The Nevada Law regarding who may take money "upfront" or before achieving results for a homeowner in a "Loan Modification" is a bit of a grey area.   It is fairly clear however:  Once a homeowner is 'in the foreclosure process' only a licensed attorney may take money upfront to negotiate with a Lender to modify a loan.  The definition of 'the foreclosure process', or when it starts isn't clear yet, so stay tuned.

 

 

Many of the individuals working in the so-called, loan modification business today were formerly mortgage loan brokers or bankers.  The crisis we are experiencing was brought on by bankers who knew little of the products they were selling, but knew they would make a profit if they sold it.  The same can be said for these loan modification companies and many, if not most, of the individuals who own them and work for them.

 

It's not that easy.  I have a simple rule learned over the years I've spent litigating for and against businesses and individuals.  "Once you have the money, fight like hell to keep it."  It sounds a bit brutal doesn't it?   Well, it's a simple fact of business.  It's obvious from looking at the news and watching this economic crisis unfold, the Banks like to keep the money they get and they will take as much of our money as they can get.   And they'll risk going to jail to keep it. The same goes for insurance companies by the way.  You're in good hands..... and all that notwithstanding. 

 

So, there is no reason to believe that these fly-by-night Loan Modification Companies will do you much good in getting the principal written down, getting the interest rate cut, or increasing the term of your loan to decrease your monthly payment.  The banks just aren't that easy.  

 

Now, that's not to say that these companies don't get some results some of the time.  They might.  A lawyer told me he got a reduced interest rate and increased the term of the loan from 30 to 40 years, thereby decreasing his client's monthly payment somewhat.  So it does happen.  

 

It would have been better to have the bank write down the principal.  Now that's a loan modification.

A lawyer has an advantage over the 'Loan Mod' Company.  A knowledgeable, skillful and experienced lawyer has the ability to file suit against the bank.  There are all sorts of reasons to do so.  The literature is showing us that violations of the Truth in Lending Act or TILA and the Real Estate Settlement Procedures Act, or RESPA were rife during the go-go years of this most recent run up of real estate prices.  I am given to believe that more than 80% of the loan documents prepared during those years contained violations of TILA and RESPA and other federal laws.  Many of these violations will allow the lender to rescind her loan contract and thereby free herself from the duty to pay.  Of course, it all depends on the 'technicalities' as they say.   Rescission can be a beautiful thing if you are on the winning end.