Real Estate NewsAssisting Clients with Loan Modification Advice
While the daily headlines announce the latest corporate and Wall Street bailouts, homeowners are wondering whether anything is being done to bail out Main Street. The good news is that many distressed homeowners are writing their own bailout programs via loan modifications. For qualifying homeowners, lenders can (and often must) modify the mortgage loan to accomplish the following:
Lower and fix the interest rate
Extend the term
Decrease the principal due
Roll any delinquent payments into the principal
Forgive any late-payment penalties and fees
Re-amortize the loan to make the monthly payments more affordable
As a real estate professional operating in the midst of the biggest foreclosure epidemic of our generation, you are likely to have plenty of clients facing the looming threat of losing their homes to foreclosure. A loan modification can help your clients save their homes and earn you their loyalty. The next time they need to buy or sell a home, they are going to remember the person who helped save them from foreclosure.
Unfortunately, many homeowners are often as cavalier in choosing a loan modification company as they were when they took out the mortgage loan that landed them in their current predicament, so you need to encourage them to think before they act and proceed cautiously when choosing a loan modification company.
Advise with Empathy
When offering advice to homeowners who are facing the threat of losing their home, remain very sensitive to their situation. Many homeowners are in this predicament through no fault of their own, and even if they are partially or wholly to blame, that matters very little at this point. They need solutions, not further embarrassment.
Finding Reputable Loan Modification Companies
Your clients may find dozens of loan modification companies on the Internet or through advertisements, but the best way to find reputable professionals is through referrals. If you know other clients who have worked through a loan modification service, ask for the company’s name and contact information and how satisfied your clients were with the services they received. Keep a list, so you can provide future clients with referrals. (You may even be able to earn some compensation by referring clients to reputable companies.)
Identifying companies with the right stuff
When your clients begin their quest, advise them to search for companies that meet or exceed the following criteria:
Phone number and street address – not just a Web site, P.O. Box number, and toll-free phone number
Solid industry reputation and transparency
BBB (Better Business Bureau) member in good standing or a member of other consumer-friendly organization
Real testimonials of prior success in negotiating loan modifications
Professional designations – licensed, insured, member of reputable industry associations
Professional affiliations – team members with distinctions and education such as lawyers, real estate professionals, and so on
Track record for promoting industry regulation and oversight
Companies that offer educational resources, an honest Web presence, and clear, detailed explanations of the problems and solutions
Favorable refund policies or no up front fees. Up front fees are common and not a red flag if you’re dealing with attorneys or a law firm.
Spotting red flags
Caution your clients to be on the lookout for the following warning signs:
Pure salesmanship, no substance, just a shell game
Compliance or regulatory complaints filed with and verified by reputable organizations, such as the Better Business Bureau or a state regulatory agency, not simply a disgruntled consumer posting a rip-off report on the Internet
Inability of representatives to answer questions
Lack of straight answers
Undercapitalized start-up companies simply trying to cash in on a crisis
Companies that encourage you to act on emotion or fear rather than make informed decisions
Companies with cheap or shoddy looking Web presence – if you see a page with Google ads, run the other way
Companies that can’t, don’t, or refuse to explain the process and services they perform
A one-size-fits-all approach – they should ask you plenty of questions before offering a solution
Companies that pirate reputable company’s resources and copyrighted materials
Companies that guarantee results or make wild claims – offering a money-back guarantee is acceptable, but nobody can guarantee success
Large up-front fees with an unclear or no refund policy
Tip: If a company reviews the case and says it cannot help your client, do not judge them harshly – they may be the only trustworthy company of the bunch. Some companies promise the moon to get the business knowing full well they cannot deliver.
Encourage your clients to trust their instincts. The company must pass the “smell test” – that is, if your client smells something funny, he or she should dismiss the company. Clients need to feel comfortable and confident in the company before jumping in. Remind your clients to take their time:
Don’t get pressured into signing up for anything immediately.
Have your attorney review any documents or contracts before signing them.
Ask questions until you fully understand anything you find confusing or out of the ordinary.
Ask the same question in different ways and on multiple occasions – the answer shouldn’t change unless your situation has.
Communication Is Key
The prospect of losing one’s home is very scary. In addition, if the lender took advantage of the homeowner, he or she may be suspicious of others in the industry. This can compromise the representative’s ability to function effectively. Encourage your client to be as cooperative as possible with his or her representative and to keep the lines of communication open. Your clients need to know that loan modification takes time – their representative may be hard at work, but the lender could be dragging its feet.
The best approach is for your clients to remain patient. Calling every day or becoming upset when they have not heard back from their loan modification representative for several days or even a week is counterproductive. On the other hand, they should not be afraid to call their representative about pressing issues, especially if they haven’t heard from him or her in a few weeks.
Rewarding Good Companies with Referrals and Testimonials
Follow up with your clients to find out which loan modification company they used, what the company was able to do for them, and how satisfied they are with the service they received. If they had a great experience, encourage them to tell others about it.
You can do your part, too. Let your other clients know about reputable loan modification companies who deliver quality service – whenever you have dealt with someone who is reputable, did what they said they would, and achieved results, you should let the world know that this is a good company.