Can Mortgage Modification Companies Help Me Keep My Home?

By Gina Pogol
Mortgage Credit Problems Columnist

Maryanne Asks: Dear Gina, I am trying to hang onto my home and avoid bad credit. Mortgage modification seems to be the best solution, but I'm having a hard time getting hold of my lender and it's taking so long I'm afraid of ending up in foreclosure before it's finished. Can these modification companies really help?

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Gina Says:

Dear Maryanne,

I'm sorry to hear about your frustration with your lender. Mortgage modification is a new industry and unfortunately it seems to have attracted more than its share of crafty characters. In fact, the Federal Trade Commission (FTC) decided to step in and regulate all companies it classifies as mortgage assistance relief services (MARS). The agency wants to force these companies to disclose their services, how long they take, that they aren't affiliated with the government, and that there is no guaranty of a modification or achieving a specific interest rate or mortgage payment. In addition, the FTC wants to make it illegal for these providers to take payment in advance--they would only be allowed to be paid if they get you a modification commitment in writing from your lender.

Your Own Personal FTC

Whether you have a bad credit home loan or a prime mortgage, you deserve protection. And until new regulations are implemented, you have to protect yourself. Here's how:

  • Get an agreement in writing. The FTC wants MARS providers to disclose the following items, and you should require the same of any mortgage modification provider you choose.
    • The likelihood of getting the payment/interest rate you want, and how long it will take
    • Their status--nonprofit, private business, and their legal name
    • Services provided, and how much they charge
    • Refund and cancellation policies
  • Do not agree to pay for services in advance. You don't want your MARS to take your money and then not perform. Some of them don't even intend to do any work; they take your money and leave town.

  • Don't cut off all contact with your lender no matter what the MARS provider tells you. That's a fast way to find yourself in foreclosure. Some companies don't want you talking to your lender because they know you'll find out they haven't been doing anything to help you. There is one exception--if you are getting foreclosure help in conjunction with a bankruptcy filing, your attorney should be the contact point for the lender. It's okay for him or her to instruct you about contact with creditors.

If You Get Burned by a MARS

The FTC wants to know. File a complaint online in English or Spanish with Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357).

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