Loan Modification Fees

If you are an attorney, or plan to employ the services of an attorney to help with the modification process, you will likely be able to charge more than the average. Attorneys can carry extra clout when negotiating with lenders. They also provide some insurance against litigation from frustrated clients.

You could also charge points, such as 1% or 2% of the loan amount, instead of a flat fee structure. Or you can charge $1000 plus the equivalent of one full mortgage payment. Another strategy is to use a tiered pricing system, where you charge a set amount for loans under $200,000, more for loans between $200,000 and $500,000, and still more for loans over $500,000. Lastly, if you a real estate broker, you could attempt the modification for free, and then get the short sale listing if the modification fails. You can use any of these structures, just keep in mind that the higher your fees, the less competitive you will be. Also realize that it will be difficult to justify charging three times as much for modifying a loan three times as large, since the work you do on each is exactly the same.

Investment property mortgages are extremely difficult to modify, so you should probably turn them all down outright. However, if you do decide to attempt one (after informing the client of the long odds, of course), you may want to work on an hourly basis regardless of whether the modification is successful. Have your clients sign a contract/disclaimer/release form, collect a retainer check of maybe $500 or $1000, and then go for it.

The simple answer is that, while fees can range anywhere from $0 to $10,000 or more, most reputable companies tend to charge somewhere between $1250 and $2500. $2000 is a good target, depending on home values in your area. Just be aware that many of your clients won’t have a lot of extra cash lying around, otherwise they wouldn’t be behind on their payments.