ADJUSTMYLOAN.COM EXPLAINS THE IMPORTANCE OF A WELL WRITTEN LOAN MODIFICATION HARDSHIP LETTER!
When requesting a Loan Modification from your lender(s) be prepared to create a loan modification hardship letter explaining your circumstances. This explanation is one of the most important parts of a loan modification proposal and is one of the first things your lender looks at. You only have one shot at convincing the bank that your situation warrants a loan modification so take time when creating your hardship letter. Have your Loan Modification Hardship Letter clear and to the point. No more than 1-2 pages, and handwritten is best. Tell them what was causing you to struggle, what you are doing or did to overcome the problem, and exactly what you want them to do for you. Below are two examples of Loan Modification Hardship Letters that should help you get an idea of what most banks are looking for:
Loan Modification Hardship Letter #1
August 10th, 20__
Regarding
Borrower: John and Rebecca Smith
Subject Property: 555 N. Baseline Rd. Mesa, Arizona 85202
1st TD With Countrywide Loan Number: ##########
2nd TD With National City Mortgage Loan Number: ##########
Dear Lender / Servicer:
I am writing this letter to explain our family’s unfortunate situation that has caused us to become delinquent on our mortgage. We have tried everything in our power to keep current on our payments but unfortunately since our interest rate adjusted, we have fallen behind and would like you to consider working with us to reduce our monthly payments.
The main reasons that caused us to become late are a decrease in our income, increase in our monthly obligations, current market conditions, our adjustable rate mortgage, and our inability to refinance.
I work as a waitress and my husband works at a marketing manager for a local screen printing company. Most of my income has been generated by tips and has decreased dramatically due to the unfortunate economic situation. My husband job is secure and he has been with the same company for 2 years. We have a 3 year old son and cannot afford daycare in order to get a second job.
For the past several months we have been cutting back on our misc. expenses. We no longer have premium cable, go on vacations, or eat out. Our credit cards are getting maxed out due to us paying our mortgage on them and can no longer keep that up. We have currently missed 2 payments and wish to work out a payment plan with you after you reduce our rates to something we can afford.
My husband and I consulted mortgage professionals regarding a refinance but due to our lack of equity, the falling home prices in our community, and our lack of assets we were denied.
I have no other choice but to ask you to please consider my request for a loan modification. My family and I would really be grateful if you can help us work out a payment schedule we could afford. We do not want to lose our home. We wish to continue making mortgage payments on time for the remainder of our loan.
Sincerely and Respectfully,
Rebbecca Smith
Loan Modification Hardship Letter #2
Date
Lender name
Lender address
Attn: Loss Mitigation Department
RE: Borrower name, Loan number
To Whom It May Concern:
We are writing to you to explain our current financial situation that has caused us to default on our loan agreement. We don’t want to lose our home and will anything we can to work with you to remedy the situation and find a solution that will benefit us both. We first became delinquent on our mortgage payments due to [INSERT YOUR REASON HERE BRIEFLY]. We’ve tried to bring the account current, but haven’t been able to catch up by paying the full amount due. The trouble started approximately [INSERT DATE HERE] and we believe that this is a [TEMPORARY or PERMANENT] hardship.
We are now in a better position and would like to work out a plan to begin making payments again and stay in our home. We are hard working, responsible individuals willing to work to keep our home. We would appreciate it if you would consider a modification to our existing loan terms in order to lower the monthly payment and include some or all of the past due amount. We’ve created and implemented a new budget for our family and we are confident that we would be able to meet the new, lower monthly payment every month without fail. We’d appreciate any help or suggestions you could give to us regarding this matter. It’s an extremely difficult time for our family and we’d really like to get the issue resolved as soon as possible.
We hope these examples help you create a well written Loan Modification Hardship Letter that gets you the loan modification you deserve. If you need help with your Loan Modification, AdjustMyLoan.com is a national Loan Modification Company based out of Phoenix, Arizona that can help you audit, package, propose, and negotiatiate a Loan Modification on your behalf. Visit our website www.AdjustMyLoan.com or call our toll free phone number 1-800-557-7573 today.
Okay…we know this post is mainly for bragging rights, but how could we resist letting the world know that www.AdjustMyLoan.com is ranked #1 on Google for “Arizona Loan Modification Company”, “Phoenix Loan Modification”, “Arizona Loan Mods”, “Arizona Loan Modification Experts”, “Arizona Loan Modification”, and “Attorney Based Loan Modification Company”!
We are not some “Fly-By-Night” company that charges HUGE upfront fee’s and takes advantage of homeowners in distress. Instead, we are a Professional Loan Modification Company based in Phoenix, Arizona that CHARGES NO UPFRONT FEE’S for our ArizonaLoan Modification Service. We invite you to challenge us and see if our reputation stands up to your standards. We want to earn your business and our integrity / business ethics will make you feel comfortable from the first phone call you make to us.
SO WHERE DO WE GO FROM HERE?
Qualifying for one of our Loan Modification Programs is easy. Just call one of our customer relationship managers and get pre-qualified. The process takes a few minutes and is absolutely free. Once pre-qualified, we will help you gather the necessary documentation needed to build a professional Arizona Loan Modification Proposal. Then we will package and propose your Arizona Loan Modification and begin negotiating on your behalf. At the same time, our affiliated real estate Attorney will conduct Forensic Loan Audit on your original loan paperwork to uncover any Predatory Lending Violations that may have occurred. We will use any violations found as our negotiation “trump card” and get you the best loan terms possible.
FREE LOAN MODIFICATION CONSULTATIONS - WE WANT TO EARN YOUR BUSINESS!
Negotiating 101 – Tips For Negotiating Your Own Loan Modification!Dealing With Objection
This section is dedicated to the psychology of negotiating LOAN MODIFICATIONS. In most instances, when you first call your lender, they will be helpful…then something happens! They switch from customer service role, to debt collector role and things become interesting. Obviously the main key is to always stay calm and remember that they did not put you in this position. Also remember that they are overwhelmed with cases, get yelled at all day long, and do not get paid very much money. Below are some tips and tricks that we have found useful when dealing with loss mitigation.
Building Trust, Rapport, And Satisfaction
If you are entering into a negotiation, you will be in a much stronger position if you can convince the other side of your qualifications. This is why we spend so much time doing our research with the INCOME / EXPENSE WORKSHEET and running COMPS. Your first priority is to convince the decision makers that you can do what you propose. The whole point of this is to build trust! Next, spend some time building a rapport with the negotiator. Ask about where they are located, how busy they must be, ask them about their background and experience, even talk about your family. The more of a real person they view you as, and greater the chances they will go to bat for you when you need them to. Lastly, get ready for some flexibility. You don’t want to be thought of as a deal breaker, but a deal maker who understands that you must create a mutually beneficial relationship that both you and the bank are okay with!
Dumb Is Smart
Remember, things are not always what they seem! Sometimes it is a good idea to play “dumb” to gain more information from the other side that they might not volunteer if you are a Mr. Know-It-All! Listening is the key to this concept, so even if you have a razor sharp mind, play “dumb” and gain the strategic advantage.
You Have Got To Do Better Than That
If in your negotiation you reach a gap that you are not sure how to bridge, a simple statement “you have got to do better than that” can work wonders. The point of this is to get them to the point where they say “this is the best that we can do for you”. This does not cost you anything and is a good way to push the envelope without causing a fight.
