Why Do Loan Modifications Cost So Much?
A lot of people are looking to reduce their monthly payments by doing what is called a loan or mortgage modification.
Some folks will turn to their trusted real estate agent, lawyer or mortgage broker to provide this service, and many won't blink an eye when learning that the average fee is $1,995 -$8,500.
Actually, the fee in California may be even higher - the maximum allowable fee is 10 percent of the loan balance.
But if you stop to think about it, ten percent is a lot of money! If the loan balance is $500,000, for example, ten percent is $50,000! So as Joan Rivers would say, "Can we talk?" Why is the fee is so high? I believe there are three reasons, and I bet you already know the answer to reason one.
Reason One: This reason is incredibly simple.
Everyone knows it.
The reason a loan modification fee is so high is because that most homeowners expect the fee should be high.
After all, many modification firms are headed by lawyers, and doesn't a lawyer charge big money for his or her time? Certainly.
Also, most mortgage specialists will tell the owner that he should skip a few mortgage payments to show the bank that the owner earnestly needs help, what is the owner going to do? He's going to follow the loan specialist's advice.
And guess what? The owner now has ready money to pay the loan modification specialist's high-priced fee! Reason Two: The second reason that a loan modification fee is high is because loan modification companies often pay generous referral fees to real estate agents and others who refer clients to them.
Most owners don't know this.
Most owners simply want to follow the lead of an expert or other knowledgeable individuals to help them come to the right decision.
(Advertisers have known about this for some time now.
That's why they use actors who play doctors on TV.
) So if your local real estate expert suggests that you contact LoanModify.
com or Steinman & Sons law firm to modify your home mortgage, you may do so because that's what your local expert told you to do - not knowing that the "expert" would then be paid a referral fee of between $500 to $1,000 dollars! Reason Three: The third and final reason that a mortgage modification fee costs so much is that homeowners have been led to believe that it's a difficult chore that they cannot do by themselves.
It's funny, but most people are motivated by the fear of losing something than the thought of gaining something.
They are more afraid of doing something wrong than just trying.
But the reality is, that even the best modification company cannot guarantee a 100% success ratio.
In other words, if an owner signs an agreement with a law firm to modify the owner's mortgage and the law firm cannot perform, the owner will still owe the lender his back payments PLUS be billed by the attorney for his time! Ouch! A better approach of doing a loan modification is to just do it yourself, and then if that fails contact a lawyer or modification specialist.
The reason that many owners don't initially do this is because maybe they didn't exactly tell the truth on their original loan application.
Maybe they will be seen as someone who is inconsistent at truth-telling.
So what? Stuff happens.
Things change.
Besides, most lenders have heard it all by now, and may be willing to believe your story.
There you have it.
Three little-known reasons why loan modifications cost so much.
An often quoted passage, "the truth shall set you free" should be revised to "the truth shall help set you financially free" because many homeowners are saving big money by doing a loan modification without hiring a high-priced specialist.
Maybe you'll be next.
Some folks will turn to their trusted real estate agent, lawyer or mortgage broker to provide this service, and many won't blink an eye when learning that the average fee is $1,995 -$8,500.
Actually, the fee in California may be even higher - the maximum allowable fee is 10 percent of the loan balance.
But if you stop to think about it, ten percent is a lot of money! If the loan balance is $500,000, for example, ten percent is $50,000! So as Joan Rivers would say, "Can we talk?" Why is the fee is so high? I believe there are three reasons, and I bet you already know the answer to reason one.
Reason One: This reason is incredibly simple.
Everyone knows it.
The reason a loan modification fee is so high is because that most homeowners expect the fee should be high.
After all, many modification firms are headed by lawyers, and doesn't a lawyer charge big money for his or her time? Certainly.
Also, most mortgage specialists will tell the owner that he should skip a few mortgage payments to show the bank that the owner earnestly needs help, what is the owner going to do? He's going to follow the loan specialist's advice.
And guess what? The owner now has ready money to pay the loan modification specialist's high-priced fee! Reason Two: The second reason that a loan modification fee is high is because loan modification companies often pay generous referral fees to real estate agents and others who refer clients to them.
Most owners don't know this.
Most owners simply want to follow the lead of an expert or other knowledgeable individuals to help them come to the right decision.
(Advertisers have known about this for some time now.
That's why they use actors who play doctors on TV.
) So if your local real estate expert suggests that you contact LoanModify.
com or Steinman & Sons law firm to modify your home mortgage, you may do so because that's what your local expert told you to do - not knowing that the "expert" would then be paid a referral fee of between $500 to $1,000 dollars! Reason Three: The third and final reason that a mortgage modification fee costs so much is that homeowners have been led to believe that it's a difficult chore that they cannot do by themselves.
It's funny, but most people are motivated by the fear of losing something than the thought of gaining something.
They are more afraid of doing something wrong than just trying.
But the reality is, that even the best modification company cannot guarantee a 100% success ratio.
In other words, if an owner signs an agreement with a law firm to modify the owner's mortgage and the law firm cannot perform, the owner will still owe the lender his back payments PLUS be billed by the attorney for his time! Ouch! A better approach of doing a loan modification is to just do it yourself, and then if that fails contact a lawyer or modification specialist.
The reason that many owners don't initially do this is because maybe they didn't exactly tell the truth on their original loan application.
Maybe they will be seen as someone who is inconsistent at truth-telling.
So what? Stuff happens.
Things change.
Besides, most lenders have heard it all by now, and may be willing to believe your story.
There you have it.
Three little-known reasons why loan modifications cost so much.
An often quoted passage, "the truth shall set you free" should be revised to "the truth shall help set you financially free" because many homeowners are saving big money by doing a loan modification without hiring a high-priced specialist.
Maybe you'll be next.