Loan Mod TV | Hardships and Questions

Recorded Live: Jan 28, 10

Here is the transcription of this class. Enjoy!

 Ryan Rockwood:  Hello everyone and welcome.  You know, I really want to start out by saying unfortunately we’re really behind in our correspondence to people. If you’re watching tonight and you’re thinking gosh, I just haven’t got an email back.  I bet I’m five days behind and I’m very sorry about that.  Hopefully, I’m going to catch up this weekend.  So anyway, let’s start off on that note.  Welcome to the members of the Loan Modification Teleseminar.  I’m a little sick so pardon my voice, but I’m here with my father and business partner, Mike Rockwood and of course we do these calls to — and actually we have a third class now each week for out Credit Card Cure and that’s to help you eliminate your own credit card debt.  So really we’re on three days a week now.  This is a form where if you have some questions, you can go ahead and jump on that chat.  You can send your questions to questions@60minuteloanmodification.com or you can use the telephone number, the e-mail, actually call in and we’ll see if we can take some questions tonight.  Hopefully that will work out.  Okay, so welcome to the show tonight.  We’re going to talk about hardship letters and we’re going to take your questions and you know even though it’s hard to know if this is interesting to members or I mean because certainly we’ve got over a million times but a lot of people are maybe new to the call and might be wondering about it.  So if you’re wondering why we’re covering it again.

 

 

Mike Rockwood:  Well, the main reason I wanted to get, we need to get to tap into the audio guys.  The main reason that I push to have another session on hardship was because twice in the last week, I’ve had the experience that I related to you guys in the past and that is where you’ll — I was talking with a client about a short sale and happen to talk a little bit about loan modification and they made the statement that well, you know, we really don’t have any hardship.  You have to really have a hardship and have it, and then just pushing a little bit on and probing a little bit, came to realize that they had very significant hardships.  So I think — I asked Ryan that I think it’s time that we remember that we have to keep going back to basics all the time because a lot of people have misconceptions about a lot of the basics about loan modification.  So let’s talk about hardship and what qualifies as a hardship, what qualifies you for a loan modification.

 

But first of all before we get too far along, we want to be sure that you understand that we provide this information as a service to our clients and that we are not attorneys and that the advice that we provide is just really reporting about what we see and what we hear in the business of doing loan modifications.  We are not tax advisers.  We are not CPAs.  So anything that we say with regards to taxes really is just repeating what we have been told from clients or had experienced on our own.  You should consult a lawyer or a CPA with any specific questions about the legalities or about the tax consequences of your situation.

 

Now, Ryan and I are realtors in Southern California and we are also fulltime foreclosure experts.  We do seminars and we produce products and we work on loan modifications and we help people with deed in lieu applications.  We do just about every type of foreclosure workout there is.  So we kind of follow the market into really being foreclosure experts here in Southern California and if you’re here with us tonight, it’s because you’ve purchased some product from us so we kind of cut to the chase a little bit and get right into questions and get right into our topic of the evening, okay.

 

So we’re talking about hardship and what qualifies as a hardship.  First of all, the hardship letter itself used to be really a significant part of the application process and we would go to great lengths to craft nicely worded hardship letters and we would always recommend that clients hand write their hardship letters.  Now we still do, but in the acceleration of things, as things have gotten so crazy busy in the last year with sometimes as many as 10,000 applications in a single day for loan modifications.  All of the lenders have really streamlined the process and they have most of them settled on either a brief explanation — asking for a brief explanation of your hardship and they’re really looking for keywords or they actually give you a checklist and ask you to sign an affidavit that this is indeed your hardship.  So I mean they reveal to you what the 10 acceptable hardships are and they are the things that you would expect, a death in the family, divorce, a reduction in income, lost of hours at work, no more overtime, no bonuses this year, illness, time off work et cetera, et cetera.  So anything that impairs your ability has impaired your ability to make your mortgage payment is a legitimate hardship.

 

I want to go over some of the more kind of — the ones that are kind of on the fringe because I want to jog your thinking a little bit and help you realize where some of the hardships can come from.  Sometimes I encourage people to think through whether or not their child care expenses have increased or their elder care expenses have increased.  Just last week I had a client.  I have been working for them for quite a while telling me that he forgot to relate to me earlier that he and his wife were spending two weekends a month driving all the way to San Francisco to care for her mother and that all the kids were kind of chipping in and this was their portion of the support.  Well that’s a significant expense just being away from home and traveling as well as the time spent caring for their mother.  You know they really could hire out and pay probably you know $1,500 a weekend for.

 

So think about whether or not expenses have gone up, whether or not your mortgage has adjusted and gone up, your adjustable rate mortgage whether you’ve had some reduction in your income and that could from a reduction in hours or the loss of one of your jobs.  I can’t believe how many of our clients have two and three jobs.  It’s really amazing how hard all of us are working just to keep up with all these debt loads that we’re caring.  But at any rate, what we want to emphasize to you is that hardship is a real broad category that has become really just a gating factor for a loan modification.  Sometimes indeed after really pushing and pushing and pushing, we just can’t find a hardship.  A person doesn’t have a hardship and in fact you are SOL, you’re out of luck.  You can’t get a loan modification without a hardship but 9 out of 10 times when we interview clients, we can find that hardship because usually what brings people to us is they’re having difficulty paying their mortgage so you kind of peel back the onion ask question after question as to exactly why is that high credit card debt is reduction in your hours at work or just what is it that’s causing you to have trouble making that payment.

 

So more and more, we’re encouraging people to use those affidavits, and we’re encouraging people when they are asked to craft a hardship letter to be just that brief and just use those keywords.  So Ryan really coaches people on just using, my hardship has to do with income reduction, job loss, reduction in hours, increase expenses.  So just be very, very clear and then we always like to hang a very specific number on it.  So if your income has decline by 20%, we’d like to say that or if an expense had — you’re now encouraging — incurring about a $1,000 month in elder care than say $1,000 or say what a percent that is of your income so that they have some sense of the magnitude.  But realistically, here’s what happens.  When your file shows up, it gets passed to a number of people that are screeners and these are administrative people that really are trained in looking just for one thing.  When it gets to the hardship person, he takes your file and he has a good understanding of this hardship checklist and he will read through your hardship letter to find those keywords and when he finds them, he will check them.  He will take that checklist and include it in your file and pass it outside of his department.  So it’s really that simple.  They’re just looking for keywords and they’re looking for you to attest to the fact that that is true, all right.  All right, I got questions right away.  Do you want me to take mine or have you got some coming in on my email?

 

Ryan Rockwood:  I do have a few in my e-mail.  Up to you which ever one.

 

Mike Rockwood:  Right.

 

Ryan Rockwood:  I want to try to cut tonight a little bit short because I’m a little bit sick but…

 

Mike Rockwood:  Hey, I don’t know if we told you but send in your questions to questions@60minuteloanmodification.com.  All right, Neil wrote in to just about half hour ago.  “How can I get my second mortgage lender to just settle with me?  If I sell the home short, they will only get about half of what they are owed, so this is the second mortgage.  Why not just settle with me for that much?”  Neil, I think you know you’re applying logic to the whole thing and that’s always dangerous, number one.  Number two, what you’re saying makes a ton of sense and I think if times were different, you might be able to get that kind of a settlement and maybe in a year or so you will when principal reduction and settlements like that are more common.  But right now there are still great deals of resistance to principal reductions.  I know there’s a lot of talk very recently about how principal reductions would help all of us to stay in our homes long term rather than just the short term interest rate reductions.  There’s some movement to spend some of the bailout money doing that but so much more bailout money would be needed if we’re going to really take our program like that.  So here’s — I can’t really say why you, I don’t think you’ll be successful in getting that settlement unless of course your second mortgage is just 10 or $20,000 but if it’s like most of our seconds and it’s $100,000 or $300,000 it’s just not likely to happen because then the bank has to accept that loss and currently what they’re doing is they have it on their books as a full asset for the full asset value and because you’re making monthly payments, they carry it on their books.  So it’s a really big deal for them to write off that much money.  So I just don’t think you’ll be successful.

 

Tom says, “The fact that this home is now over $100,000 underwater and that this loan is interest only, those are my two hardships.  Nothing has really changed in my finances but I’m just so stressed out about paying so much for something that is now worth so little.  Will Aurora,” his lender, “consider a loan mod in my case?”  Okay so here’s the situation Tom is making a point to us that because his home has declined so much in value and he’s only paying interest only so he’s not even buying the bad asset.  So number one, it’s a bad asset.  Number two, he’s not even buying it.  He’s just basically renting the money that he overpaid on it so he stressed about that and he wonders if that qualifies as a hardship.  Nice try Tom but no, it actually doesn’t.  If nothing has changed in your finances, really the value of your home is really irrelevant in the loan modification application so as much as that seems right, a loan mod is not for you if really, if nothing has changed.  If you’re $100,000 underwater and that’s a significant amount of the home’s value which it’s got to be unless it’s — if it’s a $2 million home then that’s not so bad but if it’s a $300,000 or $400,000 homes like a lot of those in Southern California that are $100,000 underwater, it’s not going to recover during the time that you own it, you’re not going to recover that value so you really should investigate a short sale.  Remember we would love — Tom, remember we would love to do the short sale for you especially if it’s in Southern California, but really in any state that you’re in.

 

Ryan says, “How can I know if my lender will sue me for the amount left after my short sale?  If they will not then, it seems like a good option.  We owe much more than the home is worth.”  Well, that’s good, clear thinking.  You do have to get clarity on that before you decide on your workout option.  There really are — those two things are absolutely imperative that you did clarity on.  One is are you vulnerable, liable for deficiency judgment and the second is what are your tax liabilities if the bank forgives a major part of your debt?  The beauty of those, both are that you can get absolute clarity, 100% clarity by visiting with an attorney.  Now, I’ll give you just a little bit of my own advice but the absolute — the way to absolutely nail it in your instance is just to dial a local attorney and have him look at your loan papers for you.  Here’s the situation.  You can be held personally liable for debt even if the collateral, the house, even if that has declined in value, you can be held accountable for the shortfall in some states under some circumstances.  Now many, many states, I think it is 33 or 34, are non-recourse states.  So if the loan you’re talking about is the home that you’re living in, then you very likely are not going to be held personally liable.  There are some exceptions on second mortgages particularly if you refinanced a number of times which so many of us have done, use the home like a piggy bank in order to finance other ventures.  So you can really only nail that answer by getting a specific answer from your attorney on your situation.  So that’s what I recommend.