Take It Or Leave It
If your lender tells you that this is the deal “take it or leave it”, you do have some options. Obviously, you could take or leave the deal depending on your situation. Before you do, first try and change the parameters of the discussion by offering an agreement with an alternative. Let’s say you are trying to get a 3 month forbearance, a principal balance reduction of $50,000, and an interest rate adjustment from 7% to 6%, and they say we will reduce your interest rate and that is it…”take it or leave it”. A good response could be “okay, I might accept the lower interest rate if you can give me a 6 month forbearance on my payments to help me cover the lost benefits of the principal balance reduction.” Now you have taken back control and changed the pace of the negotiation.
The Two Dreaded Personalities
1. Mr. Intimidator
Here is a quick story. We were once negotiating a short sale with a loss mitigator from one of the nation’s largest banks. We sent in the short sale packet and made our initial phone call. The loss mitigator claimed that she never received the packet and asked us what the offer was for. We told her and she immediately yelled “this is an insult….do not call me back until you have a higher offer” and then hung up. She did not even see the paperwork, the statistics, or the offer yet! We knew instantly we were dealing with a Mrs. Intimidator. We tried calling back and every time she would not even let us speak more than a few sentences and then she would cut us off and say “I told you to get me a higher offer…you are wasting my time so don’t call me back again until you get something higher.” This posed a huge problem because the offer was actually a really good offer…she was in Ohio and we were in Arizona, so she had no Idea what market values were or were doing (declining). Everytime we called her we stayed calm even when she yelled at us.Finally, we called back about 2 weeks later and as fast as we could talk (before she hung up on us), we told her how hard we were working, everything we could about the family losing their house, how market values had declined, regurgitated market statistics such as foreclosure rates and short sales in the neighborhood, and told her that if she does not take a second look at the numbers we were going to let the house foreclose. She said she did not care and hung up. We waited and the next day she called us back and apologized for her attitude. She claimed she thought long and hard about this family’s situation and from that point on was our best friend. Literally overnight the whole tone and pace of the negotiation changed for the better. We had the auction postponed, got an acceptance for our short sale, and completed the transaction. She realized that bullying us around was not the answer and changed up her strategy!
2. Mr. Know‐It‐All
This is the most difficult personality type to deal with. These are the people that you cannot tell anything to. They can be in another country and claim to know exactly what is happening here in Arizona. They have done this a thousand times and you are just another file they have to get finished before the end of the day! Flattery with the know-it-all can get you anywhere you want to go. Once the know-it-all is convinced of their superiority, their guard goes down. The key here is to give minimal information and many “you know” statements. For example, say something like, “with the declining housing market and my loss of all my equity, I cannot afford my new interest rate. You know what is typical since you have done this a thousand times. Let me send you a proposal that you are familiar with and we can use that.” Also, do not challenge them directly, this will only infuriate them. Instead stroke their ego!
Last Piece Of Advice
If you come to a standstill with your assigned home retention mitigator, you can always attempt to move it up the chain of command and speak with their supervisor. In most cases, your negotiator will not volunteer their contact info so you may have to call customer service and ask for the manager of _____________ (your negotiator). It may be a good idea to ask for the name of your negotiator’s manager’s phone number on your initial contact for your file.
CONTACT ADJUSTMYLOAN.COM IF YOU GET STUCK
If you still stuck, AdjustMyLoan.com is a national LOAN MODIFICATION COMPANY based out of Phoenix, Arizona. The Loss Mitigation Experts, professional LOAN MODIFICATION NEGOTIATORS, and affiliated Forensic Loan Auditing Attorney’s at AdjustMyLoan.com are always here to help if you get to a point where you cannot handle the LOAN MODIFICATION yourself. We have years of loss mitigation experience and can help you audit, package, propose, and negotiate your LOAN MODIFICATION. We are also a member of the Better Business Bureau, have a log-in system so you can see your LOAN MODIFICATIONS progress, charge NO UPFRONT FEE’S, have a MONEY BACK GUARANTEE, and have many happy client referrals for you to review. We understand that the hardest part for a homeowner to do is remove all emotions fromt he negotiation. If you need us, just give us a call at 1-800-557-7573 and WE CAN STEP IN AND GET THE JOB DONE!
WHAT IS A LOAN MODIFICATION AND WHY WOULD A BANK ACCEPT A LOAN MODIFICATION?
LOAN MODIFICATION DEFINED!
An ARIZONA LOAN MODIFICATION in its simplest form is the alteration of your current loan terms in order to lower your monthly payment and keep you out of foreclosure. Loan modifications typically involve a reduction in the interest rate on the loan, an extension of the length of the term of the loan, a reduction in the principal amount you owe, or any combination of the three. A lender might be open to modifying a loan because the cost of doing so is less than the cost of default, and/or the borrower owe more than the property is worth.
For borrowers who can prove their ability to consistently repay a modified loan, the bank will allow certain changes to their loan terms. Sometimes the changes can be temporary, such as an interest rate freeze for a period of a few years, or more permanent such as stretching out the length of the term from 20 to 30 or even 40 years. Anything is possible…from interest rate reductions, stretching out amortization, reducing the principal balance, to adding an interest only feature are all commonly asked for modifications.
At the end of the day, the whole goal behind an ARIZONA LOAN MODIFICATION is to negotiate an affordable and sustainable monthly payment that suits your income level. Banks do not want to revisit your file and typically will not give you another chance so make sure you create, and acquire the appropriate modification terms. Also, keep in mind that your banks loss mitigation department will take into account your entire monthly budget (income and expenses) so do not over estimate what you can afford for housing. If requested, your lender should send out an INCOME /EXPENSE form for you to fill out. Be honest about your total monthly expenses and income. Use the form to determine what you can afford for a new mortgage payment…and since it will be based on your specific situation and backed up by your bank statements / paycheck stubs, you will have the negotiating power to ask for that specific amount. (Compared to you just pulling a monthly payment from the air and proposing that to the bank)
WHY WOULD A BANK MODIFY A LOAN?
The general perception by many troubled homeowners in today’s market is that banks do not want to foreclosure on their home. This thought is not necessarily true. No bank wants to foreclose on a property in a declining market, but their decision to foreclose or LOAN MODIFY is based simply on the numbers. What we mean by this is that your lender(s) truly only care about one thing…which solution is going to net them the most money! As long as you are paying on time, your bank has a valuable income producing asset that gets sold and resold as a mortgage backed security on Wall Street. When you stop making your mortgage payments, your loan gets transferred to the loss mitigation department. From this point forward your bank is losing money. The following is a general scenario to help you understand the expenses a bank incurs once you stop making your payments.
Let’s say you owe $350,000 on your house and it is currently worth $305,000. You have an interest only loan that is set to adjust the beginning of next year. You can no longer afford your payments for whatever reason so you stop making them.
Balance Owed: $350,000
Today’s Market Value: $305,000
Interest Rate: 6%
Amortization: 30 years
Interest Only Payment: $1750 / month
Cause Of Loss To The Bank
Approx. Amount Of Loss ($)
Missed Interest Only Payments (8 Months = Avg. AZ Foreclosure Process)
$14,000
Total House Depreciation
$45,000
Attorneys Fees And Trustee Paperwork Costs
$1,500
Holding Costs Once They Become The Owner (4 Month Avg. Time To Sell)
$7,000
Selling And Closing Costs To Sell An REO (Real Estate Owned). Remember that most properties are selling at a 5% discount from market value plus the Realtor and closing costs involved with selling real estate…estimated 10%.
$30,500
Total Estimated Loss
$ 98,000
Now we know that this scenario is a general estimate of expenses, but we believe that this information should help you build the foundation of your loan modification proposal. BANKS DO NOT WANT TO BECOME HOMEOWNERS AND WANT TO MINIMIZE THEIR LOSS! As you can see, the bank stands to lose almost $100,000 on a $300,000 house…if your scenario for a LOAN MODIFICATION is better, and you can prove it through documentation, then you stand a great chance of a successful LOAN MODIFICATION.
