Mortgage rescue or rip off?

Mortgage rescue or rip off?

Many for-profit companies now offer foreclosure counseling services to at-risk homeowners. Are they worth the price?
By Les Christie, staff writer

NEW YORK ( — If mortgage lending was the Wild West during the boom years, foreclosure-prevention counseling is the lucrative new frontier of the bust.

Nearly 1.6 million borrowers are in jeopardy of losing their homes this year, according to economist Mark Zandi of Moody’s, and thousands of new foreclosure-rescue companies are rushing in to offer the troubled homeowners loan work-out assistance. For a price.

Usually homeowners seeking mortgage modifications call their lenders directly or work with non-profit community groups. But many borrowers are now turning to for-profit companies as their mailboxes are flooded with work-out offers.

Each day private firms go online or visit courthouses across the country to pore over foreclosure filings, which are public records. “By 10 or 11 o’clock, they’ve mailed out solicitations to anyone with a foreclosure filing that day, promising to save their homes,” says Jeff Hart, a prosecutor with the Ohio attorney general’s office.

Once a borrower contacts a foreclosure-prevention company, the counselor takes their financial information, analyzes how much the client can afford, and then contacts the lender and negotiates new mortgage terms.

Those modifications can involve reducing interest rates, lengthening the term of the loan or even lowering principal. In exchange, the consumer agrees to pay a fee, generally between a month’s mortgage payment and 1% of the mortgage’s principal.
Lifestyle counseling

“We attack the case from many different angles,” said Justin Pane, vice president of Amerimod Modification Agency, which Pane said has been doing foreclosure prevention modifications for about three years. “We may do a forensic document audit, for example,” he added, which involves examining original mortgage papers to see if anything illegal or unethical was signed during closing. If so, it can be used as leverage for a better deal from lenders.more


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