 

Okay.  Then Jill asks, “Is it always best to say just a little about your hardship?  The book says to be brief and all of the examples are very brief.”  Yes Jill, brevity is best here, number one because they are cranking through so many files.  They’re just looking for keywords.  You might as well just cut to the chase and just use those keywords.  Actually two or three sentences is plenty but most people don’t feel comfortable with that.  They want to give a good explanation of the hardship.  So yes, keep it very brief.  It’s always best.  Honestly in general, in dealing with negotiations, brevity is best because when you’re talking and when you’re giving away information, you’re doing just that.  You’re giving away information and then in negotiation information is power, right?  So in general you want to just apply information that you’re asked for and in every conversation and in every way, be as brief as you can.  Less said is always better when you’re in the negotiations and you are.  Believe me right from the start.  Don’t believe any of the propaganda that you believe about — they’re not trying to make your home affordable one bit.  They’re really trying to mitigate their losses, all right.  I’m going to keep rolling or are you answering on email instead of sharing with our friends?

 

Ryan Rockwood:  Well, actually I do have a question that I’d like to share.

 

Mike Rockwood:  All right, go ahead.

 

Ryan Rockwood:  Teresa wants to know how she can schedule an appointment and the way to do that is to schedule an appointment to talk and in case you don’t know, every kit that we sell comes with a free 20–minute call.  Even if you haven’t done that or purchase the kit or if you want to talk more, you can always go to 60minuteloanmodfication.com/schedule and there’s a drop down arrow at the top left of the screen there.  Actually, it takes a minute to load so be patient.  There’s a drop down thing there on the left and you can select the product whether it’s a free consult or it’s a paid time or something like that.  What will happen there is that it will allow you to select the time and then it will come to us and we’ll either approve it or deny it based on what else we have going on.  Okay, so…

 

Mike Rockwood:  That’s usually — that’s really a value.  People really like that.  I mean, because you pay a little bit so you don’t feel like you’re asking for more than you bought from us and we don’t feel abused either, and you get to tap in to all of our experience with loan modifications or any foreclosure-related question, whatsoever.  It’s really a pretty darn good value.  I mean, where else can you, for that little bit of money, get — I mean you get professional help but what’s nice about our help is that it is so current and so up-to-date.  I mean, we will literally be turning away from a loan mod application to talk to you.  I mean that’s what we do is the loan modifications all day long.  Okay, here’s a good one.

 

Ryan Rockwood:  And someone just did it.  So we’ve got a 10:00 am tomorrow.

 

Mike Rockwood:  Okay.

 

Ryan Rockwood:  Okay.

 

Mike Rockwood:  Dan says, “My lender just approved our short payoff application without any cash from us and my brother is trying to get his short sale approval.”  Yes, this is a Florida deal.  This is an interesting one.  Dan and his brother bought homes right next to each other from the builder before they were done and before the builder finish the homes, the builder went bankrupt and stops development.  So Dan says, “My lender just approved our short payoff application without any cash from us.”  Congratulations, Dan.  “But my brother is trying to get his short sale approved right next door same floor plan, same issue but the lender wants him to accept a $50,000 promissory note.”  Now for — and he says why is this and what can he do?  Well that might be shocking to some of you but some of the values in Florida — I mean I know this one was originally like about $650,000 gorgeous home that is now selling for about $145,000.  So I mean this is like an extreme example of the decline in values.  So sometimes when the lender, and sometimes when there’s a private mortgage insurer involved, the negotiations get pretty heated and the lender or the insurer will turn the screws on the owner to accept some portion of the shortfall.

 

Now, in this case I think it would be about, they’re asking for 50.  I think it’s like 250 so it’s like 20% or so of the shortfall and that’s not unusual at all for them to be asking for 20%.  A lot of times the promissory notes are extended over a 15-year period and there’s no interest so the payments are pretty minimal.  Honestly, Dan, it doesn’t sound so extraordinary and the reason that it happened was because your brother has some assets that you don’t have.  Either he has a high paying job or he has a lot of assets that are not protected by a trust fund or social security or pension funds.  He has some assets and the lender or the private mortgage insurance company can see it.  They have amazing information technology capabilities to find out information about you and so they have decided that they want to, rather than just let the deal go through like yours was allowed to go through, they want to turn the screws on and get some of the money out of him.  They’re probably pretty much prepared.  Very likely, they’re prepared to let the deal fall through because they sort of feel like, “Hey, if we get this deal now, we can get another one in a month or two.”  They’re probably right.  So he might just be stuck.

 

Honestly, a lot of folks are actually accepting those kinds of deals that and a lot of our Florida short sales come along with the buyer either bringing some money to the close — or the seller bringing some money to the closing or accepting a promissory note.  Remember then that becomes an unsecured note.  It becomes an unsecured loan just like a credit card.  So I got to be honest with you.  Some of our clients are accepting those knowing full well that that’s not collectible, like some of our clients have absolutely no assets that are not protected by a pension, no assets that are not protected by social security or a trust fund.  So they’re really not afraid of an unsecured promissory note and the ability of that bank to be able to collect that from them.

 

All right, Bob says, “How do I know how to price my home for a short sale if the lender won’t let me know how low they will go?”  We’re getting a lot of short sale questions on our loan modification evening.  Well Bob, you don’t know and the lender will not tell you.  In fact, they usually don’t even want to talk to you in the short sale department until you have an offer.  They don’t know because they don’t know.  They won’t tell you because they don’t know.  They honestly don’t know until you have an offer, a current offer that they can send a local agent out to do a broker price opinion and figure out if that offer is reasonable, and then they begin to run the numbers on whether the implications of accepting it.  So there’s one thing about whether or not it’s reasonable and here’s — maybe this gets to the heart of your question is what’s reasonable. I always say that any offer that’s within 10% market value is reasonable in a short sale.

 

So here’s what you do.  Ask your realtor to do a broker price opinion themselves or what they might call a CMA, Current Market Analysis, and price the home 10% below that.  If that doesn’t get you an offer within two weeks, then drop it another full 10% because remember the key is to get that offer from a good qualified buyer. Even if it’s an investor who’s just looking for a great deal, the bank may be very interested in doing a deal and may just approve it and after all you don’t care because it’s a short sale after all.  The only one who cares is the bank.  Okay.  Am I going to keep going?

 

Ryan Rockwood:  Let me jump in with a couple of -

 

Mike Rockwood:  Okay.

 

Ryan Rockwood:  – questions.  Let’s see.  Maria B. has a question.  “Six rental properties, I bought three of them as a primary home not an investment.”

 

Mike Rockwood:  Yes.

 

Ryan Rockwood:  “How will the mortgage company know if I don’t live there anymore and how like [Indiscernible] [0:25:29] is it what they want proof?”  It’s a likely scenario.  “I am a member and would like to watch previous Thursday night recordings.  Can I do that online?”  Yes, you know where you can get the recordings right now is go to 60minuteloanmodification.com and in the very top in the menu bar is something that says something like Articles.  You click on that and unfortunately you just actually have to go back and go through them.  They are organized.

 

Mike Rockwood:  It’s in the Articles file?

 

Ryan Rockwood:  Yes.

 

Mike Rockwood:  Is it?

 

Ryan Rockwood:  Yes, everything goes there.  Every blog post, everything.  So it’s like reverse chronological order.  So you can get that there and just when you get down to the bottom of the page, it will be something like view last or view next or something like that.  So go ahead and check that out.  The transcripts are there more and more as well.  So enjoy that.  She needs to schedule of real estate owned.  You know, you can find that in your black belt CD.

 

Mike Rockwood:  Yes.

 

Ryan Rockwood:  While we’re talking here, I’ll see if I can just find it on my computer that I have right here and e-mail it to you.  I maybe lost the CD or something.  Then, but the major question is here’s what they want to going to know.  The question here is can you get away with — I think what you’re asking is can I get away with doing multiple primary homes as the investment property thing?  The answer is I’m really not sure.  I don’t know.  Here’s what they’re going to want though.  They’re going to run a utility bill in your name, okay, and you either going to want to sign legal affidavit from you saying that it is your primary home.  So to be honest, it’s totally believable to me that you could get two primary or three primary property HAMP loans even from the same bank and it’s totally believable to me that you can get them from separate banks.  But -

 

Mike Rockwood:  But that’s going to be your call.

 

Ryan Rockwood:  Yes.  But I just don’t know.

 

Mike Rockwood:  Yes.

 

Ryan Rockwood:  Yes.  Okay, she also asked, “She gave us a formula that we can calculate what you expect from a loan mod.  Take the loan amount multiply it by 0.055 divided by 12, et cetera but my loan is an interest-owned.  How do I calculate that?”

 

Mike Rockwood:  Yes.

 

Ryan Rockwood:  “I have six properties.  Three have arm that are interest only rates are 3.25, 3.65 and 5.125.  They adjust annually which I asked for how much of relief should I ask for?”

 

Mike Rockwood:  Yes.  That’s a good question.  Hey, you know the key though is you’re not going to get significant month-to-month relief, but how much of a relief would it be to have fix mortgages on all of those because we’re coming up on — there is no way that we’re not going to have higher interest rates in the next five years and probably for the next 10 years.  There’s just no way that can ever happen, so try as the government might to suppress that.  It is absolutely coming our way so we’re going to see 10% and 12% mortgages again within five years.  So walking in those adjustable rates is a beautiful thing even if you don’t get any — you don’t get much relief Maria.  So I’d be all about that if I were you.