WHY CHOOSE ADJUSTMYLOAN.COM TO CONDUCT MY LOAN MODIFICATION?
There are many so called “LOAN MODIFICATION” companies out there that are simply NOT QUALIFIED to help you re-negotiate your current loan terms with your lender(s). Most are simply loan officers and brokers that can no longer do loans due to the current credit crisis so they began marketing themselves as “LOAN MODIFICATION EXPERTS“. Anyone can package and propose a LOAN MODIFICATION to a bank , even you…but do you really think the bank is just going to give you the best deal right away? Absolutely not…what you need is the professional negotiating experience found in the AdjustMyLoan.com LOAN MODIFICATION TEAM.
Do not allow just any ARIZONA LOAN MODIFICATION COMPANY “look-a-like” to conduct your LOAN MODIFICATION. Imagine the difference a few interest percentage (%) points can make on your monthly payment! Imagine being able to wipe out that negative equity you have and obtain a PRINCIPAL BALANCE REDUCTION on the principal amount you owe! WWW.ADJUSTMYLOAN.COM is an ATTORNEY BASED LOAN MODIFICATION COMPANY where your LOAN MODIFICATION is audited, packaged, proposed, and negotiated by a staff of PROFESSIONALLOSS MITIGATION EXPERTS that specialize in LOAN MODIFICATIONS and utilize the findings of a FORENSIC LOAN AUDIT by a trained real estate Attorney to get the job done.
WHY IS IT IMPORTANT TO HAVE A FORENSIC LOAN AUDIT DONE?
A FORENSIC LOAN AUDIT is considered by many to be the “secret” to obtaining a loan modification with your lender(s). Sometimes called a FORENSIC LOAN DOCUMENT REVIEW or MORTGAGE AUDIT, the main purpose is to determine if there are violations of federal law! Almost 70% of loans conducted in the last 7 years, and almost 95% of all sub-prime loans have major RESPA (Real Estate Settlement & Procedures Act) and TILA(Truth In Lending) violations. The only way to find these violations is to conduct a FORENSIC LOAN AUDIT by a qualified person…in most instances a trained Attorney! If found, through an Attorney ran negotiation process, most lenders choose to renegotiate the terms of the loan to something more affordable to avoid litigation! The whole goal here is to uncover any predatory loan practices and push for a favorable LOAN MODIFICATION. If you are researching different companies to conduct your LOAN MOD, please take into consideration whether or not they are performing a detailed loan review by an Attorney! Don’t be fooled by loan/mortgage companies that jumped into the LOSS MITIGATION BUSINESS yesterday…hire a company that has real experience negotiating LOAN MODIFICATIONS and can fight for you.
ADJUSTMYLOAN.COM is a NATIONAL LOSS MITIGATION COMPANY that specializes in ATTORNEY BASED LOAN MODIFICATIONS. Our team of LOAN MODIFICATION SPECIALISTS is comprised of Attorneys, processors, professional negotiators, short sale and foreclosure experts, loan officers, Realtors, and financial advisors. Our state of the art facilities are located in downtown Phoenix, Arizona. We believe that our experience and relationships with most major lenders, as well as the fact that we conduct FORENSIC LOAN AUDITS on every file by a qualified Attorney gives us a strategic advantage over our competition! We are members of the BBB, have many referrals and testimonials to prove our business ethics, and a proven track record that produces real results! Plus, our pricing is so competitive we wouldn’t understand why you would want to go anywhere else!
Disclaimer: We are not giving you legal advice…please contact a qualified real estate attorney for specific legal questions you may have about your situation.
WOW, First off, we want to say it is amazing at the number of “Fly by Night” Loan Modification Companies we are seeing popping up everywhere! It is sad that homeowners are going to be bombarded with “Foreclosure Consulting” companies who promise to “Modify” their note for an upfront fee. BEWARE OF ANY LOAN MODIFICATION COMPANY TRYING TO CHARGE YOU A LARGE UPFRONT FEE FOR THEIR SERVICES! AdjustMyLoan.com offers FREE LOAN MODIFICATION CONSULTATIONS AND DOES NOT CHARGE ANY UPFRONT FEE’S.
So, how can you tell the reputable Loan Modification Companies from the bad Loan Modification Companies? Research! Any reputable Loan Mod Company should give you easy access to learn about their company, employees, and background. Many of these “Knock-Off” Loan Mod Agencies are nothing more than loan officers and brokers that couldn’t hack it in the loan industry any more and are jumping over to the loan modification industry so they can make a quick buck. These are the same people that put you in the loan that got you in trouble…why would anyone want to go back to these same people for help???
At AdjustMyLoan.com, we believe in transparency. Any potential client of ours gets a “Worry-Free Guarantee” when dealing with us. First, we have an amazing staff of highly educated and skilled employees that consist of a Paralegal that manages our Loan Mod Negotiation department, highly trained Loan Modification Negotiators, Loan Modification Processors, customer relationship agents, a compliance officers who double checks all of our paperwork, and a trained real estate Attorney who conducts Forensic Loan Audits to uncover any Predatory Lending Violations that may have occured durring loan origination! Second, WE CHARGE NO UPFRONT FEES, offer a Money-Back Guarantee, and only get paid if we complete a Loan Modification on your behalf. Third, we have an on-line database system that allows you to log in and see the status / notes on your loan modification file. Fourth, we are brick and mortar…located in downtown Phoenix, Arizona in a building we own (were not going anywhere). Fifth, we are members of the Better Business Bureau, D&B, and Privacy Guard so you can verify our business ethics. Lastly, we have many testimonials and referrals for you to verify our ability to get the job done.
Oh, and we also put everything we say we are going to do in writing, have a 3 day rescission period just in case you change your mind (you get all your money and paperwork back), and offer free advice how to handle your own loan modification on our website.
OUR FREE LOAN MODIFICATION CONSULTATION TAKES ABOUT 15 MINUTES AND COULD CHANGE YOUR LIFE! Imagine lowering your monthly mortgage payments and freeing up cash flow to pay off your other bills. Once you get pre-qualified with us, we will help you complete a full application, gather the necessary documentation your lender(s) will require, then we take over from there. We do all the work, and you enjoy all the benefits!
LOAN MODIFICATION PROGRAMS, SERVICE, AND ADVICE- That is what AdjustMyLoan.com offers our clients! If you are interested in learning more, please visit our Loan Modification Website or call us today!
We believe that our experience and relationships with most major lenders, as well as the fact that we conduct Forensic Loan Audits on every qualified file by a trained real estate Attorney gives us a strategic advantage over our competition! Call us today and take advantage of our FREE LOAN MODIFICATION CONSULTATION!
Loan Modification Company AdjustMyLoan.com Investigates The 10 Ways To Stop Foreclosure!
In this post we are going to take a look at the different ways to Stop Foreclosure. We explain these options in order to give you a better understanding of your situation and show you how a Loan Modification by a qualified Loan Modification Company like AdjustMyLoan.com can help you Stop Foreclosure and stay in your home. Pay special attention to the first five options because these are your choices if you are trying to save your house. Understanding available solutions will help you formulate your plan giving you the best chance for a successful outcome. Remember, we are not giving you legal or tax advice and recommend you contact a professional to verify our information.
1. FORBEARANCE
“Forbearance” is an agreement with your bank/lender to Stop the Foreclosurein exchange for paying the overdue amount (called “arrearages”). The arrearagesare paid in either one lump sum, or a schedule of payments over a period of time (typically 6‐12 months). In some cases, your lender may even allow you to pay reduced monthly payments until you get back on your feet. More than likely, they will INCREASE your monthly payments to cover your owed arrears. Of course, your lender will only agree to forbearance if you can afford to resume your monthly payments. For example, if you got behind on your monthly payments because you lost your job, but were recently rehired, your lender might consider forbearance. Unfortunately, most homeowners Facing Foreclosure cannot come up with the money to make up back payments, nor can they afford higher monthly payments.
