realtors and Loan Officers who are scrambling for new "profit centers" to cash in on. It has come to my attention that there are many new "loan modification companies" cropping up daily, who charge anywhere from $3000.00 to $7000.00 to do a loan modification. Many are taking upfront fees. Many are making no guarantees. Most are taking a substantial fee over and above a reasonable attorney's retainer fee for simply referring the file to an attorney to negotiate the loan modification. Case law may very soon establish whether or not it is actually illegal for them to be charging these fees. Liability issues for licensed real estate brokerages are definitely a concern here.
There are good attorneys, who have developed entire departments that specialize in negotiating loan modifications. (and there are crooks-beware!) There is a fairly standard set of paperwork and financial documentation that needs to be gathered and assembled in a complete and coherent way in order for a loan modification to be successful. It is reasonable to pay a small fee - say $200-300 at the most for a professional of some sort to help you assemble that package. It is unreasonable, in my humble opinion, for a real estate agent or loan officer to make $1,500 or more (on top of the attorney's retainer) for doing nothing more than helping put a financial package together and referring the client to the attorney who will negotiate the modification.
There are a number of good loan modification attorneys who will charge the client a retainer of $2,500 - $2,900 depending on the size of the loan. This is reasonable for the amount of work that is required to be done. It isn't necessary to pay a lot more - If you need help assembling the paperwork, offer to pay no more than $200 - $300.00 for that service. I work with one attorney group who will prescreen your case carefully, then tell you if they will accept your case, and why. Then, if they agree to take your case, they offer 100% of your money back if they cannot successfully modify your loan to something you can afford.
I would urge real estate professionals to look at this foreclosure crisis as a very different kind of opportunity. This is an opportunity to build LONG TERM relationships, and very solid referrals - not a get rich quick opportunity to cash in on over-inflated fees that these clients can scarcely afford. Pre-screen and develop a relationship with a few REALLY good, very legitimate attorneys that you can refer to in good conscience. And demand top notch service for the clients you are in the position to refer to them, in lieu of asking for a referral fee from them. Get results for your clients. Resist the temptation to seek immediate gratification in the form of high fees - waive those, spend a few quality hours truly helping somebody in need, and just see how many friends, family members and associates your very, very grateful foreclosure clients will refer you to. There will be a few clients whose situation simply will not qualify them for modifications. Maybe a short sale is in order. Maybe despite everything you can do for them, a foreclosure IS inevitable. It happens. But that's not the end either. You can choose to take the time to help those foreclosure clients get back on the road to financial recovery. Under current conforming loan guidelines, foreclosure clients can be back in the marketplace, qualified to buy a home again in 2 years - IF they get the help and guidance they need from you to teach them what to do in the interim to rebuild their credit status. Left alone - the hopelessness and depression that can accompany a foreclosure may keep that client out of the market for years and years to come. It doesn't have to be that way. WE have the talents, the knowledge and the tools to help these clients get back on the road to recovery. Let's do this.
This is a time when we need to band together, and forget business as usual. This is a human crisis - the likes we have not seen in decades. I encourage every real estate professional to take the high road here. Let's be part of the solution.
Live, Love, Laugh - oh, and call me once in a while!
TotalAccess Realty Advisors