 

Ryan Rockwood:  Okay.  So the answer to your question Maria, how can you calculate it?  The truth is that, I mean these are really good rates and these are industrial properties.  So I mean your chance, frankly, aren’t looking too good.  If you — now that’s not just saying don’t try, but I think that the very best you could hope for would be 30–year fully amortized payments around that amount.

 

Mike Rockwood:  Yes, around 4.7 or 4.8.

 

Ryan Rockwood:  Yes.

 

Mike Rockwood:  But you know, I think you’ll accomplish your goal.  If you just have realistic expectations, it will be plenty of work and you will only get a modification to a fixed rate but that’s worth it.  That’s worth doing.

 

Ryan Rockwood:  Okay.  Now, I’m going to send her something, so why don’t you do it.

 

Mike Rockwood:  Okay.  Joan says, “We have been waiting for weeks to hear about our mod.  Now, Saxon says they won’t even offer a mod after all this time because the home is rented.  Is there any way around that?”  Yes Joan, there is.  Saxon is one of about three or four lenders that really tries not to do any other than the Making Homes Affordable Loans but they do have an in-house staff.  It’s actually quite considerable and I have personal experience getting around it.  So what I did is I just kept pushing and pushing and asking for an in-house modification expert negotiator.  You might have to escalate it to a supervisor or you might have, I hope that you have gone late on your mortgage because if you haven’t, there’s no way in heck you’re going to get their attention.  But what I did on my own property, I just went late until they would talk to me and late until they would talk to me about modifying a rental property.  So yes, there is a way around it but it’s harder at Saxon.  It’s harder now at IndyMac and it’s harder at AmTrust and a couple of others.

 

All right, Sheldon says, “How can I get a Deed in Lieu?  From what I’ve read that seems to be the best solution for me and for Wells Fargo.”  Well Sheldon, it is a great solution, a Deed in Lieu of Foreclosure is when you just turn the property over to the lender and they don’t have to take it through the foreclosure process.  You don’t get a foreclosure on credit.  They get the home a lot faster and they save a lot of money.  So it’s faster.  It’s cheaper.  It’s better for your credit.  But it doesn’t work very often for a number of reasons.  Number one is a lot of people have second mortgages or other leans on the property.  If they take it without foreclosure, those leans don’t get stripped away.  So that’s one issue.  Another issue is through the foreclosure process and the real estate owned process, they have all kinds of safeguards in place.  There’s an agent involved and he’s got an insurance policy, and there is an inspector involved and he’s got an insurance policy, there’s an appraiser involved and he’s got an insurance policy so there’s a lot of insurance for them that the property is taken correctly.  They don’t have that infrastructure in place to take property directly from you, so it’s not as safe for them to do so.  So I think that’s another reason Deed in Lieu is not being used very often.  Then the last one of course is that values have fallen so dramatically that the property is usually worth considerably less than it’s owed.  Very often the bank would just assume go through the short sale process to get good appraisals, inspections, et cetera.  Okay?

 

Then Mel says, “Why do the few percent of loan mod applications that are getting approved,” there’s been a lot of press about that lately, “why do they get approved?  Are there tricks?”  I would say to Mel, you should have listened to us on Tuesday night.  Go back in the archives.  Tuesday night will be posted, right.  Go back and watch Tuesday night.  We talked about eight specific good, good, good tricks, great ones that I recommend for why I think it is that my loan modifications, 96% of mine that I’m working on are getting approved, although I did get just get turned down today, but 96% are getting approved as opposed to 96% getting denied.  So there are tricks and I’ve divulged all of them on Tuesday.  You know what?  I think I posted that too.  So you’ll both be able to see it if you want to or you can just download it and read it.  I posted it as a blog post and I’m sure it was something like something having to do with 96%.  Yes.  Why are 96% — no, it’s about Loan Mod Mercenary and it was posted on Tuesday night after the show.  All right, Mel.

 

Ryan Rockwood:  All right.  We’ve got a question here from Lizette who says that the lender is not allowing her to — they say no to the loan mod and the reason is because they have not paid in 12 months.  Have you heard of that?

 

Mike Rockwood:  No.  That’s a phony answer.  There’s another reason why.  They’re just giving you a hard time about not having paid for 12 months, but there’s another reason why you’re not qualified.  If you live in the home and you qualified for the making homes affordable program, I think you can argue your way back out of that one point.  There are some other reasons why they’re rejecting.

 

Ryan Rockwood:  Yes.  I mean here’s the thing.  You want to make sure that you didn’t just get a collection call from the bank.

 

Mike Rockwood:  Yes.

 

Ryan Rockwood:  I mean, they might have just said it.  No, no, this isn’t the load mod.

 

Mike Rockwood:  Yes.

 

Ryan Rockwood:  To tell you, you don’t qualify because you haven’t paid, perhaps, a month.  Now, there was something about not being over three months late.

 

Mike Rockwood:  Yes.

 

Ryan Rockwood:  Do you remember that?

 

Mike Rockwood:  Yes.  But honestly, I’ve heard that, read that, but it hasn’t been my experience so -

 

Ryan Rockwood:  Yes.

 

Mike Rockwood:  – I just have to discount it.

 

Ryan Rockwood:  Okay.

 

Mike Rockwood:  We get plenty of people who — I’ve got several that are almost a year without making a payment and they get a modification.

 

Ryan Rockwood:  Then, I have had some clients who paid up to get under the three-period or three months and they got denied again.

 

Mike Rockwood:  Yes.  So Lizette I would just say keep pushing, pushing, pushing.  That answer isn’t good enough, call back.  I always recommend you call back five times, talk to five different operators and just say, “This doesn’t make sense to me.”

 

Ryan Rockwood:  Yes.

 

Mike Rockwood:  “I don’t understand it.  Please can you help me?”  Then if that doesn’t work, ask for a supervisor to call you back.  If that doesn’t work, send a Qualified Written Request and then, of course, you have to kind of check your own sanity and think about if you haven’t paid for in a year, you’re playing a high stakes game there.  So I hope you either fully intend to lose this house, or if you fully intend to keep it then what do you care if you are required to because imagine if they refused you for a loan mod, they offer repayment program.  So if you plan to keep the house and you think you’re going to keep the house then you don’t care about, a repayment plan is okay to get you back on track, right.  So if, on the other hand, you are just getting out from underneath this loan and you’ve already gotten a year’s worth of free living, boy, you should count yourself really lucky and start laying plans for a new place to live.

 

Ryan Rockwood:  Yes.  I mean maybe it’s time for a short sale.

 

Mike Rockwood:  Yes.

 

Ryan Rockwood:  And hopefully, yes, you’ve got some money saved up.

 

Mike Rockwood:  So -

 

Ryan Rockwood:  Well, let’s wrap it up because I’m melting.

 

Mike Rockwood:  Okay, you’re dying.

 

Ryan Rockwood:  Yes, let’s see if we’ve got anyone on the phone here.

 

Mike Rockwood:  Good.

 

Ryan Rockwood:  That has a question before we go.  Hi there.

 

Male Speaker:  Yes.

 

Ryan Rockwood:  Yes, go ahead.

 

Male Speaker:  [Indiscernible] [0:37:19].

 

Ryan Rockwood:  Tell me like if we perform that service for people.  Well, I’ve never actually heard that term.

 

Mike Rockwood:  Well, you’re using it like a proper noun, like it really is something.  Tell us more.

 

Ryan Rockwood:  Have you write into it?

 

[Audio gap]

 

Ryan Rockwood:  No.

 

Mike Rockwood:  Who is it?

 

Ryan Rockwood:  Home rescue.

 

[Audio gap]

 

Ryan Rockwood:  Well you know -

 

Mike Rockwood:  Really?

 

Ryan Rockwood:  Someone else on the call thinks there are scam home rescue.

 

Mike Rockwood:  But accelerated -

 

Ryan Rockwood:  Most people actually — it’s a funny thing to call it because maybe they just branded their process or something.  But most people, when they’re doing short sale, I mean you can do a short sale fast or slow.

 

Mike Rockwood:  No, he said about loan mod.

 

Ryan Rockwood:  No, he said short sale.  Did he?

 

Mike Rockwood:  Oh.

 

Ryan Rockwood:  Did you say short sale?

 

Mike Rockwood:  Yes, sorry.

 

Ryan Rockwood:  Most people don’t want a fast short sale.  What do you think that would benefit you, like less damage on your credit?  Is that your main motivation?

 

[Audio gap]

 

Ryan Rockwood:  Sure.  Yes.

 

Mike Rockwood:  Yes.  When we have a client who tells us that they want the short sale to happen fast, it’s pretty easy to make it happen fast because you know you just accelerate everything.  You just take action right away.  You advertise it right away.  You lower the price dramatically maybe even each day and usually it’s pretty easy to get an offer within a week or two if you’re really aggressive about pricing and advertising.

 

Male Speaker:  [Indiscernible] [0:39:33].

 

Mike Rockwood:  Do you get it out?

 

Male Speaker:  [Indiscernible] [0:39:39]

 

Mike Rockwood:  Yes.

 

Male Speaker:  [Indiscernible] [0:39:50] have your heard of them?

 

Mike Rockwood:  No, we haven’t heard of them but an accelerated short sale is something that you can do.  Here’s the deal.  You can move as fast and get an offer and get your packet submitted as fast as you want but it’s pretty hard to get any lender to approve them in less than 30 days these days.  There is a — now, what was the program we just read about, Ryan about — that’s pre-approved.  That’s something that National Association of Realtors is working on so that’s a waste off.  But see, we have trouble like even if we slam an offer in the same day that we list it, we have a hard time getting it in front of a negotiator for two weeks, and then the negotiator always gets 20 days, 20 working days, before his company demands that he take action before the file turns into a pumpkin or whatever.  So it seems to always take at least a month before we get that settlement offer so -

 

Ryan Rockwood:  But I guess it really depends on what someone by accelerated, right?