Bottom Line: To take advantage of this solution, you must be able to:
1. Pay the arrearages in a lump sum and be able to resume your monthly payments, or
2. Afford higher monthly payments (i.e. your original monthly mortgage payment plus a portion of the arrearages) until the arrears are paid off.
2. LOAN MODIFICATION
“Loan Modification” means changing the terms of your mortgage. (Also called “recasting” the mortgage.) For example, lowering the interest rate, increasing the loan amount, extending the amount of time you have to repay the loan, and/or other changes that your lender agrees to. A lender will typically consider a Loan Modification if you will be able to make your new mortgage payments after the change. For example, if you lost your job and got a lower paying job, your lender may lower your monthly payments, but increase the number of years you must pay your mortgage. There are temporary and permanent loan modifications and each lender will try and put you in a loan modification program that is in their best interest! Hiring a company like www.AdjustMyLoan.com will give you the professional representation you deserve so you receive the BEST LOAN MODIFICATION TERMS possible!
Bottom Line: To take advantage of this solution, you must be able to show your lender that you can afford the new monthly payments once the loan is modified.
ADJUSTMYLOAN.COM is a NATIONAL LOSS MITIGATION COMPANY based out of Phoenix, Arizona that specializes in LOAN MODIFICATIONS and forebearance agreements. Our professional staff is ready to help audit, package, propose, and negotiate a loan modification on your behalf. We offer FREE LOAN MODIFICATION CONSULTATIONS and DO NOT CHARGE ANY UPFRONT FEES for our LOAN MODIFICATION SERVICE. Call 1-800-557-7573 today and get the professional help you deserve.
3. FHA “Partial Claim” LOAN
If you have an FHA‐insured (Federal Housing Administration) loan, you may qualify for a one‐time “partial claim” loan. To qualify, our mortgage must be delinquent 4‐12 months and you must be able to resume full mortgage payments. When your lender files a “partial claim”, FHA/HUD (Housing and Urban Development) pays your mortgage current. However, in exchange for the “partial claim” loan, FHA/HUD puts a lien on your home and gives you an interest‐free loan that is due when your mortgage is pain in full (for example, after a refinance or when you sell your house). In other words, you have to eventually pay FHA/HUD back for the amount of money they paid your lender, but you don’t have to pay them back until you pay off your mortgage or sell your house. Visit www.hud.for more information.gov
Bottom Line: To take advantage of this solution, you must:
1. Have an FHA‐insured mortgage.
2. Not already have a “partial claim” loan from FHA/HUD.
3. Be delinquent at least 4 months, and no more than 12 months.
4. Show that you can afford to make the monthly payments in the future.
5. Remember that, sooner or later, you will have to pay back the amount of the “partial claim” loan.
4. REFINANCING YOUR MORTGAGE
“Refinancing” is when a lender (either your current lender or a new lender) gives you a new mortgage to replace your current mortgage. Of course, the new mortgage will likely be more than your current mortgage because the points, late payments, and other fees will be added to it. Unfortunately, most homeowners Facing Foreclosure cannot refinance because they do not have good credit or enough equity in their house. “Equity” is the difference between what your house is worth and the amount of the loans against it. For example, if your house is worth $300,000 and you owe $250,000 on a 1st mortgage and $15,000 on a 2nd mortgage, you have $35,000 in equity because $300,000 house value, less $250,000 representing the mortgage less $15,000 second mortgage = $35,000 equity.
Bottom Line: To take advantage of this solution, you must:
1. Have good credit and /or enough income to qualify for a new loan, and/or
2. Have a substantial amount of equity in your home; sufficient to meet the lender’s guidelines.
5. ANOTHER LOAN (i.e. 2nd mortgage, 3rd mortgage, etc.)
This is a new mortgage in addition to the mortgage(s) you already have on your house. The money from this loan is used to bring your mortgage current and stop the foreclosure. Unfortunately, the new loan will have a high interest rate (similar to most credit cards) and cost 5‐10 points. A “point” is 1% of the borrowed amount. For example, if you borrow $10,000, 10 points =$1,000. Also, since it’s another loan, keep in mind that you’ll have higher monthly payments. Beware of this trap, because if you cannot afford your current monthly payment(s), how will you afford higher monthly payments?
Bottom Line: To take advantage of this solution, you must:
1. Have a lot of equity in your house, and
2. Be able to afford the additional payment each month.
6. DEED‐IN‐LIEU OF FORECLOSURE (DIF)
A “Deed In Lieu Of Foreclosure” is when you voluntarily give your house back to your lender and move out. In exchange, the lender Stops the Foreclosure and agrees not to sue you for more money if the house is sold for less than the amount you owed. Since a DIF does not wipe out junior liens (i.e. 2nd mortgage or other liens), banks will usually not accept a DIF because they do not want to inherit the junior liens against the house. Also, you will not receive any money for your house when you use a DIF.
Bottom Line: In general, to take advantage of this solution, you must only have one mortgage. If you have a 2nd mortgage, 3rd mortgage, etc, most banks will not accept a DIF.
7. SELL YOUR HOUSE TO A REGULAR HOME BUYER
Unless your financial situation has improved, selling your house is one of the best -and in most cases, the only- way to stop the foreclosure. Although you probably want to stay in your house, the truth is that selling your house and moving is a lot less painful than Losing Your House To Foreclosure and having to move anyway. At least if you sell your home, it will be on your terms - not the lender’s -and your have a better chance of getting some cash out of your house. Plus, you’ll Stop the Foreclosure and save your credit. If you decide to sell your house to a regular home buyer, you can either try to sell it yourself or use a real estate agent. If you sell your house yourself, you’ll save money on real estate agent commissions. However, it will probably take longer to sell…time you don’t have. You will also have to spend time and money advertising andshowing the house to potential buyer. You will also have to understand how to write up a contract and where to go to complete the transaction (title agency). If you sell your house through a real estate agent, you’ll probably sell your house a lot quicker and probably at a higher price. But you’ll have to pay a commission to the agent (typically 6% which, on a $300,000 home is $18,000).
Bottom line: To take advantage of this solution, you must:
1. Have enough time (typically 3 ‐ 6 months, or more considering current market conditions) to find a qualified buyer and close escrow before the foreclosure auction.
2. Have enough equity to pay the real estate agent’s commissions (if you use an agent), and
3. Have enough time and money to perform all necessary repairs or you can sell the property as is for a lesser price.
8. SELL YOUR HOUSE TO AN INVESTOR
If you don’t have enough time to sell your house to a regular home buyer, don’t have enough equity to pay a real estate agent’s commissions, and/or don’t have the time or money to perform repairs, then selling to an investor is probably your best bet. An investor won’t pay full price for your house, but he/she can close quickly, pay you all cash, and buy your house in “as‐is” condition. This allows you to stop the foreclosure, save your credit, and get cash to move and/or pay other expenses and bills.
Warning: There are a lot of beginning investors out there who are not as experienced in this sort of situation. They may have good intentions but often will create a bigger disaster for your situation when time is of the essence is handling your matter. What you need now is an experienced team of professionals so if you choose this option, please call 602‐626‐3598.
Warning #2: Whatever you do, don’t let anyone talk you into paying for help without first verifying the person’s company and expertise! It is not likely that a paid, so‐called professional will be able to help you with your situation. Get all of the facts and check the Better Business Bureau before you do anything.
