Q: This past April my daughter and I entered into a contract with a law firm for a loan modification. We paid $3,500 up front and as of yet have gotten only “it’s in the process.” Or they’re asking for documentation that we have already provided.

At this point I believe we are the victim of a loan modification scam. Is there anyone or any agency that we report them to? And what are the chances of us getting our money back? The loan is with Bank of America.

A: We have written many times about this issue in the past and have concluded that companies, people or organizations that claim to assist borrowers in their loan modification process probably won’t help you too much – if at all.

Some organizations (like HUD-certified housing counselors) will do it for free and some are able to make sure that your paperwork and documentation gets to the right place. However, all of the big lenders have confirmed to us that there is zero benefit to paying anyone $3,500 to help with a loan modification – it is not recommended.

Lenders have participated in programs across the country to assist borrowers with their loan modifications, housing agencies have set up workshops to help homebuyers, and many lenders have set up portions of their website to assist their borrowers with the loan modification process.

Having said all that, if you decided to hire a law firm to assist you with a loan modification, that law firm may have spent time processing the paperwork and even following up with your lender, but you could have done all of those things yourself.

You should know that only a small fraction of borrowers have obtained permanent loan modifications. Documents we have seen report the success of loan servicers as quite low. The vast majority of borrowers have failed to get permanent loan modifications.

It’s quite possible the law firm you hired is still working to get you the loan modification. There are many instances where trial loan modifications last for months, even a year or two before a loan servicer denies the loan modification. There are many stories of lenders losing loan applications, requesting additional documents multiple times and in the end failing to grant a loan modification.

But some states have made it illegal for companies to charge an upfront fee to consumers for the service of assisting with loan modifications. When the loan modification process was started, there was a race by companies, attorneys and others to gain access into the marketplace and assist homeowners with loan modifications for a new and lucrative source of revenue.

Now that the success rate is seen to be so low, you tend to see less legitimate companies advertising their services.

You should first take the time to call Bank of America and see what the status is of your loan modification. While the law firm may have your consent to deal with your lender, you can still call them and see where things are.

After you determine where you stand in the loan modification process, you can evaluate whether the law firm provided the service they promised you. You should look at the paperwork you signed with the law firm that is assisting you to determine if you can get a refund if they did not deliver on their promise. You may also want to talk to the bar association in the state in which you are located to make sure that the law firm provided a service within the guidelines that lawyers are to abide by in your state.

Finally, if you determine you were a victim of a scam, you can file a complaint with the government agency in your state that regulates attorneys. You can, and should, file a complaint with the attorney general office of your state. Keep in mind that in some states, the law firm may have delivered the service it promised and just because the lender has failed to render a decision for you may not be sufficient basis to claim you were defrauded.

For any other borrowers out there, before you shell out your hard earned dollars on a person or company to assist you with a loan modification, you should first contact your lender and make the application yourself. You might then see for yourself that the loan modification system is flawed and see that only a small percentage of homeowners actually get a loan modification. But at least you will not have paid a company $3,500 to find that out.