 

Mike Rockwood:  Yes.

 

Ryan Rockwood: It is like accelerated less to 8 months.  If you want to -

 

Mike Rockwood:  Yes, we can do them in less than 60 days if you tell us to.

 

Ryan Rockwood:  Would you like us to, like we’d like to schedule a time to talk about what your specific situation and see if we got any advice for you.

 

Male Speaker:  [Indiscernible] [0:41:17]

 

Ryan Rockwood:  Would you like to schedule a time to talk privately to see if we might have some advice for you?

 

Male Speaker:  [Indiscernible] [0:41:23].

 

Mike Rockwood:  Yes, okay.

 

Male Speaker:  [Indiscernible] [0:41:36].  Have you heard of them or anything?

 

Ryan Rockwood:  No.

 

Male Speaker:  It doesn’t matter if you heard [Indiscernible] [0:41:41].

 

Ryan Rockwood:  Okay.

 

Male Speaker:  A part of, Barack Obama, what have you done for us?  Nothing.

 

Ryan Rockwood:  Okay.  Hold on one sec.  Hold on one sec.

 

Mike Rockwood:  Hey, wait a minute.

 

Ryan Rockwood:  Okay.  Sorry about that.  It’s hard to hear the callers and also repeat a little bit of it, but this guy is asking have you heard a particular company that has done something that they called accelerated short sale.  We don’t actually get that too often where someone wants to know or wants a short sale done fast.  I can tell you that.

 

Mike Rockwood:  Yes, more often.

 

Ryan Rockwood:  Yes.  More often they say, “Hey, I need some time to figure out where the heck I’m going to go from here.”  So that maybe just clever marketing on their perspective or whatever, but you going to do shop around.  What we do is concentrate in getting the short sales done right.  The key thing there is that you have to make sure that the second lean is taken care of and the vast majority of people don’t know what they’re doing.  So they may get that second to release the lean on the home or the first or whatever.  However, they haven’t tied up the end.  So what’s going to happen is these guys could come to you, even in California, and they’ll probably end up selling it to someone else, a collector who will eventually sue you.  So I would prepare for that.  You can talk to — it doesn’t sound like you’re ready to talk now — but if you are ready to talk, you can always send us an e-mail.  My name is ryan@60minuteloanmodification.com and we do short sales nationwide.  Yes, we can do it as quick or as slow as you need.  Of course, we prefer quick because then it’s over.  But -

 

Mike Rockwood:  Running faster is always better.

 

Ryan Rockwood:  Yes.  But also short sales don’t cost you anything.  A typical question we get on short sales is, “Should I make that my next tax payment?  Should I make my next HOA payment?  All I can say on that category is we have a lot of success getting the bank to pay those things along with know all costs associated with the sale like realtor and stuff like that.  So anyway, when you’re ready to reach out and talk, we’ll be happy to talk with you.

 

Okay, so I just want to wrap it up and thank everyone so much for joining us.  Thank you so much for — and congratulations on getting a week closer to getting your loan modified.  Also, be sure to check out our new credit card program, it’s the same thing do-it-yourself.  We’re teaching people how to do-it-yourself settle your credit card debt instead of paying some guy 5,000 bucks and sending him all your credit card payments for the next couple of years.  How about if you just take a couple of months and do it yourself and you’d be done with it?  That’s a pretty cool program.  It costs 20 bucks a month.   So you should check it out.

 

Right now, you can go to 60minuteloanmodificaiton.com/credit and join that program.  You should definitely do that.  We had one member this week settled $28,000 with Bank of America for $9,000 and this is a client that was in extremely for negotiating situation in regards to who could not get a judgment for personal reasons, could not file bankruptcy.

 

Mike Rockwood:  What he means is he couldn’t tolerate the judgment so he couldn’t let the creditor take him to court.

 

Ryan Rockwood:  Yes.

 

Mike Rockwood:  So he wasn’t in a strong negotiating position and he had high income and he had some assets.

 

Ryan Rockwood:  Yes.

 

Mike Rockwood:  That they could see.

 

Ryan Rockwood:  So anyway, that’s going well, but I invite you all to that.  All right, thank you so much everyone.  Have a great week.

 

Mike Rockwood:  All right, good night.

One Talk Radio Host dubbed me the “Loan Mod Mercenary”!

I’ve been focused on this loan mod frenzy since the start – and 96% of my loan mods succeed? I created the 60 Minute Loan Modification Kit…to help others succeed with their mods.

Now, in 2010, with so much press about loan mod failures, I’ often asked why I’m still getting such a high success rate. My answer? It’s all about “file inertia”.

That’s how I describe the fact that files in motion tend to stay in motion. And, files that are stopped tend to stay stopped. So, your loan mod application needs, more than ever before to be perfect. Perfectly presented, perfectly complete, perfectly accurate and perfectly approvable.

Lenders are swamped. That’s not news. One way to get more time to work on the files and get management “off their back” is to reject as many files as possible for whatever reasons are plausible. Think about it. There is a ton of incentive to put your file into a holding pattern by identifying anything about it that is not perfect – and assigning it to a support team to fix. That takes weeks!

Here are my tips to get file inertia working for you on your loan modification application.

1. Income must be documented correctly and extremely clearly:
   
   1. Self employed P&L – notarize it!
      
   2. SSI and EDD – send checks AND send award letters
      
   3. Calculate monthly for them – show at least three bi-weekly checks and at least three semi monthly checks…run the math for them.
      
   4. 1099 – explain the logic you are using…like showing the last 90 days of comm. checks or showing direct deposits to my checking A/C. Total and underline and explain in notes.
      
2. Rental property must be handled correctly – Esp important if you are applying for MHA mod.
   

    

   With 3 or more present your rental properties on a separate form and go to great lengths to make sure they evaluate it separately – the gross income is the issue.
   

 

If you only have one or two properties, I merely show the net of Rent minus PITIA as an expense item (or an income item if you are so lucky).

 

1. Front-end DTI must be right
   

 

1. Back-end DTI must be right
   

 

1. All debts on credit report must be addressed
   

 

1. Cash flow must be zero
   

 

1. You must be late on your payments
   

 

1. Your application must be flawless (no loose ends) and exceptionally easy to understand. Craft it as if you are across the desk presenting each page:
   

• Cover fax/letter
  
• Contents (with page numbers)
  
• Notes whenever needed
  
• Use their forms and mark thru the cells you are not using and fill-in EVERY one you can.
  
• Sign/date bottom left of every page – all persons on the loan
  
• Number bottom right
  
• A/C# middle-bottom of every page
  
• Highlight important info –circle, notations, etc.

Get these right and your application will sail through in no time and get approved for a great mod…just kidding! But, at least you will have inertia working for you!

Success Secrets of the 6% | Loan Mod TV

Recorded Live: Jan 26, 2009

You have probably heard 94% of Loan Mod applications fail.You may even wonder, ‘is it worth trying?’ The answer is, ‘YES! Absolutely!’
Tonight’s video broadcast is dedicated the 6%’s SUCCESS SECRETS!

Loan Modification TV | Jan. 19

Recorded live

Tonight’s call was “Open Microphone” Questions and Answers

Transcript of the call!

Mike Rockwood:  Issues and dealing with your questions, and you can send the questions to us at questions@60minuteloanmodification.com or if you’re watching us live on the Internet, you can just join in the chat and deliver questions by chat, right Rocky?

Ryan Rockwood:  Yes, you can.  It is a little wonky.

Mike Rockwood:  Not as good?

Ryan Rockwood:  It not always works but the way they access the feed online and to participate there is through 60minuteloanmodication.com/live.

Mike Rockwood:  Okay, so that’s 60minuteloanmodification.com/live.  Okay, I’m Mike Rockwood and along with my business partner, Ryan Rockwood, we are your hosts tonight and we deal with all sorts of foreclosure topics.  Our 60-Minute Loan Modification site, by which many of you got to this broadcast, really is the premiere Do-It-Yourself Loan Modification Kit in the industry today.  We’ve been advocates of loan modifications as the primary workout vehicle, workout solution that is available to homeowners today.  So that’s kind of been our bread and butter for the last couple of years.  But of course, working in loan modifications gets you into short sales like crazy.  So we do short sales throughout the country, we do deed.  We help people think through and work out the whole deed in lieu of foreclosure process.  We help people work out settlements with their lenders.  We do virtually all ten of the foreclosure options that we teach about in our Notice of Default Handbook.  We’re involved in helping homeowners throughout the country think through those issues and work them through, so all topics are — it’s open Mike tonight.  We’re just going to work on questions.

Ryan Rockwood:  You know, that’s not to say that we just do whatever.  It’s just to say that it really is imperative to remember that you can’t just go around promoting one solution like loan modification in that every tool and workout is appropriate, just not for everyone at the right time and at the same time.  So -

Mike Rockwood:  Right.

Ryan Rockwood:  – be that as of me.

Mike Rockwood:  While Do-It-Yourself Loan Modification might be right, it might be really right for another person to hire somebody to do the loan modification.  The same person might also want to concurrently, which is what I often advise, put — have the home, have the property up for short sale.  But you know what, a lot of the logical thinking, a lot of the preparation, and a lot of the critical issues that you have to face in thinking through even bankruptcy or just walking away from the home, they’re all the same.  I mean, let’s think about it.  You have to think about your equity position in the home.  You have to think about your vulnerability to deficiency judgments.  In other words, are you going to be held liable for any shortfall on a home if you turn it over to the bank and they sell it for less than it’s owed or if you short sell it?  You need to think about the tax consequences, and you need to just figure out your own finances and how you’re going to make it through the foreclosure process.

