For many families in Chicago, their financial well-being depends on the value of their home. After all, your home is likely your biggest investment. So the demise of property values has hurt millions in Chicago and beyond.
Be Cautious With Loan Modifications/Debt Consolidation
Perhaps the most troubling aspect of this has been the development of secondary markets that often times prey on those individuals who are struggling financially. In particular, loan modification and debt consolidation firms are taking advantage of those who can least afford it.
There are certainly companies that perform these two tasks well. But states across the country have had to enact legislation and create task forces to help individuals avoid getting scammed by entities that are supposed to help them. From California to Pennsylvania, people who are struggling to make ends meet and pay their mortgage are being conned into losing what little money they have to pay their mortgages and bills.
So what are the signs that a company is trying to take advantage of your dire situation? Here are the tell-tale signs:
1. The Fees Seem Excessive.
There should be an immediate reaction to a fee arrangement for any loan modification, mortgage consultation or debt consolidation package. For loan modifications in particular, the going rate on the West coast was $2,000-3,000 as recently as last year. Your gut reaction should tell you whether or not to pursue such a process. Paying that kind of money to modify your loan is excessive. If you're struggling to pay your mortgage, you probably don't have several thousands of dollars laying around. Make sure to compare prices on these firms to see how they compare, and what you get for the fee.
2. You Must Act Now.
It's a classic sales trick, but it is highly effective. Many debt consolidation outfits will urge clients to sign up today, or the deal is off. Most people know better, but if you're back is against the wall financially, this tactic can scare people into signing anything. If you get this line, make sure to explore all of your options before deciding. In most cases, you do not have to immediately decide whether you're going to consolidate, modify or perform some other action on your loan or debts.
3. You Speak Only With Customer Service Representatives.
If you're not reaching a mortgage specialist, attorney or someone else who seems knowledgeable, you're probably dealing with the wrong type of company. You do not want your credit rating and financial well-being handled by a telemarketer. Deal only with a professional who can help your situation, and has knowledge of the subject matter.
4. You Get Only One Option: Theirs.
Whether it's debt consolidation or mortgage modification, you have many legal options. So if you're dealing with a loan modification firm, and you're not getting any information about short sales and foreclosure defense, you're limiting your options. The same holds true for debt consolidation. Bankruptcy is a tricky area of the law, so you should be clear on your legal options in choosing between debt consolidation and bankruptcy. Make sure you get all the facts and scenarios before opting for something that doesn't fully help your specific situation.
It's difficult out there for many homeowners these days. Unfortunately many companies are aware that homeowners will do just about anything to keep their homes, even if it means trusting a company that is only looking out for its bottom line.