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By E. Vernon Small

March 12, 2013 (San Diego) – If you are a struggling homeowner, you have undoubtedly been approached by companies that claim they will reduce your mortgage payments and/or your mortgage balance by negotiating a ‘loan modification’ with your current mortgage lender.  All of these companies claim to be reputable and licensed, and many even operate as attorneys.  They typically charge $1500 or more to handle this process, and most offer payment plans.

The good news is that reports say that 750k-850k loan modifications were performed in 2012… The bad news is that 8-10 million families applied for mortgage loan modifications. It is widely accepted that only 10% percent of loan modification applications are approved by lenders. This gives you a 1 in 10 chance of losing your money.

The authorities are overwhelmed with thousand of loan modification complaints, so if you encounter a problem with a company, it is unlikely that any action will be taken for months if not years. The San Diego Division of the FBI indicted an attorney that was running a modification company, along with a dozen accomplices in October of 2012. First American Loan Center in Oceanside, California allegedly defrauded 11 million dollars from unsuspecting homeowners through a loan modification scam.


I have worked for…well, mostly against numerous loan modification companies over the past three years, and I have concluded that loan modification companies that use telemarketers and/or direct mail to get your business are rarely able to accomplish what they claim.  And the ‘100% Money Back Guarantee’ does not matter when they shut down the company after they already have your money.   I have found that it is better to deal with a single licensed individual rather than a large company.   There are a handful of reputable attorneys that will effectively handle the process from start to finish.  However, you should always contact your lender directly to modify your mortgage loan.  But if you insist on hiring a third-party, email me and I will assist you in finding a reputable professional. 

For questions or comments about this article, or if you would like advice on your particular situation- Please email info@smallworldms.com or call 888-938-5453.


Please review the information below BEFORE paying thousands of dollars to a loan modification company. The following is from HUD.GOV – You can find access to FREE counseling and assistance.

Avoiding Foreclosure:  When a Lender Won’t Work with You

You've done all your homework, explored workout options, talked to a housing counselor and tried to talk to your lender. But, the lender won't work with you. What do you do now?

For an FHA-insured loan

Your lender has to follow FHA servicing guidelines and regulations for FHA-insured loans. If your lender is not cooperative, contact FHA's National Servicing Center toll free at (877) 622-8525, or via email. Whether by phone or email, be prepared to provide the full name(s) of all persons listed on the mortgage loan and the full address of the property including city, state and zip. We may be able to help you more quickly if you can also provide your 13-digit FHA case number from the loan settlement statement.

For a VA-insured loan

First, visit the VA Foreclosure Alternatives page. If you need assistance or have additional questions, talk to a Loan Service Representative.

For conventional loans

If you have a conventional loan, first talk to a HUD-approved housing counselor at (800) 569-4287. They may be able to help you with your lender. You can also contact HOPE NOW or call the Homeowners Hope Hotline at (888) 995-HOPE to ask for assistance in working with your lender.



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