So really the issues are always the same and very often we’ll advise clients to head down a couple of paths simultaneously because you’re not always in control.  You don’t always know for sure what your outcome is going to be.  You might think you’re a very, very good candidate for a loan modification only to find as you go further and further into the process, you begin to let it sink in, you begin to realize that in fact maybe it will be better to just get out from under this debt and so you wish you were in a short sale situation.  That’s very often the case actually.

So today we’re going to deal with questions.  But before I jump into questions, I did want to highlight a little bit about loan modifications.  I see there is a lot of press today about a lot of folks just waxing eloquent about the Making Homes Affordable Loan Modification Program.  Whether or not it’s working, for some or whatever reason, it was a series of “experts” who ventured their opinions today, and it generated kind of a flurry of blog and forum entries and people speaking up about the success.  So I’d encourage you if you are interested in that topic, loan modifications in particular.  The Making Homes Affordable Loan Modification Program, go ahead and Google some of those and you’ll get some really varied opinions.  That’s what struck me today.

Ryan, I didn’t talk to you about this but there were experts who came out in fully endorsing the program, talking about how it, without a doubt, has been instrumental in stemming the decline in the housing market prices by keeping people in their homes and allowing homeowners to have more time to work on a foreclosure workout.  There were just as many experts who said that it’s been a total waste of money and most of the money has not, you know add up the bargain, but how few have really got the modifications.

Apparently, most people are in agreement that more than 5% and less than 7% of the applicants have gotten loan modifications.  It’s really pretty pitiful because it has been, gosh, nearly — well, the Obama program has been announced.  It was announced almost a year ago.  Really, prior to that, we had about nine months of modifications going.  So it’s really kind of pathetic but it’s all very understandable because the banks were given an awful lot of resources and found other things to do with the money.  I mean, we all know and we’re all angry and we all feel ripped off.  I know you don’t need another political pundit, but we all feel ripped off that the banks didn’t use that money for modifications and helping to stabilize the housing market.  Instead, they went globally and invested it and earned enough to pay off the tariff funds so that they don’t have to march to the administration’s drummer any longer.

But anyway, it’s kind of interesting to see that there are pros and cons and certainly I got to think that the truth is somewhere in between that probably the Making Homes Affordable Program, unlike it’s predecessors, has probably had some impact.  Certainly for the nearly hundreds of people that we have worked with and over 120 mods that we have actually done for our clients, it’s really been a God sent.  Some of our clients got reductions in their monthly payments of 300 to 1,300 dollars per month and that can really change things for you in terms of just a month-to-month pressure.  So we believe that the program has been successful and we kind of look forward to at least six more months of using it to help our clients and help all of you get good modifications.  When I say using it, that’s exactly what I mean because if you are street smart, if you’re really paying attention to what’s going on, it’s really not so hard to use the program.  You just have to play by the rules and you have to be street smart enough to get out of line and get up to the front of the line and understand what it takes to get your modification through quickly.

All right, so enough said just on loan modifications.  We’ve already got a bunch of questions that had started to come in before we’re broadcasting.  I’ve got half a dozen of them here.  Should I start or do you want to -

Ryan Rockwood:  Yes, go ahead.

Mike Rockwood:  Okay.  So I’ll just start.  You just interrupt me, Ryan.

Ryan Rockwood:  Well, you know, did we give enough of introduction for someone who has never been here?

Mike Rockwood:  Probably not.  Go ahead.

Ryan Rockwood:  My name is Ryan Rockwood.  This is my dad and my business partner, Mike Rockwood.  Basically, way this all started was from personal experience where we found ourselves in a situation, but we needed relief.  Well, I’m really telling my dad’s story, not we.  He did a relief on his mortgage, called the bank, and they weren’t willing to work with him.  Long story short, he just went accept “no” and ended up finally getting a loan modification.  But after probably six months of working at it, but the savings were huge, it was a big deal and he wrote a book about his experience because the hurdles were so dramatic.  It’s kind of like no ordinary human could get pass those rules.

Mike Rockwood:  Yes.  Most people would have been just blown off.

Ryan Rockwood:  It was just astonishing.  So now, many of the hurdles have changed.

Mike Rockwood:  Yes, that’s true.

Ryan Rockwood:  In some ways, it’s gotten easier.  In some ways, it’s gotten harder.  But then the book has changed along the way too.  So what this community, what this kit is all about is trying to bring people a low-cost way of getting a loan modification.  So if you’ve arrived at this site and you don’t know who we are, we have a kit that is priced certainly within everyone’s reach.  So please go ahead and purchase that.  Also, we have some other products too that we may have mentioned.  But welcome to the call, we do this every Tuesday for clients.  If you have purchased the kit, there is another class like this on Thursday.  Okay.  Thanks so much.

Mike Rockwood:  All right, so every Tuesday our lawyer really encourages us to remind all of you that we are not lawyers and we are not CPAs, we’re not tax advisors.  We are in fact realtors, and we are in fact very experienced in the foreclosure business, and we are in fact like experts in loan modification and many other workout solutions.  But what we pass on to you is just reports of what other people are doing.  It may or may not be appropriate for you and it may or may not be legal for you.  Whether or not, what we suggest is ethical to you is your business.  That’s your choice.  But hey, Ryan and I are kind of fiddling around with this book.  You may see and we’re kind of pleased with it because it just came in, and I see it does need a few more improvements, Ryan, but it’s the prototype for the most recent edition of a book that Ryan wrote called Mia’s Home.

Ryan Rockwood:  Well, no.  I think it’s perfect.  You can’t get rid of that.

Mike Rockwood:  Yes, but you can’t get it over here.  You know what I mean?  Because that just doesn’t look right.

Ryan Rockwood:  Yes.

Mike Rockwood:  But anyway, Mia’s Home, if you’re familiar with it, is a children’s book because we so frequently saw that we knew the family is struggling with financial problem, struggling with short sales with thumb, losing their homes, or even working through modification.  There’s just a lot of anxiety in the home.  So Ryan wrote a book — in conjunction with a friend of his who is an artist — wrote a children’s book to help parents talk to kids about these tough financial issues and just reassures them about the family that we’re having trouble but we’re sticking together, it is going to be okay, we’re going to make it through, we’ve done nothing wrong, we’re not going to get caught and hold off to jail.  It’s really a great story and parents really report that it’s very, very useful.  Well, why we like this edition so much is that it is now same book, flip it over, and it’s a Spanish version.  La Casa de Mia.  We’re very, very pleased with that because so many of — so much of the population of the big foreclosure states like Arizona, Texas, California, Nevada, Arizona have such a large Hispanic population that we’re hoping that this is going to help a lot of people.  By the way, there are some real fresh endorsements for this book that I personally and very gratified by Moe Anderson, the Vice Chairman of the Board of Keller Williams Realty endorsed it; Judith Cousins, who is a children’s book author; Conrad Ricketts, who is an Emmy Award winning executive producer, he’s the extreme makeover guy; and Johnny Wilson, who is part of Habitat for Humanity in Georgia, endorsed the books.  So it’s a great book and you can get it on our website as well and it comes with the 60-Minute Loan Modification Kit.

All right, some of the questions.  The first one that I got this evening was from Tina and she said, “How long will it take for my credit score to recover from 4 to 5 mortgage late payments?”  I think she asked that specifically because that’s usually what it takes in a loan modification.  Let’s be frank, you can’t really get a good loan modification in less than four months unless you’re in default, unless you miss a payment.  Most people end up missing 4 to 5 of them and that depending on how many credit lines you have, trade lines, can mean as much as a 50- or 75-point decline in your FICO score.  So if you are so proud of your 750-point score, you might just drop down way below where you like to be down into the 675-point range.  It will take you — it would take under normal circumstances — probably a couple of years to recover from that.  But in the book I recommend seven what I call credit repair habits that help you to speed and to recover much faster.  Those credit repair habits are things like double paying — paying twice a month — establishing passbook savings accounts and using those passbook savings accounts to establish new credit with the passbook savings loan that gets reported payments on which you get reported to the credit bureaus every month, some really intelligent ways to ensure that you never make a late payment again.  Then of course the old standby of piggybacking on a good friend’s credit rating by cosigning on one of their accounts.  So there really are in total seven of them.  And I’ll go into great length to explain how to implement them.  So Tina, realistically 4 to 5 mortgage lates will probably take you 6 to 12 months to recover from if you get really aggressive about it.  It just can’t happen faster than that.  That’s just reality.

Mark says, “I owe back homeowners association dues of over 4,000 bucks and in my short sale, which is on the market now, will the lender pay these off or am I stuck with them?”  That is a real timely issue because for the first time in my — I don’t know how many short sales I have done in the last two years but I bet it’s — let’s see — I bet it’s probably not 100.  It’s probably more than 75 and less than 100.  I have not ever had trouble getting the HOA dues to be paid, but this past — two weeks ago I did have.  I ran into trouble and Bank of America simply, for whatever reason, would not pay off the homeowners association dues and I could not get the association to waive some of the dues.  So in fact, we have to strike a deal and I was very pleased that the buyer came in.  So Mark, the answer to your question is most of the time and it’s up to your negotiator to get that in and make sure it’s in on that HUD-1 that gets submitted with the application.

Rina asks, “Why don’t you recommend that people record calls on their mods?”  Okay, here what she says, “You can transcribe them and then you have a great record and prove some of the strange things we are being told by these banks.”  That’s not what she called.  “I started doing this,” she says.  Rina, I think that’s a great idea and number one is that it sounds like a little cumbersome to me because sometimes those conversations go on for quite a bit.  But if you do transcribe, and that’s great to have that kind of a record.  In terms of being able to prove anything to them, I wonder though, I mean it’s not like the banks don’t know that their front line representatives are undertrained and underpaid apparently and that they’re inexperienced, so I don’t know what you’re going to prove when you do — if you do run into a real bad apple and you really have a problem.  You got this really wrong information and you escalate the problem to the manager or a supervisor.  I mean, they’re not really interested in you proving that their employee is poorly trained or misspoke.  The legality of having recorded and transcribed that conversation, I’m not so sure that’s going to be really useful to you either because at the end of the day even if they said one thing and later didn’t come through on it, if you haven’t got it in writing, it’s really not probably — you probably can’t enforce it.  To top it all off you may not be — depending on what state you’re in — wherein you may not be in a state where it’s even legal to be recording that conversation without notifying both parties.  So I think there are some problems with what you’re doing, but what you’re recommending that people keep really good records is a great idea.