Bottom Line: To sell your property to an investor you must sell our house at a discount because the investor will have costs to fix your home to resell it. Just be sure to find a reputable company or investor that you know you can trust!
9. A SHORT SALE
A “Short Sale” is an agreement with your lender to accept less money than they’re owed as full payment for your loan. This solution often makes sense when you owe more than the property is worth. For example, if you owe $500,000 but your property is only worth $420,000, a short sale may be your only option. Rather than trying to negotiate a short sale yourself, call a professional who is experienced in negotiating with lenders. A short sale requires selling your property to an end buyer who will live there, or an investor who will Negotiate With Your Lender on your behalf. There are no guarantees that the lender will accept the short sale. Keep in mind that your bank does not want your house back! It is considered a non‐performing asset and they cannot have too many on their books! They want to work something out with you. As part of the short sale agreement, the lender prohibits you from receiving any proceeds from the sale. In other words, the investor cannot give you any money for your house.
Bottom Line: To take advantage of this solution, you should talk to an experienced Short Sale Negotiator. AdjustMyLoan.com has such professionals on its staff that can help you, however we only do Arizona Short Sales! Ask us for more information about your lender’s recourse on short sales. We have an informational report we can give you when we meet called How Property Owners in Foreclosure / Short Sale can avoid paying Taxes on 1099.
10. BANKRUPTCY
It is very important you understand how bankruptcy works and we suggest you meet with a bankruptcy attorney before considering this option. Many people use bankruptcy as a scare tactic. There are several different “chapters” of bankruptcy. Some are work‐out others are wipe‐out, but here is the general idea. When someone files bankruptcy it’s almost like someone builds a “bullet‐proof” barrier around the house. No one can touch you! However, you are not free of all responsibility and most people do not understand that. We are not bankruptcy attorneys, but you need to know the difference between a Chapter 7 and a Chapter 13 bankruptcy so you know what happens. Like we mentioned earlier, some bankruptcies are “work out” others are “wipe out“. The two that we will focus on are the Chapter 7 and Chapter 13. These are the most common in your situation. Chapter 7 is the “wipe out” and Chapter 13 is the “work out”. Bankruptcy is a federal court action designed to help individuals repays their debts or eliminate their debts depending on their circumstances. Chapter 13 bankruptcies are designed to reorganize debts in an effort to repay all debt. Chapter 7 bankruptcies are geared more towards liquidation of assets. Both Chapter 7 and Chapter 13 immediately stop the foreclosure process and any creditors from taking further action against you.
Here is how Chapter 7 works. When someone files a Chapter 7 bankruptcy, all assets and creditor collections are technically frozen which is called an automatic stay. The person filing bankruptcy cannot buy or sell anything, nor can they give away their property. If they try to sell their home, the court could order the receiving party to return it to the custody of the court appointed Trustee. Unsecured debts such as credit cards, unsecured loans, etc. are typically eliminated, although you should confer with your attorney on the rules regarding this. Then the trustee or attorney who represents the court and the creditors will look at all the assets (house, car, furniture, and equipment) a thing of value and decide what must be liquidated to pay some of the debt that was wiped out. The statute provides that there are some minimal assets a person filing bankruptcy may keep. If the homeowners are involved in a pending foreclosure, a Chapter 7 will Stop The Foreclosure Process temporarily. Usually, your lender will request the court appointed Trustee to release the property from the automatic stay so they may continue with the foreclosure process. Once the property has been released from the bankruptcy, the foreclosure process starts up again.
Chapter 13 is a little different. When someone files a Chapter 13, they usually keep their assets and repay their debts in a debt consolidation plan. Whatever amount is agreed upon has to be paid to the Bankruptcy Court every month for the next 3‐5 years. The homeowner usually keeps their house, car, and other assets. The homeowner is required to stay current with the mortgage payments and pays the amount agreed upon. If any payments are missed, the trustee will dismiss the bankruptcy and the foreclosure process will begin again. Bankruptcy is usually a last resort and should not be used to stop foreclosure unless you have no other option or else you need the protection of a bankruptcy due to other circumstances. If you feel this may be your best option, please seek legal advice.
Bottom Line: To take advantage of this solution you should consult an experienced bankruptcy attorney. We are not in the business of giving legal advice and in no way are we bankruptcy experts. This information is deemed reliable but no guarantees or warranties are expressed or implied!
WE CURRENTLY ARE CONDUCTING LOAN MODIFICATIONS IN THE FOLLOWING STATES:
ARIZONA LOAN MODIFICATION, ARIZONA LOAN MODIFICATIONS, LOAN MODIFICATION ARIZONA, CALIFORNIA LOAN MODIFICATION, CALIFORNIA LOAN MODIFICATIONS, FLORIDA LOAN MODIFICATION, FLORIDA LOAN MODIFICATIONS, NEVADA LOAN MODIFICATION, NEVADA LOAN MODIFICATIONS, NEW MEXICO LOAN MODIFICATION, NEW MEXICO LOAN MODIFICATIONS, OREGON LOAN MODIFICATION, OREGON LOAN MODIFICATIONS, WASHINGTON LOAN MODIFICATIONS, WASHINGTON LOAN MODIFICATIONS, NEW YORK LOAN MODIFICATIONS, NEW YORK LOAN MODIFICATIONS, MASSACHUSETTS LOAN MODIFICATION, MASSACHUSETTS LOAN MODIFICATIONS, MICHIGAN LOAN MODIFICATION, MICHIGAN LOAN MODIFICATIONS, OHIO LOAN MODIFICATION, OHIO LOAN MODIFICATIONS, GEORGIA LOAN MODIFICATION, GEORGIA LOAN MODIFICATIONS, MARYLAND LOAN MODIFICATION, MARYLAND LOAN MODIFICATIONS, COLORADO LOAN MODIFICATION, COLORADO LOAN MODIFICATIONS
Below is an article I found in the Washington Post written by Jack Guttentag (Mortgage Professor) a finance professor at the Wharton School of Business in Pennsylvania. It is an older article, but it hits the LOAN MODIFICATION nail on the head talking about how most loan companies are actually servicing the notes for investors on Wall Street. Getting an approval on a LOAN MODIFICATIONcan be difficult because these servicers have a fiduciary duty to protect the investor, not the homeowner, and this is where frustration can cause failure when trying to negotiate your own LOAN MODIFICATION. The main point we want you to walk away with after reading this article is that persistence is the key when dealing with your lenders home retention department whether or not they actually own the loan or just servicing it. If you remove all emotion and negotiate strictly from a business position, and you show the bank that by accepting your LOAN MODIFICAITON PROPOSAL it will net more money than if it forecloses, you will have a real chance at getting your LOAN MODIFICAITON accepted!
At the time this article was published (Oct. 20th, 2007) LOAN MODIFICATIONS were not at common as they are today! Many major lenders are jumping on the LOAN MODIFICATION bandwaggon and trying to offer solutions to keep homeowners falling behind on their payments in their houses. At AdjustMyLoan.com, we believe that this LOAN MODIFICATION evolution will continue and more and more banks will create their own LOAN MODIFICATION PROGRAMS.
A LOAN MODIFICATION is a change in the loan contract agreed to by the lender and the borrower. The modifications getting attention now are those designed to reduce the payment burden on borrowers faced with impending interest rate increases that will make monthly payments unaffordable to them. Many are sub-prime borrowers.
Homeowners faced with this prospect, whether they are delinquent or not, should request a modification.
You are unlikely to get such a change if you don’t ask, and you should make the investment required to make the case. The stakes are very high: your house and your credit.
