Learn How to Obtain a Loan Modification From Your Lender

Released on: September 23, 2007, 7:47 am

Press Release Author: Moe Bedard

Industry: Non Profit

Press Release Summary: When applying for a loan modification, make a game plan on
how exactly you are going to approach them. These people are trained in minimizing
loss for their company and they get paid to by getting the most amount of money out
of you as possible or declare that your case is un workable and foreclose on you.
That is how they mitigate loss. If you understand this, then you\'ll know that you
have to approach them and all conversations very carefully. Everything can and will
be used against you.

Press Release Body: A loan workout is an agreement that is negotiated with your
current lender that changes the terms of your current loan. Lenders are willing to
negotiate when borrowers are facing financial difficulties and can\'t obtain other
financing alternatives. You must show the lender why it would be in the lender\'s
best interest to agree to a workout arrangement. If convinced, a lender may be
willing to reduce the loan interest rate, reduce monthly payment amounts or change
other loan terms.

A loan modification generally occurs where the parties to a problem loan mutually
agree to workout the problem by creating new and better loan terms. The hope is that
the new loan will enable to the borrower to meet their obligations.

When applying for a loan modification, make a game plan on how exactly you are going
to approach them. These people are trained in minimizing loss for their company and
they get paid to by getting the most amount of money out of you as possible or
declare that your case is un workable and foreclose on you. That is how they
mitigate loss. If you understand this, then you\'ll know that you have to approach
them and all conversations very carefully. Everything can and will be used against

Items You Will Need When Applying For a Loan Modification

Document income and expenses. Keep all correspondence (even the envelopes) Before
negotiating a deal, gather all the information you need, starting with any
correspondence from your lender. That includes anything that you have unopened from
the lender. Don\'t throw away envelopes from the servicer -- postmarks sometimes can
make the difference between being eligible or ineligible for relief.

Collect everything that relates to income and expenses. Find your last four pay
stubs. They want to see at least one month of income. If your income is very
sporadic, the support your story by showing how you\'re getting paid so we can
calculate an average over time. Gather at least three years worth of W2s and tax
returns, plus three to six months of bank statements. Find all the mortgage
paperwork and add that to the file. Pull together all bills, paid or not, from the
times you were falling behind on the house payments until now. Include utilities,
auto payments, credit cards, student loans, child support, medical bills. Find the
winter and summer heating and cooling bills. You need to also include everything
that documents why you fell behind. An employer\'s notification of reduced hours or a
layoff, an invoice for an auto repair or a furnace replacement, a shutoff notice
from a utility.

What to Do When You Call Your Lender:

Your lender has two platoons of employees who talk with delinquent borrowers. The
first is the collections department, which consists of people who try to pry money
out of you and get you current on the payments. The second group consists of the
loss mitigation specialists. These departments go by different names, depending on
the servicer, including foreclosure prevention, loan resolution and delinquency
customer service. We\'ll use the most common name for the department: loss
mitigation, or loss mit. It can be difficult to get through to the loss mitigation
department if collection agents are discouraged from transferring calls. This is one
of the benefits of having a helper, such as an attorney or a housing counselor. The
first will intimidate bill collectors and the second might have contacts within the
loss mit department.

The trick with any bank and getting a work out done is learning to navigate their
phone system so as to increase your chances of getting a live person. Over the years
Ive learned some tricks that help, sometimes you hear options that you know will
lead to a person like when it says \"to speak to a representative press ___\" but
sometimes they don\'t give you these options (cricket wireless is the worst at this)
so you have to think, what options WOULD get a live person. For example often
anything that involves new clients signing up will get a live representative...cause
they always want new business. You have to be a little savvy though, you cant just
tell the sales guy you called them so you could get a warm body to answer the phone!

Once you get a live person, you want to be working your way up to a decision maker.
This is sometimes harder to do for a homeowner than a 3rd party. Often with the
homeowner they get stonewalled at the first level, and sadly the first tier in Loss
Mitigation is really a glorified collections department. They are paid hourly
employee\'s who have very little if not zero motivation to go the extra mile and help
you get some needed comfort and relief while resolving your problem. Often they just
compound the problem by being rude and demanding, telling people things like \"just
pay your bills\". So its essential that you get beyond these people and to a

Sometimes to get to this point you have to put up with the hourly employee\'s through
a process of filling out their forms and information. Providing them with items such
as pay stubs, tax returns and a whole host of financial information. Once everything
is provided, then some lenders will assign the file to someone higher up in the loss
mitigation department.