Molly asks, “I’m evaluating my loan experiences based on your questionnaire.”  Let me explain that.  When people ask us to help them with their loan modification, in other words they decide not to do it themselves and they hire us to do so, we interview them to see if they’re a good candidate to get a modification, and then we send them a packet of information that the list is a bunch of responses from them about their loan experience and that is because we do a forensic loan audit on every one of our client’s loan experiences based on — you know, it’s not a full-blown audit of every consumer protection law and every RESPA statute, in every Truth In Lending Act statute, but it is like about a 10-point forensic loan audit, and she says that our questionnaire got her thinking about her experiences.  She asks, “How do I know what the best interest rates were at the time of my closing?”  Because one of the violations is that in fact sometimes lenders switched at the very end and gave you, in fact, a loan at a slightly higher rate than you had anticipated and some people don’t know about that until closing.  So you’re right there and all of a sudden the loan is a quarter of a point higher than you thought it was going to be.  Sometimes they get compensated to do that through a Yield Spread Premium.  So Molly is evaluating that situation and suspects that maybe that was the case.  So she asks how do I know what the best rates were on that day, and here’s my advice.  You go to erate.com/mortgate_rates_history.htm.  That will bring you up to a page and you just merely need to enter the date of your closing and it takes you to what the historical rates were on that date.  If yours has — if you had a good FICO score like if you had over a 720, Molly, and you find that in fact you did not nail that best rate, then you have to make note of that and use that in your loan modification application, all right.  Ryan, you have some questions you want to take?

Ryan Rockwood:  No.

Mike Rockwood:  Okay.

Ryan Rockwood:  Sorry, I don’t.

Mike Rockwood:  I’ll just keep rolling.  Ken asks and this is another forensic loan audit question.

Ryan Rockwood:  I should say questions@60minuteloanmodification.com.

Mike Rockwood:  All right.  Ken asks whether or not he needs an attorney to use the violations that he knows happened during his loan modification.  For those of you who may not be really familiar with what I’m talking about, a lot of the loan modifications these days are turning a little bit nasty and because a lot of our clients and a lot of people are trying to get out of line, get to the front of the line and get that mod, so a lot of them are turning to forensic loan audits and that is a review of the loan process to identify violations of any kind of law:  Consumer Protection law, Real Estate Settlement Procedures Act laws, Truth In Lending Act laws, or even out-and-out fraud or discrimination.  So when we do find those violations, and this is getting to the heart of Ken’s question, what do we do with them?

What many people do, if they’re pretty serious violations is they will go to an attorney, retain an attorney to help them with their modification and most attorneys that will work in this area will do that for $2,000 to $5,000.  That’s a little bit pricey, except that you keep in mind that some of our clients are dealing with 1.2 to 2. — I think the biggest mortgage that we’re working out right now is like a $2.7 million mortgage.  So in the scheme of those kinds of things, it’s not so much money.  But for most people who have a $120,000 to $220,000 mortgage who, and you know your relief and your modification is only going to be $600 a month, you hate to spend 2,500 bucks for an attorney to help you pursue that.  So what we are doing routinely on our mods, and I recommend that people do this is I craft a letter.  I don’t try to act like an attorney.  I’m very transparent about it and I write to the legal department at the same time that I’m submitting the loan modification.

So here’s what I recommend, Ken.  Write a letter.  Explain that you are applying for a loan modification and that you are disturbed by the following information and then you tell them the information that you have uncovered and you say, just explain that you have read that in fact these violations are violation of your right and may have hampered you and put you into a loan that put you at risk of losing your home and of defaulting and hurting your credit.  So what you’re explaining to them is that you understand that these violations, you understand that the whole basis of any of those suits would be that you suffered some ill consequences.  So you state the fact that you know there were some violations or you suspect that there were some violations, you understand that the reason they would be interested in that is because it may have caused you harm and that gives you a ground for suit against them.  Then what I’d do is I’d just ask them to please investigate.  So you hit them with a ball in their court and let them work it on their nickel.  I submit it as a Qualified Request to the legal department and then I attach it to the loan modification, and that goes to Loss Mitigation Department as well as the Customer Service Department.  That Qualified Written Request, of course, I sent as in certified mail.

Now I’ve used another term that we haven’t used for a few weeks and that is the Qualified Written Request.  For those of you who are new, let me explain what that is.  Section 6 of the Real Estate Settlement Procedures Act guarantees you a communication deal between you and your lender and here is how it works, it guarantees you that if you submit a question in a Qualified Written Request, QWR, that the lender is obligated to respond to you within 20 days that they have received the request and within 60 days with a full response to your query.  I’m sure there are a lot of ways around that and a lot of ways that they can pacify you, but honestly my experience is that they take it very seriously, and usually I get that response that they received the letter prior to the 20 days and invariably I get a full response within 60 days.  So use a Qualified Written Request and you can go to our website.  I think there are articles.  If you go to the articles section, search for an article on Qualified Written Request or simply Google Qualified Written Request, QWR, or e-mail me for my suggestion for a format to use in any Qualified Written Request, all right?

Another related one to forensic loan audits comes from John and he asks which violations are significant and which one gets the lender’s attention?  That’s always a real popular question because everybody wishes that I could just tell them the four or five violations that are most important.  In my upcoming book, Do-It-Yourself Forensic Loan Audit, I do highlight the ten that are the most common, but here’s what I become convinced of.  It doesn’t matter if you have three or four minor violations or you have one major violation.  What really matters is that you use the information correctly.  You really have to follow a really intelligent process for using the information.  Otherwise, it really falls on deaf ears.  It’s sort of like, well if you remember Gavin Harris who was with us on one of these teleconferences from De Novo Financial Solutions, who is a company that we highly recommend for full-fledged forensic loan audits, he put it this way.  A set of golf clubs in his hands are not nearly as effective as they are in the hands of Tiger Woods.  In the same way, violations that you find may not be nearly as effective in your hands.  I can help you and my upcoming book will help you get pretty darn effective at using it.  But honestly when push comes to show off, the legal violation is really the realm of an attorney, is really the realm of lawyers.  If you really have a claim and you need that claim to get the modification that will keep your home, then you should hire an attorney to get that for you.

All right, that question we’ve already covered.  Okay, what do I need to do — is that Renee — says, “What should I do before I contact my lender?”  Of course the lenders are always saying call me, call me.  The government is always saying call your lender, call your lender and sometimes the lenders will refer you to non-profits who will help you prepare to talk to your lender.  That’s all well and good but I really have to advise you to think about it.  Would you just dial the IRS to ask them how much money you should send it when you’re reconciling your taxes?  Yes, you want to talk to your lenders.  It’s very important to talk to your lender, but not until you get ready.  The lender has all the information, knows what all your options are.  The lender holds all the cards and you are about to negotiate with them.  Why enter into that negotiation until you at least, to some extent, level the playing field?  At least get better informed.  So I recommend that you do the following.

The first thing I recommend before you contact your lenders is go to my website 60minuteloanmodification.com and order the free, that’s right, free CD that tells you my story.  The reason that I recommend that is because a lot of people just find it kind of confidence building to hear about how I handled six loan modifications, how I got six loan modifications, and how I saved myself by half a million dollars.  So that will be encouraging for you.

The second thing you want to do is move any money out of — if you have any savings or CDs with the bank that you’re going to be negotiating with — I want you to move that money out of that bank.  You have to trust me on that one.  They have a right of offset.  Unless it’s a trust account or unless it’s funded by money from social security, they have a right to take that money if you miss payments.  So don’t think they won’t.  It happens all the time.  Don’t doubt it.  Move that money.  I would not close accounts.  It’s never smart to close an account.  But if I had $5,000 in the Bank of America and I was about to negotiate with them on a loan modification and I fully intended to go late to get their attention and to get them to negotiate with me, I would move 4,900 of it to an account at Wells Fargo.  Of course, I just used those.  I just picked those names out of the air.

The third thing that I recommend you to do is you have to make sure that you have an acceptable hardship.  Think about what is the hardship that’s causing you these problems.  Did you lose your job?  Are your hours cut back?  Did you not get a bonus this year?  Are you not getting the same commission [Indiscernible] [0:30:26] do that you normally do is your spouse, spouse’s income down.  What’s the problem?  Are expenses up?  Is your mortgage payment up?  Is the kid’s tuition increased?  Has your taxes increased?  What’s changed?  Has there been a death in the family, a divorce?  What is the hardship?  You have to make sure that you’re really clear on that because applying for a loan modification or applying for any workout assistance without a bona fide hardship is dumb.  You’re just not going to win.  So that’s the third thing to do.

The fourth thing is also absolutely critical.  Don’t think about calling them until you do your budget.  When you have your budget fully laid out, naming all your debts, all your cash flow in the month, then there are three important ratios you need to — or three important items you need to look at — your front end; debt-to-income ratio, which is your first mortgage payment, the first payment, the first mortgage; principal interest tax insurance; and homeowners association, it must be at least 31% of your household income, gross household income.  If it’s not, don’t think about it.  Now, work out solution.  Second, your back end, all your debts added up divided by your gross household income.  It must be under 70% or else you lose.  If you have more than 70% they’re going to say, “Yeah, you know what?  You have debt problems.  You’re not going to make it.”  The third factor is your cash flow.  At the bottom of your budget, it should be a big [Indiscernible] [0:32:11].  You should spend all the money you make.  If you have all kinds of excess they’ll say, just like they said to one of my clients today, “You miscalculated.  You have $600 extra every month.”  Stamped it with a big DENIED.  If you’re too short, they’ll say no.  You can’t keep up with it from a cash flow.  You have too many expenses.  Your costs of living are too high.  You’re not going to be able to make it sold.  Our advise to you these days is a big [Indiscernible] [0:32:40] down at the bottom.