In most cases, the decision on a modification is not made by the firm that owns the loan. It is made by a firm servicing the loan under contract to the owner. The owner could be a single lender, or it could be a group of investors who own pieces of a mortgage-backed security collateralized by a pool of loans.
Whoever owns the loan, the servicing firm is contractually obligated to find the solution to payment problems that will minimize loss to the owner. If the lowest-cost solution is a contract modification, that’s great — everyone involved prefers a modification instead of a foreclosure. But if a foreclosure would generate lower costs for the owner, the decision will be to foreclose. The cost of foreclosure to the borrower does not enter the decision.
Yet the decision is far from cut and dried, and it can be materially affected by whether and how the borrower presents his case. I discussed this issue with Warren Brasch, a lawyer who represents borrowers seeking loan modifications. Our combined observations:
Equity: Perhaps the most important factor affecting the modification decision is the amount of equity the borrower has in the property. If the borrower has enough equity in the property to pay any deferred interest plus foreclosure expenses, foreclosure is almost bound to be the lower-cost solution.
Equity depends on property value, which the borrower is much better positioned to know than the servicer. The borrower knows or can easily find out how many houses in the neighborhood are for sale and what the trend has been in recent sale prices. In a weakening market, it is easy for the lender to overestimate value, and the borrower must prevent that.
Moral hazard: Servicers fear that if they are liberal in granting modifications, borrowers who don’t need a modification will seek one anyway. They protect themselves against this by entertaining modification proposals on a case-by-case basis, while placing the burden of proof on the borrower.
Borrowers must accept the burden of proof. In addition to the data on property value, they need to document that they cannot afford the payment increase that is pending, and they must document what they can afford.
To do so, borrowers should calculate their total debt ratio: the sum of mortgage payment, other debt payments, property taxes and homeowner’s insurance as a percent of their gross (before tax) income.
This number should be calculated as it stands now and as it would be after the rate adjustment. It should also be calculated to demonstrate what the borrower can afford. On the last, Brasch suggests that a servicer may be willing to accept 45 percent as a reasonable maximum.
Servicing cost:Servicers have an interest in minimizing modifications because they add to costs. They try to keep costs down by computerizing the servicing process to the greatest degree possible and standardizing customer support procedures so that low-paid and easily trained employees can perform them.
Modifications must be handled by a special group who are more highly trained and better-paid, and the increased cost of expanding their number cuts into the bottom line. Hence, there is a tendency to be non-responsive in the hope that the borrower will go away.
Borrowers have to be persistent. Brasch said: “If a servicer says they will call you back . . . forget about it. You need to call them and call them constantly. They will lose your paperwork, fail to return calls, put you on hold and then hang up. It’s what they do. Keep fighting, calling, faxing. This does work!”
In deciding whether a modification would be less costly than a foreclosure, servicers usually ignore an asset possessed by the borrower that could tilt the balance toward modification. This is the right to future appreciation in the value of the borrower’s house.
In exchange for a modification that might otherwise be more costly to the owner than a foreclosure, the borrower could pledge a percent of the future appreciation, which could shift the balance to modification.
Jack Guttentag is professor of finance emeritus at the Wharton School of the University of Pennsylvania.
If you are a homeowner facing foreclosure an searching for a solution to save your home, there are options available to you. A loan modification is a way to renegotiate your current loan terms, adjusting your interest rate, principal amount owed, or length of loan in order to lower your monthly payments. A lender is willing to do a LOAN MODIFICATION because it is a cheaper alternative than foreclosure.
As great of a solution a loan modification is, there are many “fly by night foreclosure rescue” companies out there looking to take advantage of your situation! BEWARE OF THE FOLLOWING LOAN MODIFICATION SCAM.
LARGE UPFRONT FEE SCAM:
These scams typically start by either a phone call, or an “official” looking document that uses scare tactics to get the homeowner all worked up about losing their home. Then, they offer a loan modification stating that it takes anywhere from 2-10 weeks to complete. They then charge a large upfront fee (typically $3000 - $7000) and promise to have a 98% success rate. They state that they have been helping homeowners for years and only they can help you. They offer a 100% money back guarantee if your not satisfied. This sounds good so you decide that you will do anything to save your home and pay. Once your money is collected upfront, in many instances you loan never gets modified. After some time the homeowner gets curious as to why they have not heard from the company or individual with an update. They start investigating and realize that the company does not have a physical address, nor will return their phone calls or money. The company or individual uses excuses such as “the homeowner never provided all the documentation needed” to get away with not doing any work. At the end of the day, the homeowner looses their home to foreclosure because it is typically too late by the time the realize they were scammed!
WHAT YOU NEED TO DO TO PROTECT YOURSELF:
MAKE SURE THE PERSON YOU ARE DEALING WITH HAS A PHYSICAL BUSINESS ADDRESS AND BUSINESS PHONE NUMBER.
MAKE SURE THE COMPANY YOU ARE DEALING WITH IS A MEMBER OF THE BBB
DO NOT PAY A LARGE UPFRONT FEE…A SMALL FEE IS OKAY BUT YOU SHOULD NOT HAVE TO PAY UNLESS THE LOAN MODIFICATION IS SUCCESSFULL.
MAKE SURE THE COMPANY YOU ARE USING HAS AN ONLINE TRACKING SYSTEM SO YOU CAN SEE THE PROGRESS OF YOUR LOAN MODIFICATION AT ALL TIMES
MAKE SURE YOU MEET THE COMPANY AT THEIR OFFICE AND SEE THAT THEY ARE CONDUCTING BUSINESS (GET TO KNOW THE COMPANY)
GET REFERRALS AND TESTIMONIALS TO VERIFY COMPANIES HISTORY
GET COPIES OF ALL PAPERWORK THAT OUTLINES THE BUSINESS RELATIONSHIP
Our “Worry Free Guarantee” provides you peace of mind when you need it most. WE ARE NOT A FORECLOSURE BAILOUT COMPANY! We are an PROFESSIONAL LOAN MODIFICATION COMPANY that specializes in loan modifications and short sales. Our expert loan modification negotiators will pre-qualify, package, propose, and negotiate a LOAN MODIFICATION on your behalf! We pride ourselves on being members of the BBB and in good standing. That we put all of our promises and guarantees in writing and have a 3 day rescission period in case you change your mind. That we have many referrals and testimonials. That we are located in downtown Phoenix, Arizona in a state of the art building that we own! THAT WE CHARGE NO UPFRONT FEE’S FOR OUR LOAN MODIFICATION SERVICE! Lastly, that we have an online tracking system that updates you on your loan modifications progress. We have spent hundreds of thousands of dollars building our company and advertising so we can help as many homeowners avoid foreclosure and stay in their homes. Our commitment to getting the job done and conducting business with honor and integrity is displayed to you from the second that you call! LOAN MODIFICATION INFORMATION
NATIONAL FORECLOSURE TIMETABLE AND HOW IT AFFECTS A LOAN MODIFICATION.
Each states foreclosure timetable is different and there is no strict industry standard. Your lender(s) can, at their own discretion, file for foreclosure at any time once you start missing your mortgage payments. You can in theory conduct a loan modification when you are current on your mortgage payments. It is difficult to do because your lender has little reason to take a loss on income when you are able to make your monthly payments. Most homeowners get the best loan modifications once they miss a payment or two but if you wait too long, and a foreclosure auction date is set, it becomes much more difficult to complete a loan modification with your lender(s). If you have already received a Notice of Default, immediately hire an Attorney Based Loan Modification Company such as www.AdjustMyLoan.com to conduct a Forensic Loan Audit and professionally negotiate your loan modification.
