Mortgage Renegotiation

July 12, 2008 6:08 PM

Asking for a friend. She's financially naive, and got stuck with an absolutely terrible loan on her house. She is several months behind on her mortgage payments, and needs to renegotiate the terms of her mortgage.

As a result of this and other problems, she has declared bankruptcy. She desperately wants to keep her house, and so far calling the mortgage company has been fruitless.

She's found a company that promises "loan renegotiation services" for the low, low, price of one month's house payment. I cannot find much information on them on the internet, and I'm not sure what a third party can do if the bank is intransigent.

Does anybody have any experience with this type of service? Are they scams, or can they do some good? I'm suspicious because although my friend says that the person that she talked to promised her money back if they weren't able to do the renegotiation, the contract language was so garbled that I told her to get them to rewrite it before she'd sign.

What she wants out of this is to have the amount that she is arrears on her payments added to the principal of the loan. She says that if they do this, she'll be able to make the monthly payments from now on.

This is in California.

posted by Daddio to work & money (23 comments total)

Do you know what kind of loan it is, such as conventional or FHA?
posted by thebrokedown at 6:16 PM on July 12

I believe that it's a conventional, with a second mortgage. It was an ARM with one of those super-low teaser rates which has now adjusted way high. The load had negative amortization, even! I sure wished she'd asked me before she signed....
posted by Daddio at 6:24 PM on July 12

I'm not sure what a third party can do if the bank is intransigent.

Good intuition. This loan negotiation service sounds very much like a business enterprise that is preying on the desperate to turn some fast cash. They're promising to "try" --- I'm sure they send a letter or something --- but if it doesn't work, your friend is out the money. Too bad, so sad.

See Scam #3 here (oddly, that site looks pretty scammy itself).
posted by jayder at 6:24 PM on July 12

Why don't you tell us the name of the company she's found to renegotiate her mortgage?

After all, if they're legit, they certainly won't mind the publicity and scrutiny.

If they're a scam, the army of Mefites reading this question will inevitably figure it out.
posted by jayder at 6:26 PM on July 12 [1 favorite]

They're called Loan Negotiator Group
posted by Daddio at 6:32 PM on July 12

Well, if this is their website then they don't seem very legit. Their "members login" page doesn't even have an text entry boxes. Seems super-fake.

Would you really trust a company that can't even afford a real website to negotiate your loan? I wouldn't.

What state is she in? Some states, IIRC, let you keep your house in the event of a bankruptcy.
posted by delmoi at 6:41 PM on July 12

Ooops, I see you said she was in CA.
posted by delmoi at 6:41 PM on July 12

Yes, that's the website. I futzed the link.
posted by Daddio at 6:42 PM on July 12

According to this somewhat sketchy website bankruptcy can stop a foreclosure in CA.
posted by delmoi at 6:44 PM on July 12

What jayder said. Meantime, she should contact a HUD-approved counseling service. That assistance is free, and likely can help her sort out whether this service is credible and likely to be useful. (My guess is no, to both.) See also HUD tips to avoid foreclosure and FHAsecure assistance program.

Has she checked yet with the Better Business Bureau and CA attorney general's office? If this company is making promises it can't keep, there's a good chance that other victims have left a trail of complaints about them. Just make sure you discuss with her that an absence of complaint records wouldn't be proof of legitimacy (i.e. they could have just started a new scam, or using multiple business names, etc.). But it's certainly an easy starting point.
posted by nakedcodemonkey at 6:48 PM on July 12

The approved counseling services list looks like a keeper, nakedcodemonkey. Thanks!
posted by Daddio at 7:00 PM on July 12

she has declared bankruptcy

Chapter 13 or Chapter 7? How far into is she (does she have a discharge, has she had her meeting with creditors)? She really really needs to discuss this with her bankruptcy lawyer (and add "really" a couple more times in all caps if it's a 13). She does have a bankruptcy lawyer, right? And yeah, IAAL,BNYL. Or your friend's lawyer, either.
posted by dilettante at 7:02 PM on July 12 [1 favorite]

Site built with iWeb.

Stock photo next to the staff names, instead of showing actual staffers.

No staff bios, no client testimonials, no bank references, no references period.

Most of the staff share the same last name.

Two of the pages are incomplete. The hardship sample "letters" are just one "your name" plus "your address" with a very big space between).

The "prep list" directs you to write out a hardship letter based on the (nonexistant; see prev) one on their website.

The credit card authorization form authorizes a payment amount without indicating that it's in exchange for anything; good luck disputing that charge someday if necessary, because you've signed off on giving a gift, not making a purchase.

"Client understands that they are not to communicate in any way with the lender" is a seriously bad idea.

I don't know if it's a scam, but it sure does smell bad. Best case scenario: your friend is the first client of a very new and inexperienced family business. It doesn't sound like something to depend on as her sole (see above) opportunity to save this home.
posted by nakedcodemonkey at 7:07 PM on July 12 [1 favorite]

She does have a bankruptcy lawyer, and that's a good idea. She's trying to avoid any extra expenses right now, but I understand that this expense may be necessary. I don't know whether it's chapter 7 or 13.
posted by Daddio at 7:09 PM on July 12

By the way, I don't know if this was obvious enough, but that FHAsecure program is adding more loan renoegotiation assistance as of this Monday. So she should figure out this weekend whether she's remotely eligible, and if so get that app in pronto.
posted by nakedcodemonkey at 7:13 PM on July 12

Also, their website didn't even exist 3 weeks ago.
posted by nakedcodemonkey at 7:21 PM on July 12

Noted, nakedcodemonkey, and thanks for the pointer. I'll make sure she calls the FHA on Monday and gets the ball rolling.
posted by Daddio at 7:26 PM on July 12

Also on that site, each staff person's web address opens as an e-mail addressed to Barney, the guy at the top. Seems pretty sloppy to me.
posted by chippie at 7:53 PM on July 12

Email me privately (in my profile) the names of her lienholders (mortgage company and/or bank) - I might be able to point her in the right direction.
posted by cyniczny at 8:13 PM on July 12

Depending on how/if anyone answers my question of not long after this, you may want to point your friend in the direction of NACA. They have a program to help people who got stuck with predatory loans to refinance and stay in their house.
I went to the orientation today so I can't really vouch for them, but I just happened to see a coworker there who has said other people at our company have gone through them for new home purchases and been very happy.
posted by Kellydamnit at 9:08 PM on July 12

She needs a bankruptcy lawyer and fast, like yesterday. Wheels are in motion and if she doesn't know what wheels are turning, how fast, and whether or not she's going to be under them when they reach her, she's gonna get creamed.
posted by dhartung at 11:44 PM on July 12

http://whois.domaintools.com/loannegotiatorgroup.com

[e-mail] ? I don't think so

Scam- keep clear
posted by mattoxic at 3:30 AM on July 13

A timely article on difficulties in refinancing was in the Sunday New York Times Business section. The article talks about this forum.
posted by gudrun at 9:37 PM on July 13