All right, so when you’ve done those four things, now call your lender.  So realistically, I mean from the time you decide you’ve got a problem and you need help and the modification or some workout solution with your lender might be the answer, those four things, certainly they’ll take you a couple of days to do, but they should never take more than a week.  So it’s not like I’m encouraging you to keep away from your lender but I am saying, boy you have to be prepared.  So get it all prepared then call the lender.  Now, you’re equipped to answer their questions because think about it, now you know that the reason they ask you those questions is they’re trying to mitigate their losses, not yours.  So they’re asking that information in order to use against you.  The mini Miranda that they read to you or that is read to you by the auto-attendant, “We’re a debt collector.  Any information we gather from you, it is going to be used for that purpose.”  That’s what that’s all about.  They’re warning you that anything you say, it’s recorded and they are going to try to use it against you so you have to know what you want to divulge to them so that it can be used for the purposes that you want it to be used.

All right, here’s a question from Nina that says, “Why do I have to miss a payment to get a modification?  My lender says that that’s not true.”  Well, nah, nah, nah, nah, nah, nah, Nina.  “My lender says that’s not true.”  Well, technically it’s not true and of course they don’t want you to miss a payment.  They have a whole department now mandated by the government called Imminent Default.  All these people do is run around trying to keep people from missing a payment.  However, the thing they don’t do in order to help you, prevent you from missing a payment is give you a good loan modification.  It’s so frustrating.  They run around and they say, “Oh, you know is there any way you could borrow enough?  You know it’s tomorrow.  It’s tomorrow.  Is there any way that we could — let’s do a check by phone.  What are we going to do?  What are going to do?  This is going to look bad on your credit score.”  Well, holy Molly.  You guys would have spent as much time and effort hiding from this whole program.  If you would have spent that much time and effort just investing in it in helping people who deserve it to get really good modifications so they wouldn’t have to be back harassing you again six months later, we all would have been better off.  So Nina, they say you don’t need to go late and if you really love your FICO score so much that you don’t want to, then go ahead, feel free, have at it.  But I got to tell you I’ve got a really bad experience in that regard.  For two years now I have only one experience of a person getting a good loan modification and not going late on their mortgage.  Okay.  It took them a long time.  Who knows what they would have gotten if they had gotten late?  They might have gotten twice as fast and twice as good, so it’s just not — I don’t advise it but it’s your call.  It’s your FICO score.

All right, here now.  Al says, “I’m currently attempting to sell short.  Should I do a loan modification instead?”  Well Al, I certainly don’t know but if you want us — it all depends if you want to save the property, if you want to keep the property and that’s an important strategic decision you need to make upfront.  Here’s a way Ryan and I always counsel people in this regard.  You have to live somewhere, right?  So if in your neighborhood you can rent, let’s say for $1,000, and your mortgage payment is $2,000 then what we always say is as a guide, let’s work for a modification that is close to that $1,000.  Otherwise, you may be foolish staying in the home if it’s very, very upside down.  Let’s say it is $100,000 upside down — 20-year 25% upside down — not really likely to regain that value certainly not in 10 years.  So the decision then is housing costs.  Remember you get a tax deduction for the interest paid on your payment.  So if you would normally pay rent of 1,000 bucks, if you can get your mortgage modified down to about $1,100 or $1,200, then it seems reasonable to stay in the home.

So Al, that’s what I would suggest.  If you go through that math and you think, “You know what?  It seems reasonable to try to stay in this home.”  A lot of people just prefer to stay in their home because the kids are in school, it’s near work, and you’re comfortable there.  Moving is such a hassle.  So if you decide to try to modify instead, go ahead and begin that process.  While some of the lenders figure it out and preclude you from doing a short sale application and a modification application at the time, keep in mind that the short sale application process doesn’t actually start until you have an offer.  So a lot of times you’re on the market for 30 to 60 days before you even get an offer.  So very often I’ll recommend to clients that they pursue both and then of course you don’t tell the lender it’s none of their business that you’re pursuing a short sale until you have that offer.  So you’re pursuing your option for a loan modification while also getting out in the market and getting that offer.  So that if the loan modification option does not work out after six weeks or eight weeks, then you’re ready to step right in with an offer and go to the bank with an application for a short sale.

Remember you can rely on us to do your short sales throughout the country, and the way that works is we do the negotiations with the banks because we’ve gotten so efficient at it, so good at it.  We do it for people in Florida, in Minnesota, in Massachusetts, Arizona, Nevada, California, and of course we love the ones in California the most because then we also act as the realtor.  But when we do like in other states, we contract with the local agent to list your property and we run the bank negotiation.  So we split that listing commission 50-50 with them.  You get the benefit of our expertise and local expertise in terms of getting a buyer.  So it’s kind of win-win-win for everybody.  Remember the bank pays for our services and pays for the listing agent.  It pays just about everything.

Ryan Rockwood:  Also, we have a credit card, a new Credit Card Cure Co-Op that we have and you can see it by going to cc.ryanrockwood.com.  Not a lot to look out right now but it’s growing every single week, and tomorrow we’ll have our next live class.  So if you have any credit card debt, well I guess probably anything over $2,000 that is really just a burden for you financially, it’s worth looking into eliminating that through settlement.  Basically, we’re trying to do for credit cards what we did for loan modifications and that is instead pointing you to a big lame organization that’s going to waste your time and take all your money.  We’re teaching people how to do it themselves for basically 20 bucks a month and you can stop/start any time, do that kind of thing.  So anyway, check that out.  For sure join, if nothing else, join the — there’s a forum just beneath this video that you’re watching.  You can sign on to the interest list but I got to say I’m not great about contacting the people in the interest list, so it’s far better if you just go to the website cc.ryanrockwood.com and sign up and see if you like it.  Each week we’ll release more information that will get you on the right path to settle your debts.

Mike Rockwood:  Okay, I want to take this question as well.  We haven’t got that much time left, but…

Ryan Rockwood:  We’ll just take one more and then wrap it up.

Mike Rockwood:  Okay.  Lily asks why it seems that we’re just getting no for an answer from IndyMac when it seems like we’re a perfect candidate for making Home Affordable Modification?  I got to say this is not unusual, Lily, and there are several reasons for it.  Sometimes we submit applications for a modification that look like they’re textbook perfect.  In fact, I have at least three clients right now who are in this situation where we have submitted for them textbook applications.  They’re just perfect for the program.  They get denied for mysterious reasons.  In other words, the representative never can explain it very well and that’s not unusual.  Can you get a [Indiscernible] [0:41:55] list?  Oh, there we go.  It’s not so unusual that their representative can’t explain it so well because a lot of these representatives are:  Number one, inexperienced; number two, poorly trained; and number three, poorly compensated.  So they’re just, shall we say, not the sharpest tool in the shed.  So it’s not unusual they can’t explain it but it gets really frustrating when you call back several times and nobody can explain to you why you’re getting rejected, but they all try, and they all give you incorrect information.  You know they say, well you got rejected because your debt -

Ryan Rockwood:  You know, maybe they’re just hoping you’re going to go away.

Mike Rockwood:  Yes, to some extent they just hope you go away but they give you these lame reasons and it’s very frustrating because you know they’re just flat out wrong.  So then finally you ask for a supervisor, and then ultimately, and Lily this is the process that you’re going to have to go through is you get to a supervisor, and I know Lily has actually already done this but what we’re going to do next is send a Qualified Request that I referenced earlier in this teleconference and we’re going to ask for a specific written response as to why our modification does not qualify for the Making Homes Affordable Program.  I got to tell you I’ve done this several times and often when push really comes to show off, in fact you do qualify.  But in fact you may have been targeted for who knows what reason as being a person who will cure their default by their own means, either you’re in a high-priced zip code or because of your past earnings from your taxes which they have access to by virtue of the 4506 T that you signed.

So whatever reason, they use statistics to determine that you are and identified and triaged you out into a group that they’re going to try not to assist.  You know what I mean?  They triage into a group that they try not to assist because they’re going to not default on their loan and not go to foreclosure even if they don’t help them, and then they treat the other third is the group that’s going to go into foreclosure in default any ways even if they help them.  Then the ones in the middle are the ones that if they help them, they can keep from going to foreclosure and keep those loans current, keep them as performing assets.  Those are the ones they work with.  So very often I think that’s where we get trapped and we get statistically triaged into this group and it takes some real arm twisting to get yourself out of that group and the Qualified Request is your next step.  So you write a Qualified Request very specifically asking that question, why [Indiscernible] [0:44:44] don’t I qualify?  I think that will force the issue.  At least they’ll force you to the next level.

All right, this has been the foreclosure doctor.  It’s Mike and Ryan Rockwood.  You can find us at 60minuteloanmodification.com.  Thank you for your questions and thanks for the opportunity to help people.  Good night.

Credit Card Debt Settlement – 5 Terms for Today

The Credit Card Cure Co-op provides tons of tools to help you settle your credit card debts…including a list of frequently asked questions and an extensive glossary of terms.

 

I hope these “5 terms for today”, January 15th help you in some small way!

 

 

Asset: Anything of monetary value that is owned by a person or company. Assets include

real property, personal property, stocks, mutual funds, etc.

Assignment: The transfer of property to be held in trust or to be used for the benefit of the

creditors (lenders).

Assignment of Mortgage: A document evidencing the transfer of ownership of a

mortgage from one person to another.

Assumable Mortgage: A mortgage loan that can be taken over (assumed) by the buyer

when a home is sold. An assumption of a mortgage is a transaction in which the buyer

of real property takes over the seller’s existing mortgage; the seller remains liable

unless released by the lender from the obligation. If the mortgage contains a due-onsale

clause, the loan may not be assumed without the lender’s consent.