Below is a chart from Realtytrac.com displaying the approximate time it takes after NOD is filed for the home to go to the foreclosure auction. Remember that the Notice of Default (NOD) is generally filed 90-120 days after the account becomes delinquent. (These numbers are an estimate and are subject to change without notice. Information deemed reliable but does not claim 100% accuracy).
State
Judicial
Non‐ Judicial
Process Period (Days)
Sale Publication (Days)
Redemption Period (Days)
Sale/NTS
Alabama
•
•
49‐74
21
365
Trustee
Alaska
•
•
105
65
365*
Trustee
Arizona
•
•
90+
41
30‐180*
Trustee
Arkansas
•
•
70
30
365*
Trustee
California
•
•
117
21
365*
Trustee
Colorado
•
•
145
60
None
Trustee
Connecticut
•
•
62
NA
Court Decides
Court
Delaware
•
•
170‐210
60‐90
None
Sheriff
District of Columbia
•
•
47
18
None
Trustee
Florida
•
•
135
NA
None
Court
Georgia
•
•
37
32
None
Trustee
Hawaii
•
•
220
60
None
Trustee
Idaho
•
•
150
45
365
Trustee
Illinois
•
•
300
NA
90
Court
Indiana
•
•
261
120
None
Sheriff
Iowa
•
•
160
30
20
Sheriff
Kansas
•
•
130
21
365
Sheriff
Kentucky
•
•
147
NA
365
Court
Louisiana
•
•
180
NA
None
Sheriff
Maine
•
•
240
30
90
Court
Maryland
•
•
46
30
Court Decides
Court
Massachusetts
•
•
75
41
None
Court
Michigan
•
•
60
30
30‐365
Sheriff
Minnesota
•
•
90‐100
7
1825
Sheriff
Mississippi
•
•
90
30
None
Trustee
Missouri
•
•
60
10
365
Trustee
Montana
•
•
150
50
None
Trustee
Nebraska
•
•
142
NA
None
Sheriff
Nevada
•
•
116
80
None
Trustee
New Hampshire
•
•
59
24
None
Trustee
New Jersey
•
•
270
NA
10
Sheriff
New Mexico
•
•
180
NA
30‐270
Court
New York
•
•
445
NA
None
Court
North Carolina
•
•
110
25
None
Sheriff
North Dakota
•
•
150
NA
180‐365
Sheriff
Ohio
•
•
217
NA
None
Sheriff
Oklahoma
•
•
186
NA
None
Sheriff
Oregon
•
•
150
30
180
Trustee
Pennsylvania
•
•
270
NA
None
Sheriff
Rhode Island
•
•
62
21
None
Trustee
South Carolina
•
•
150
NA
None
Court
South Dakota
•
•
150
23
30‐365
Sheriff
Tennessee
•
•
40‐45
20‐25
730
Trustee
Texas
•
•
27
NA
None
Trustee
Utah
•
•
142
NA
Court Decides
Trustee
Vermont
•
•
95
NA
180‐365
Court
Virginia
•
•
45
14‐28
None
Trustee
Washington
•
•
135
90
None
Trustee
West Virginia
•
•
60‐90
30‐60
None
Trustee
Wisconsin
•
•
290
NA
365
Sheriff
Wyoming
•
•
60
25
90‐365
Sheriff
ARIZONA’S FORECLOSURE TIMELINE
Since we are from Arizona and specialize in Arizona Loan Modifications, we will highlight Arizona’s foreclosure timeline in a little more detail. Arizona’s foreclosure timetable is typically 6‐8 months in length. In most cases, the delinquency period lasts 90‐120 days and a Notice Of Default (NOD) is filed. This paperwork instructs your trustee to begin the foreclosure process. From the date that this paperwork is filed until the day you lose your home at auction is exactly 91 days. After your foreclosure auction, there is no redemption period like there is in some states. A sheriff, or the new homeowner that purchased your home at the auction will evict you from the home and it is legally theirs! The chart below gives you a good visual of how Arizona’s foreclosure process works:
You Lender(s) Rationale During The Foreclosure Process
First A Quick Disclaimer…no one is instructing a homeowner to miss their mortgage payments. In fact, if you are able to make your mortgage payments, then you should not be reading this eBook. Each borrower signed a notarized document promising to repay their loan within the agreed upon terms and should honor such a commitment if they can. A loan modification is designed to help homeowners who cannot afford their mortgage payment. Also, each bank is different. This section is designed to give you a general understanding of the rational from the banks point of view. With each passing day, rules, standards, and guidelines are changing.
Homeowner Is Less Than 30 Days Late:
While in theory it can be done, in most cases a bank will offer a loan modification during this period due to the fact that if you can pay your mortgage, why should they take a loss. The exception of this is if there was some predatory lending violation in their loan documents. Having an attorney conduct a Forensic Loan Document Review can uncover any RESPA and/or TILA and/or HOEPA violations and then threaten your lender with a lawsuit. This will typically expedite the loan modification process and get things done even when you are not behind on payments. Obviously this can get real expensive real quick!
Homeowner Is 30-90 Days Late:
We call this the panic period. As you begin to miss your payments, the bank slowly switches from customer service mode to debt collector mode. Depending on your lender, this period can be frustrating and confusing. Whenever a mortgage goes into default, it gets transferred to a department called loss mitigation. This department’s sole responsibility is to collect a debt, or at least minimize that particular lenders loss. Remember, they are not there to be your friend or your coach. They are working solely for themselves so keep this in mind when they are telling you what options are available. They will try and lead you in a direction that they want you to go. Also, at first you will not be dealing with the real decision maker so keep this in mind when you are pleading your case. More than likely you will have to submit some initial paperwork (your loan modification proposal) and have it reviewed before anyone offers you any solutions. Don’t be concerned if your bank sends you letters threatening foreclosure. USE THE THREAT OF FORECLOSURE TO YOUR ADVANTAGE WHEN NEGOTIATING. What we mean by this is if the bank feels like you have given up and are not emotionally tied to the house anymore, they will be less likely to use scare tactics to bully you around. Lastly, don’t be surprised when your lender(s) tell you one thing on the phone and then send you a letter threatening you further. This is common and you should not worry yet. In Arizona, the foreclosure process generally takes 6-7 months so you still have plenty of time…check your states foreclosure timeline to see where in the process you currently are! If you decide to hire a loan modification negotiation company, they will supply your bank with a letter of authorization giving them permission to negotiate on your behalf…this will generally stop the harassing phone calls from bothering you!
The 30-90 days late phase marks the beginning of the negotiation period and you could complete your LOAN MODIFICATION within this timeframe if you are well prepared and a good negotiator. Typically your bank will start you off offering some sort of forbearance agreement. A forbearance agreement is a short term (typically 2-4 months) suspension of your mortgage payments to help you get caught up on other bills. The principal and interest that accrue (called your arrears) will generally be added to the back side of your loan or spread out over the next 12 month period (raising your monthly payment). Sometimes a temporary interest rate drop is offered (for 1-5 years). This is considered a “temporary loan modification” and may sound like a good plan at first, but realize that this is a temporary fix that you will have to deal with again in the future. Once your forbearance period is over, the bank will expect to get paid all of those missed payments, plus interest, plus fees! Make sure that if you take this solution you get the temporary interest rate reduction along with it.
NOTE: A well developed proposal with proven income and a reasonable modification can be approved in this time period, but do not be surprised if the bank does not pay much attention to you yet. The point of a loan modification is to avoid foreclosure and since you are just entering into the negotiations, there is little sense of urgency from the banks point of view.