The MOST crucial element to this whole process is your Budget and if you have dome
your due dillegence, you\'ll be ready . They will ask you for a detailed list of your
monthly expenses. If its too tight, you may not get approved, if you have too much
extra income you are going to have an outrageous payment plan. Don\'t agree to it!

The 2nd MOST important thing you can do is DO NOT SPEND YOUR HOUSE PAYMENTS. Often
people stop making their payment because they are falling behind on other bills, or
they cant quite make the whole house payment. Over the years more often than not,
the people I met with still have an income coming in each month, they just cant meet
all their obligations, so while the house is falling behind they take advantage of
the fact that they aren\'t paying the house payment in order to catch up on other
debts. THIS IS NOT WISE AT ALL. Sock away as much of that money each month as you
can. Its crucial, heres why;

If you don\'t pay your mortgage for 3-4 months and your lender decides to negotiate a
repaymenyt plan or a loan modification, then they will want what is called \"good
faith\" money for you to come to the table with. Typically this is from 30-75% and
sometimes 100% of what you owe in delinquent fees and attorney fees. Often I speak
with homeowners who spend all their money and have nothing to work with. If that is
the case, then don\'t expect them to work with you or you better have a REAAAALLLY
god explanation and proof as to why you have no money to bring to the table.

We all know life throws curve balls at us, its the nature of the game, you\'d better
just expect it, cause its coming in one form or another. Whether it be a car
breaking down, an illness, injury or death. An accident in a car, you just don\'t
ever know and its ALWAYS a good idea to have a rainy day fund. The crazy thing about
going into foreclosure is that you can actually come out of it better off than you
went in sometimes.

Is it Better to Just Walk Away and Start Over?

Many homeowners are just in over their heads. Many they love their home and their
family does too. But what good is it when you are so stressed out that you cannot
enjoy your home. Your maxed out and you don\'t have a dime to take the kids for an
ice cream or the movies. That\'s no way to live. This is a serious time to really sit
down and see if it\'s all really worth the stress and heart ache. If it\'s not then
maybe it\'s time to just thorw in the towel and down size. Get something you can
afford and enjoy. Just close the door on this time in your life and move on. Sure,
it will affect you for years, but place your health and well being before making a
house payment. If this is you, you\'re not alone. Think about it. Is it all really
worth the pain and stress? You\'re already down, maybe it\'s time to just move on and
take that money and get a nice little place to rent and regroup.

By saving up your payment for 2-3 months or more depending on the foreclosure time
line in your state, you can not only have enough to put together a really nice plan
with your lender, but also have some in the bank for a rainy day or worse case
scenario, a rental. Often payment plans with the bank can be pricey and very short
terms, like 6 months total to repay what you fell behind on. The people iI have
worked with who took my advice to save up and keep some funds in the bank, were
successful 100% of the time at keeping their home. Because they were prepared for
life\'s curve balls. Even though they had fallen behind in the past, if they had an
expense one month, they just pulled a little from the slush fund in the bank to help
supplement their house payment that month.

The Lender Has Made You a Deal, What Now?

Respond to your lender, but don\'t be rushed into making a promise that you can\'t
keep. Before making a deal with your lender, describe your situation to an attorney,
accountant or a knowledgable mortgage person. You need to make sure that it is
reasonable and not an agreemnet that will stop foreclosure for a month or two.

Many lenders are likely to offer a forbearance. Theses are only good for a short
term band aid and not for the long term. Most commonly, this entails adding a set
amount to each month\'s payment. A forbearance plan can go as long as 36 months. But
many are set to fail and are completely unreasonable for borrwers to pay back.
Usually this will require palcing the delinquent amount on top of your monthly
mortgage payment. If you had trouble making your mortgage payment before, good luck
paying your new larger more unaffordable payment.

If all else fails, seek out a third party to handle this for you. There are many
non-profit housing counselors, attorneys and for profits that are very experienced
in loan modifications and loan workouts.

Plan to arrive at an agreement, but prepare for the unwelcome news that you\'ll have
to move out. If you turn over the deed in lieu of foreclosure, or agree to a short
sale (in which the lender lets you sell the house for less than the mortgage
balance), or are forced out in a foreclosure action, you\'ll need to consult a lawyer
and maybe an accountant.

Don\'t give up and fight to stop foreclosure and save your home! If all efforts fail,
it\'s not the end of the world. Just make sure that you mitgate loss to you and do
your best to save what little credit you have left.

Good Luck!

Web Site: http://www.LoanSafe.org

Contact Details: Moe Bedard

Founder & Homeowner Advocate
951-271-6283 Direct
800-734-8819 Fax
Moe at LoanSafe.org Email

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