The New York times published a story yesterday about the proliferation of loan modification firms. Often times these firms with hide behind a law firm name but then do the work as a loan modification company. I’ve heard that they’ll generally collent between $1,500 and $3,500 to do the work. Some will collect it all in advance and some will collect 50% up front and 50% once the loan is modifiied.
As a consumer, you should know that you can do this work yourself directly with your mortgage company. Also, many of these firms do not get your loan modified for a variety of reasons. It could be that your income no longer qualifies or that your employment history isn’t what it used to be. It could be that the home is so far upside down that even desperate bankers, investors, and government officials won’t allow the loan to be modified.
Beware of anyone who asks for this kind of money upfront on a loan modification.