BankHelp.NET - Loan Modification - Short Sale Help

Loan Modification*

WARNING: There are many people out there offering to “Help You” with a loan modification for a fee. Collecting Advance Fees for Loan Modification Assistance is Illegal. Additional Resources are available at www.HUD.gov The Sinclair Group does NOT offer Loan Modification services for a fee, and we will never ask a Distressed Home Owner for payment up front.

What You Have Now…

When you received your loan from the bank you signed a “Promissory Note”. You borrowed money from a bank and promised to repay that money, plus interest with specific payment amounts and due dates for those payments (The “Terms”). All of the details of this agreement between you and the bank are outlined in your NOTE. A copy of this document with the word “NOTE” or “Adjustable Rate NOTE” in big bold letters across the top of it was provided to you when took out your loan and signed your loan papers. If you can’t find your Mortgage Note, you have the right to request a copy of your NOTE from your lender. While you’re on the phone, ask them for a “Loan Modification Package” (More on this below).

Your NOTE may have “Adjustable” or “Fixed” repayment Terms. No matter what the Terms of your NOTE, it is unlikely they included anything that says what happens if your property value goes down (or up). The Note does not include any terms that say what happens if your family income goes down (or up). How much are my payments? If they change, how much will they change? When will they change? What happens if I pay late? These are a few of the questions answered in your NOTE.

What is a Loan Modification?

When you request a Loan Modification from your lender you are asking them to Change the Terms of Your NOTE. It will help your sanity if you understand that they have No Obligation to do anything for you. Yes, they want to get paid for their investment (wouldn’t you…?) but if you are asking them to do something that causes them to Lose Money, why would they do it?

Imagine you have $5,000 to “Invest” in the hope of making money for your family’s future. You could Deposit it in a Bank CD and earn 4% interest over 5 years. You choose to loan a friend the $5,000 at 5% interest for the same 5 year term. You are now “The Lender”. To protect your investment, you secure the loan with your friend’s car. Two years later, your friend loses their job and the value of their car goes down to $2,500. Your (former) friend asks you to drop the loan balance to $2,000 and change their interest rate to 2%. You have a choice to make… Do you take the car, cut your losses, and sell it for $2,500…? Or, do you lose more money and give your unemployed friend a “New Loan”…?

Banks are in Business to MAKE MONEY! Put yourself in their shoes when you ask for a Loan Modification. If you find a way for your Request to make sense to the lender you have a better chance of getting it approved. Keep the following in mind when you present your request for a Loan Modification:

· Do you qualify for the new payment? (“Show me the Money”)

· Do you have enough money left AFTER your current expenses? (Reducing expenses once you get a loan mod is not a good way to show the bank you are financially responsible enough to keep this from happening again. Cut Expenses NOW!)

· Are you trying to stay in a house you can no longer afford? Be real with yourself. Your bank is a private company (not the government) they can’t stay in business covering for your reduced income.

· Why did you miss your payments? Most importantly, what has changed now that will allow you to begin making the new payments you are requesting? IF things got better several months ago, have you SAVED the money that should be going to your house payment? (again “Show me the Money”)

· Do you make enough to afford your payment WITHOUT a Loan Mod? Savings and retirement accounts looking good? Are you asking a For Profit Business to “Take the Hit” so you don’t have to? You might have better luck applying for a Short Refinance.

· ALWAYS ASK! After all this being said, there are things going on behind the scenes with the banks, the government, the investors that can result in any number of unbelievable requests being approved.

Remember, the bank will always act in their own best interest, but what is happening on their end may, or may not, be working in your favor. It is not likely you will ever know what is happening for them (unless you have a friend in upper management at the bank), so always ask. Things change from month to month. Show them that going forward you will be financially responsible, and you have the means to repay the loan under the new terms. You are basically asking for a new loan, so ask yourself… “If I was the Bank, would I loan me the money?”

The Problem…

As if things weren’t screwed up enough… Your “Lender” is overwhelmed with tens of thousands of requests from people just like you. Quite simply, they do not have enough people to handle all the requests. Applying for a Loan Modification is likely to be a long and frustrating experience. You will make call after call to find out what is happening. Many lenders are taking 6 to 12 months or more to approve (IF they approve) a Loan Modification.

To compound the issue, the “lender” who collects your payments may not even own your loan. Even if your lender is BofA or Wells Fargo, they might just be a “Servicer” (they collect payments) on behalf of the owner of your NOTE. To further complicate the situation… Maybe they do own your NOTE, but they own it as part of a Group of Loans. They may only own a “piece” of your loan. So the question is… Who gets to “Approve” your loan mod?

A Solution…

All that being said, DO NOT get discouraged. With a lot of patience and diligence, it CAN be done. Hundreds of Loan Modifications are being approved every day. Here are a few suggestions to make things a little easier (they will still be harder than you expect):

· Start by requesting a Loan Modification Package from your lender.

· Review notes above in the section “What is a Loan Modification…”

· Complete EVERY question and provide all pages of EVERY piece of information requested on the Loan Modification Package.

· DO NOT send in pieces of the information requested. They are unlikely to make a decision with only pieces of information, so send it all together.

· Remember that your spending habits are likely to be reflected on your bank statement… Large deposits or withdrawls? How many times a month to you use your debt card for Starbucks? The Beauty Shop? The Corner Bar? iTunes? Walmart? Web Purchases?

· Keep Copies of EVERYTHING you send AND everything you receive. Plan on needing to send some things more than once.

· Take detailed notes or every communication you have with your lender. Who did you talk to? What was said?

· After applying for a Loan Modification, save copies of anything that changes with time… Bank Statements, Paycheck Stubs, Tax Documents. By the time your lender approves your request, the documents you provided in your original package will be months old and outdated. They WILL ask for updated documents.

· Remember some things do take time… An appraisal may have to be done. It takes time for your file to move through an overcrowded system. Every time you call, ask when you should follow up next. Expect that YOU will make the phone calls through this process.

· Ask for a manager! Although not always, the person answering the phone is likely to have limited experience and be working in a system that is not all that efficient to begin with.

· If you follow these suggestions, your loan mod may happen much sooner, but plan on the process taking up to a year.

· When you get frustrated and want to give up… Ask yourself “How Bad do I really want to stay in my house?”

In 2009, the government created the Home Affordable Modification Program. The program assists homeowners with modifying their mortgages in order to make their monthly payments more affordable and avoid foreclosure. To qualify for the program, you must have obtained your primary mortgage before January 1, 2009, owe less than 729,750 on the first mortgage, and have payments larger than 31% of your current gross income. More information about the program is available at the Department of Justice website. If you do not qualify for this program and are unable to get a Loan Modification from your lender, consider the benefits of a Short Sale.

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