Homeowner Is 91-150 Days Late:
This is the period to get things done. Since you are doing this yourself, your chance for a successful loan modification is greatest during this timeframe. Somewhere during this phase a NOD will be filed and your lender(s) will become more desperate to come up with a solution. By now you should have your proposal completed and submitted to your lender(s) and your negotiating hat on. Your main focus should be a permanent interest rate adjustment, lengthening of your loan terms, a principal balance reduction to readjust your loan back down to current market values, or some combination of the three. This may not be possible for every homeowner, but should be attempted. Do not wait too long to agree on a loan modification…your bank may request a “good faith” payment and more paperwork which you want to avoid. If they request a few payments just to confirm you ability to pay, make sure they put it in writing that if you make the payments, the modification will be accepted and complete.
NOTE: Don’t panic if you loan modification is taking longer than expected. Many lenders will postpone filling the NOD if you are in the middle of a loan modification negotiation. The key is to start the process immediately after missing your first payment and continually pressuring your lender(s) for an acceptable resolution.
Homeowners Is 150+ Days Late:
Your ability to negotiate a loan modification is not over until the home has been sold at auction however if you are in this period, you should be contacting an Professional Loan Modification company like www.AdjustMyLoan.com. If you have not done so yet, you have very little time to submit your loan modification proposal to the bank. At this point, your ability to prove stable income at a level that is acceptable to the bank is your only hope for a loan modification acceptance. At this point, you should be considering a real estate short sale as a backup plan. A real estate short sale is the process where you can sell your house for less than what you currently owe. If you are located in the state of Arizona, and you want to learn more about a real estate short sale, go to www.ForeclosureCounseling.com/arizonashortsale.html.
NOTE: Loan modification guidelines change weekly and if you were denied a loan modification in the past, it might not be a bad idea to re-attempt it again, especially if your expenses or income has changed. Also, keep in mind that the bank will try to modify your loan to fit your exact monthly budget. Remember to include all of your hard and soft expenses and do not leave anything out. Many homeowners try and show the bank that they cut costs (which are a good idea when writing your hardship letter but not good for your INCOME / EXPENSE worksheet). Get rid of luxury items such as ATV’s and boats, but it is okay to have high soft expenses such as gas and food each month. Our end goal is to get your final mortgage payment affordable to you and this is achieved by being generous with expenses.
STOP…DON’T TRY AND DO A LOAN MODIFICATION ON YOUR OWN!
ALTHOUGH YOU COULD DO A LOAN MODIFICATION ON YOUR OWN, WE ALL KNOW THAT YOU BANK IS NOT GOING TO JUST OFFER YOU A LOAN MODIFICATION THAT IS IN YOUR BEST INTEREST! AT WWW.ADJUSTMYLOAN.COM, WE SPECIALIZE IN LOAN MODIFICATIONS WHERE OUR PROFESSIONAL LOAN MODIFICATION NEGOTIATORS PACKAGE, PROPOSE, AND NEGOTIATE A LOAN MODIFICATION ON YOUR BEHALF. WE UTILIZE A TRAINED REAL ESTATE ATTORNEY TO AUDIT YOUR ORIGINAL LOAN DOCUMENTATION (FORENSIC LOAN AUDIT) TO UNCOVER ANY PREDATATORY LENDING VIOLATIONS THAT MAY HAVE OCCURED DURRING LOAN ORIGINATION. IF ANY VIOLATIONS ARE FOUND, WE WILL HAVE MORE NEGOTIATING POWER TO GET YOU THE BEST LOAN TERMS POSSIBLE. DON’T LEAVE ANY TERMS ON THE TABLE. IF YOU WANT A PRINCIPAL BALANCE REDUCTION, OR A MASSIVE DROP IN YOUR MONTHLY PAYMENTS, HIRE ADJUSTMYLOAN.COM FOR YOUR FORENSIC LOAN AUDIT AND LOAN MODIFICATION NEGOTIATION NEEDS!
First becoming widespread in the 1990’s, many homeowners have been taken advantage by greedy loan originators and lenders who use predatory lending practices to maximize their own financial position! This together with low interest rates and our American culture of excess created the perfect storm that is now crushing the national housing market. AdjustMyLoan.com want homewners to be aware of these practices, and the laws put in place to protect you and your family. Our in-house attorneys are highly trained in both state and federal anit-predatory lending laws and in most instances can fight back stopping your foreclosure and in some cases put money in your pocket! A Loan Modification is the restructurin of your current loan terms in order to lower your monthly payments and keep you out of foreclosure!
EVOLUTION OF PREDATORY LENDING PRACTICES IN THE UNITED STATES!
According to the Neighborhood Works website there are 11 major reasons how predatory lending became so widespread. We will quickly list them below:
Consumer Credit Culture
Record-Low Interest Rates
Sub-Prime Industry Growth Boom
Increasing Home Values
Advent of Home Equity Loans
Consumer Demand for Home Improvement Loans
Record-High Homeownership Rates
Lack of Access to Regulated Capital
Unsure Consumers
Lack of Regulation
Unscrupulous Lenders & Brokers
This perfect storm is responsible for what is currently America’s worst housing crisis since the great depression. Predatory Lending along with Loan Modification will be the new buzz words as more and more homeowners realize the laws put in place to protect them as the search for solutions to Avoid Foreclosure!
WHAT PREDATORY LENDING PRACTICES TO BE AWARE OF?
Equity Stripping- This is where a lender takes a portion or all of a homeowners equity with no real benefit back to the homeowner. You are most sucseptible to equity stripping once you already are in foreclosure and a lender offers you a bailout loan!
Asset-Based Lending- This is where a lender gives a loan based on the equity in the home, or the rising appreciation rates currently happening in the area. They know that the homeowner’s ability to repay or afford the home loan is unlikely and will sell the home for a profit if the homeowner defaults.
Mortgage Flipping- This is where a lender continually refinances a home loan multiple times over a period of time with no real benefit to the homeowner. Each time they refi they eat up some of the homeowners equity by rolling high closing costs into the home loan.
Packing- This is kind of like when you buy a new car and the finance department tries to sell you a bunch of crap you don’t need (warranties). The same with packing…lenders pack in a bunch of insurances and fees for things you just don’t need without your consent or knowledge.
Foreclosure Rescue- This is typically from smaller institutions or investment companies that purchase a homeowners home at a discount stealing their equity before they lose it to foreclosure. They then rent it back to the homeowner with an option for them to purchase the home back at full market value.
Balloon Mortgage- A balloon mortgage has payments based on a 30-year amortization schedule with the unpaid principle balance due in a lump sum at a specified time, generally five to seven years. Borrowers believe they have applied for a low rate loan with low monthly payments. They learn at closing that it is a short-term balloon loan that will need to be refinanced within a few years.
Non-Disclosure- This is where your lender(s) avoid disclosing closing costs, fees, pre-paids, and interest rates in a timely manner. Each homeowner should be given a Good Faith Estimate and RESPA (Real Estate Settelment Procedures Act) special information booklet within three days of applying for a home loan. These forms explain a homeowners fees the borrower is likely to pay if they purchase a house. They also should recieve a Mortgage Servicing Disclosure Statement which discloses whether or not your loan originator is planning on servicing the loan or transfering it to another lender. Lastly, your HUD-1 which is the document that clearly states all charges involved in your transaction should be disclosed to you if requested the day before you actually close on the transaction. Most lenders to not follow these federal rules so their loans are in violation of federal law!
Bait And Switch- This is where your loan originator quotes you a certain low interest rate…maybe even shows it to you in your Good Faith Estimate. You then sell your current house, and at the closing table when purchasing your new home find out that your interest rate is considerably higher than expected. Your loan officer assures you that the bank switched it up but that with the way the current housing market is going you can just refinance in 6 months! Since you already sold your other home what choice to you really have? Then, the housing market crashes and you cannot refinance out of that high interest rate loan!
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