Do some research and know what you are getting for your money
Dear Mr. Feichthaler: A few months ago I re-ceived an important-looking letter in the mail. It said that my interest rate on my home mortgage is adjustable and that my payments could go up. They offered to assist me with a federally sponsored plan to get me a new loan with lower payments. They asked for a total of $3,000 for this, and I sent the first payment last week. The person I talked to said not to tell my lender about this, and to allow myself to go into default by not making payments. Am I doing the right thing?
-Laura
Dear Laura: For most of us, payments for our mortgage, taxes and insurance are the largest monthly payment we have. Offers to reduce that payment are very attractive on their face, and are designed to get a second look. Generally, if a federal program like HARP is available to modify your mortgage, your lender can offer it to you directly. There is no need to hire a third party to work with your lender in modifying your loan.
I always advise clients that, before you send money to anyone, know exactly what service they are offering. In many cases, all these “debt helpers” offer is “document preparation” services. They do not guarantee financing or even connect you with another lender. Rather, they simply prepare an application for modification that you could easily prepare yourself.
You should also do a little research on the company, and inquire about complaints and how long they have been in business. Many of these businesses will be recently formed, have no track record and will likely disappear after enough people complain. Also, their advice to stop paying your mortgage and go into default may be very poor advice on a number of fronts. Finally, their advice to you advising not to speak with your lender about your effort to modify is a giant red flag.
I would recommend you have this situation looked at by your family members or an attorney before you send any more money to this company. In the meantime, call your lender to see if they can work with you to lower your monthly payments. You may need to take immediate action to avoid a foreclosure action against you.
Eric P. Feichthaler has lived in Cape Coral for 28 years and graduated from Mariner High School in Cape Coral. After completing law school at Georgetown University in Washington, D.C., he returned to Southwest Florida to practice law and raise a family. He served as mayor of Cape Coral from 2005-2008, and continues his service to the community through his chairmanship of the Harney Point Kiwanis Club KidsFest, which provides a free day of fun and learning to thousands of Cape Coral families, and funds numerous scholarships. He has been married to his wife, Mary, for 14 years, and they have four children together. Recently, he earned his board certification in Real Estate Law from the Florida Bar. He is also a Supreme Court Certified Circuit Civil Mediator.
This article is general in nature and not intended as legal advice to anyone. Individuals should seek legal counsel before acting on any matter of legal rights and obligations.