A new Coeur d’Alene company has found a promising niche in mortgage loan modification just as Idaho and Washington officials are advising consumers to be cautious using such services.
Apply 2 Save Inc. recently hired 21 employees, boosting its payroll by one-quarter, because so many homeowners are calling for help with overwhelming monthly payments, said Ryan Robinson, who leads the company’s recruitment efforts.
“We were looking for anyone who spoke mortgage,” Robinson said.
A second, Salt Lake City-based company – ImTheSolution.com – has been running local television advertisements promoting its services, a combination of loan renegotiation and, if that’s not possible, home sales.
Washington and Idaho officials who regulate companies that help renegotiate loans say they have no consumer complaints against either company.
The Better Business Bureau has received several inquiries about Apply 2 Save, which is a BBB member, and so far the company has responded to every one, said regional President Jan Quintrall. “Right now, we’re getting the problems solved,” she said.
Lots of people need help. Although foreclosure numbers were down slightly in November, the Federal Reserve Bank estimates there will be more than 2 million foreclosures in 2008.
RealtyTrac, which monitors foreclosure trends, said Idaho had climbed into 10th position among all states in foreclosure activity. Washington ranked 23rd. RealtyTrac co-founder Joe Doyle joined Apply 2 Save as senior vice president in August.
Doyle said Apply 2 Save has ambitious expansion plans, but the holiday season and understaffed banks have slowed progress. When the company submits bank paperwork for “re-originated” mortgages, he said, “the hardest part is getting an answer.”
Robinson said Apply 2 Save screens potential clients carefully. Some are in houses they were never qualified to buy, and cannot be helped, he said. Others have experienced a job loss or medical emergency that set them back temporarily. Others just want to convert adjustable-rate mortgages to fixed-rate products.
If they have already modified their loan once, they are rejected, he said.
Robinson said fees start at $500 up front, with a flat $500 exit fee if Apply 2 Save works out a solution for the homeowner, usually an arrangement that allows the bank to recoup past-due payments over time. A good outcome is a 30-year, fixed-rate loan with an interest rate near 6 percent, he said.
Apply 2 Save does the negotiating, he said, but the lender makes the final decision.
He said consumers can try to work out something on their own, but the company has relationships with most major mortgage lenders that increase the odds of success.
“We know exactly what they are looking for, and what they are not looking for,” Robinson said, adding that a decision may take as long as 90 days.
Some companies are reportedly charging as much as $2,000 up front to renegotiate mortgage terms. Washington has received at least one complaint from a consumer who received nothing after mailing a check, said Levi Clemmens, a Department of Financial Institutions senior program manager.
“The truth is, not every loan is fixable,” said Deb Bortner, director of the department’s Consumer Services Division.
But desperate homeowners are succumbing to claims of 100 percent success negotiating new loans on terms owners can live with, she said.
Bortner and Mike Larson, head of Idaho’s Consumer Finance Bureau, said the consumer alerts issued the first week of December proved to be a heads-up for mortgage counselors as much as they were for consumers.
Larson said several companies in the loan-modification business said they had been unaware of the licensing requirement, and were taking action to comply. A bond of at least $15,000 is also required, he said.
“It seems like these businesses are coming out of the woodwork,” Larson said.
Lee Arnold, owner of ImThe Solution.com, said the company charges nothing for trying to renegotiate loan terms. Instead, he said, the company earns a commission on the sale of the 40 percent of properties owners will not be able to keep. ImTheSolu tion.com uses local brokers who split the commission, he said.
Arnold is a licensed broker in Utah.
Quintrall said homeowners in trouble with their mortgages must be realistic about their options – and just how much help a third-party negotiator can provide.
“A lot of clients are looking for someone to rescue them,” she said. “You need to really listen to what’s being offered.”
She said those who have waited too long may be out of luck. “This is not a bailout,” Quintrall said.