The state of California issued a cease and desist order against 2ND Chance Negotiations INC.  This came as a result of a joint investigation by the California Department of Corporations (DOC) and the Department of Real Estate (DRE). The state has been investigating numerous agencies aimed at taking advantage of financially distressed homeowners.

2ND Chance negotiations claimed to be a licensed corporation established for the purpose of helping homeowners overcome their financial burdens. While what they were actually doing was exploiting the very individuals they were offering to help. They promised stress relief from crippling increased interest rates.

While foreclosures have become a main issue on just about every homeowners mind now-a-days, and mortgage modifications have become words on all of their lips, there have been a large number of companies coming forward offering services that will assist in the elimination of a homeowner's current situation. There are numerous legitimate agencies that legally assist homeowners in negotiations with mortgage companies for the purpose of modifying their mortgage into one they can comfortably afford. The problem does not arise with these companies but rather with agencies promising to fix mortgage problems in exchange for an upfront fee.

2nd chance negotiations inc. was doing just that, charging upfront for services and then doing nothing. Furthermore they claimed to be a reputable negotiation agency while they actually did not even have a license to conduct business.

This comes at a time when homeowners are vulnerable and looking for help out of a bad situation. While there is definitely a market for legitimate negotiating agencies to conduct business, it is these none legitimate agencies that are only compounding an already bad situation. By offering services that they never intend to render and by charging upfront fees to individuals who are already financial burdened, they are actually causing the home owner additional concern.

This scam causes homeowners to be leery of anyone offering services to help with mortgage modifications. Not all agencies are bad nor are they all out to scam the concerned homeowner. There are steps to take when selecting an agency.

There are some tips that will help you steer clear of a scam.

• Avoid an agency that requires a large upfront fee - only licensed real estate brokers and California attorneys operating as lawyers within the scope of their license, may collect advance fees. Real estate brokers must have their advance fee agreement reviewed and sanctioned by the DRE.

• Some agencies will also keep ½ your money if they FAIL TO REACH AN AGREEMENT with the mortgage company.  If you could afford to give them half for failing to negotiate you would not need them in the first place. 

• Do not select an agency that is prone to accepting the first offer from the lender- If the offer the agency procures is not within your budget then you might as well have not negotiated for a modification. It will do you no good to modify your mortgage if you are still not able to make the payments.

• Find a company that provides a free consultation by phone - A reputable company will not charge you a deposit until they review your situation and know they can help you.  A good reportable agency will use their time wisely and only represent you if they feel confident in their ability to be effective in your particular case.

• Find an agency this is endorsed by an attorney - You should find someone who can legally stop the foreclosure. 

Along with negotiating new terms of a mortgage a reputable agency should provide the following:

Be able to buy you time -They should be able to freeze your payments up to 6 months, in the case of financial hardship. They should also be able to stop any annoying phone calls you may be receiving from the mortgage company.

Design a plan that meets your budget and objectives - such as a low rate with a 30 to 40 year fixed term. They will be able to have late payments attached to the back end of your loan.

They should also have experience with second mortgages. A good negotiator will be able to reduce or get rid of a 2nd mortgage.  You will want someone who will request a principle reduction if you owe more than the loan amount.

So while the headlines may be filled with disreputable scam artists out to make a few quick bucks at your expense there are legitimate services that will provide you the necessary experience to assist you. Do not increase your chances of foreclosure; hire only someone who can truly help you.