Feb 21, 2009
I can hear them crawling out of the woodworks again. Just like a pest, they smell the lure of the quick money. Just when you thought the days of the sub prime mortgage broker were over, they are beginning to resurface upon hearing about Obama’s new housing plan. Even before Obama’s housing plan was announced a few days ago, sub prime brokers began planting their seeds in the television and radio ads along with numerous sites on the Internet. More and more these website are appearing on a daily basis.
When this financial crisis began to escalate last year, I started to see many more debt settlement companies pop up. Are these former debt settlement agencies now the loan modification brokers? It appears that these backroom brokers may be back again, ready to prey on the SAME unfortunate individuals whose upside down mortgages they brokered.
In my first post, I mentioned that one my goals for this blog is to help prevent people from falling victim to the same lending practices that put our economy in the situation it is in today. Well, here is my first attempt to offer protection in the form of knowledge.
When loan modification first revealed itself, it was sort of hush hush. Congress was slow to wrap its hands fully around loan modification; as a result it continued, while the majority of the public had no idea. Advertisements offering “Foreclosure Prevention” and “Foreclosure Avoidance” began to gradually appear. As banks stepped forward and announced their plans to allow certain mortgages to be modified, more loan modification companies started to appear.
Some of these early loan modification brokers had their clients pay up front costs to renegotiate their mortgages, doing little to nothing to help their clients. Some ended up being scams, robbing the home owner of the fronted cash. Even though your bank rewrites the loan terms, the bank still has to outsource the work on a loan, as each case can take up to 12 hours to review.
I guess we will have to see how it all plays out as more and more banks announce that they will modify existing mortgage terms. I am curious to see how Obama’s new housing plan will protect and deal with the loan modification brokers and business as a whole.
How can you protect yourself?
1. Always request to see all proposals before agreeing to anything. This will save you in the long run when rates and terms magically “change.”
2. Know your home value. Being honest and sharing the exact home value with the lender will save you both time. The lender can only provide you an honest solution if you give them an accurate value.
3. Know your financial situation. Be honest about your income. Always know where your credit stands. Sign up for credit monitoring or for identity theft protection to make sure companies are not pulling your credit without your knowledge or against your will. Too many hard pulls by the lender can ultimately change and lower your credit score.
4. As long as you have you have the right numbers, know your financial situation, and are being cautious with your social security number, it is OK to shop around. Knowing your options is key for getting the best possible deal. .
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- Loan Fraud: How to Protect Yourself From Fake Lenders
- Consumers Still Hurting Despite Loan and Card Reforms
- Capitol Hill and the Financial Crisis: A Busy Week