Assumption: A homebuyer’s agreement to take on the primary responsibility for paying

an existing mortgage from a home seller.

Credit Card Debt Settlement and Credit Score Pain

Members of the Credit Card Cure Co-op often ask (entry 1/15/10):

Q: Will Debt Settlement hurt my FICO score?

A: Yes. All the missed payments will be reported to the credit bureaus. In addition, your account may get charged-off, which also is a negative. In my book I describe smart ways to minimize the damage and 7 Credit Repair Habits to speed FICO recovery. But, it often takes 6 months or more to settle and another 12-18 months to recover to a strong FICO score.

So, if your FICO score is critical to you in the next 12-24 months (security clearance, upcoming credit need, etc.) this may not be a good alternative. Conversely, many of us blindly pay homage to the FICO-god without an objective evaluation of how much that mindset is costing us.

How to read your credit report

In The Credit Card Cure Ryan Rockwood details a four-step process for eliminating credit card debt. The fourth step is Speedy Credit Score Recovery. Here is an excerpt from the book – about making some sense of your credit report.

Speedy Credit Score Recovery

The first step in a speedy recovery is to get familiar with your credit report. Order it now at www.Annual CreditReport.com. Also, order your FICO score from each of the three bureaus. Either way be sure to get your FICO score from each bureau as well. You will have to pay for these.

How to read and understand your Credit Reports

It is not critical that you become proficient at reading and interpreting your reports. If you have the time and the interest and the inclination to do so…go for it. What is critical is that you gain an appreciation of how you are being reported so that you can be effective in your efforts to recover your score. You can hire others to do the laborious work of disputing errors and correcting mistakes. But, you can’t win at the credit game unless you know the rules. The credit report is a big part of the rules of the credit game.

Ever try to take your credit report around with you when you car shop? Did you wonder why the dealer’s credit specialist would not accept it – but insisted on pulling her own? It’s because they prefer to use a report that is tailored more specifically to their needs – a Merchant Report. This report does more tabulating and consolidating, making it easy for them to grab the numbers that they deem most appropriate for their specific purposes.

 

Your reports are divided into four section – identifying information, credit history, public records and Inquiries.

The Identifying Information Section identifies you. Wow, who’d of thought? You will see that, in fact several of the entries are misspelled or have slightly incorrect information. That is because some creditor reported incorrectly (typo!) and the bureau retains it because omitting it could break a link in your credit history.

The Credit History Section summarizes activity on all of your “trade lines” or credit lines. Each account will sill show:

• Creditor name
  
• The type of credit it is (installment, revolving, mortgage, student loan, etc.)
  
• When the account was opened
  
• All the names on the account
  
• How much credit was extended – amount of the original loan or credit limit/high balance
  
• How much you presently owe
  
• Amounts past due
  
• Minimum or fixed monthly payment amounts
  
• Account status – open, closed, inactive, paid, etc.
  
• How you paid the account – always on-time, number of lates and when, how late, etc.
  
• Remarks – creditors’ or your own
  

Experian’s report will contain some plain English. Otherwise you need to consult the “terminology guide” that comes with each report to understand the payment codes, etc.

The Public Record Section will list financially-related public records. These include four of the worst entries on your report. These do the most score damage and for the longest time.

1. Bankruptcy – your report will show each of the accounts included in your BK. The information stays on your report for ten years and has a very negative impact on your scoring for the initial 12-36 months.
   
2. Foreclosure/repossession – If you allow the foreclosure process to go full course and the lender takes your home through a sheriff’s sale or trustee sale or your car or other collateral get s repossessed, you will have this on you public records section for 7 years. Similar to the impact of a BK, it is most detrimental in the initial years.
   
3. Tax liens – remain on your report for 15 years…even paid ones stay on for 10. Not pretty.
   
4. Judgments – If your creditors bother to sue you over a debt and they prevail, the court’s “judgment” is recorded. Also, court actions to enforce child support are recorded here as well.
   

    

The Inquiries Section is a list of everyone who has requested your credit report. It’s very detailed and divided into two sections… “Hard” inquiries – ones you initiate by filling-out a credit application and “Soft” inquiries – ones made by companies hoping to offer you a promotion credit opportunity or by existing creditors monitoring your report.

There are mathematical safeguards in the scoring process to protect you from inordinate negative impact from inquiries. The FICO model actually ignores most inquiries. It includes a buffer that ignores inquiries within 30-days of getting a mortgage or car loan.

 

Take these steps to make some sense out of your reports.

Highlight the information on each report that you question or that you intend to dispute. You may take this action yourself or hire it out. For now, just settle for identifying the disputable information being reported.

• Verify that the identifying information on the report is accurate. That is, even though some of the spelling may be incorrect, make sure that the Identification Section, identifies you and only you.
  
• Verify that there are no accounts on your report that are not (and never have been) yours.
  
• Check payment history and current balances – be sure they roughly agree with your figures.
  
• Check old accounts that remain open or charged-off/unpaid. Check them for dates of last activity to see if they are beyond the Statute of Limitations in your State (or the State in which you incurred the debt).
  
• Check the negatives – be sure they are correct or mark them for future disputes. The negatives can be identified as:
  
  • Current was 30, 60, or 90 days late
    
  • Delinquent 30, 60 or 90 days late
    
  • Paid 30, 60 or 90 days late
    
  • Charge Off
    
  • Bankruptcy
    
  • Collection Account
    
  • Collection Paid
    
  • Judgment
    

Getting familiar with your report is a great first step in your recovery after settling your debt. Now you perceive the challenge!

Loan Modification TV | January 14, 2009

Recorded live!

Ryan Rockwood:  This is the 60–Minute Loan Modification Members Only call and we’re excited to chat with you tonight.  Tonight’s all questions, answers, and on the script and dialogue.  Anyway, we had a good week and we want to share the latest results with you.  Hopefully, you had a good week moving forward.  I mean getting new questions, hitting new road blocks.  If you’ve hit road blocks, at least they’re new ones hopefully, and hopefully we can help you get through, okay.  My name is Ryan Rockwood.  My father, of course, Mike Rockwood and this is the 60–Minute Loan Modification Members Only Insider Secrets Teleconference Series, all right.

Mike Rockwood:  Every Thursday we gather here to talk to people who are familiar with our products and familiar with our attitude and familiar with what we do with regards to loan modification.  We are the preeminent site and source for Do-It-Yourself Loan Modification.  From the start, we have always advocated that you do your own loan modification and we are the source and you folks are the people who are really leading the charge in terms of do it yourself loan modification.  As it turns out, as this whole thing has evolved, a Do-It-Yourself Program is a pretty, pretty strong argument.  The government and the banks have argued that homeowners should be doing their own loan modifications that we advocated from the start.  You can and you should.  Some people can’t.  So for those people, we also do loan modifications.

But we gather here on Thursday nights to answer your questions and to talk about specific topics related to loan modification.  Like Ryan said we have had a lot of successes this week.  It’s kind of good.  It’s kind of good feeling to get the year off to a good start.  We’ve had several approvals just this week.  People with significant reductions admittedly, we had to fight very, very hard to get these modifications.  It seems like nothing is coming easy these days anymore.  Where is the wind fall?  I don’t know.  But we continue to fight the good fight and learn more and more streets smart tips and techniques every week that we try to pass on to all of you through this forum and on Monday night in The Foreclosure Doctor.

Our lawyer always wants us to emphasize that we are not lawyers.  He is the lawyer, and you must call him and pay for him if you have a legal question.  Don’t take what we say as legal counsel in any way and also do not consider us CPAs because of the fact that neither of us is one, am one, are one.  So we’re not lawyers and we’re not tax advisors.  We’re not tax experts.  All we’re passing onto you is things we’ve heard on the street in working with our clients.  We’re passing on best practices so that you can continue to do what I’ve always said you have to do in this loan modification frenzy.  Get out of line.  Get up to the front of the line.  Make your application stand out so that you can get a good loan modification.  Now Ryan, I came equipped with 10 questions that I got yet so far in the last hour.  People are just after your e-mail, started in with questions.  Do you want me to jump in to some of those or what’s your plan?

Ryan Rockwood:  Well, I’ve got one from a guy named Anthony.  Anthony is — it’s really he’s writing is he’s saying it’s hard to start the mod process because of lack of knowledge of the process.  Everyone is offering plans, who want 2 grand and $45,000 upfront to start the modification.  It’s hard to trust anyone.  Finding a lawyer is a bad reps and get a yes from the bank.  Please give advice.  Anthony, you know that’s the product we sell, right.  We do loan mod so you’re really thinking about doing a loan -

Mike Rockwood:  It is hard to trust us.

Ryan Rockwood:  If you’re thinking about doing a loan mod, there’s nothing upfront.  You do have to buy the product to get the loan and to do loan modification with us but that’s not enough for a payment.  If you’re unhappy with the product, you can return it within a year.  Anyway Anthony, why don’t you give us a call and we’ll talk to you about it.  It will probably cost you an average of $1,500 to $3,000 to have us do it for you.  It depends on how much you save and you pay after only if you say.  Okay?  So hopefully, we just knocked down one of the ball part.

Mike Rockwood:  Well you know, yes.  It is really a pretty no risks situation, but here’s the one thing you want to do is be sure not to abandon your relationship with the bank after you hire us or hire anybody else to do your loan modification for you.  Because really the only way you stay in touch with the process at all is at first every other week and then after the process is roll on pretty well.  I think you can let it go for a month or so.  But you should be contacting the bank just to verify that this third party is in fact working your modification.  You want to know the date on which the application was submitted and in our case, you’ll know that very clearly because you need to sign absolutely every page of it.  So when you work with us, we have full disclosure.  We tell you exactly where you are in the process.  Not that we’re God’s answer to a loan modification although we might be.

Ryan Rockwood:  Yes, we really are.

Mike Rockwood:  We could be.  But you want to expect a lot from these third parties because you’re turning over to them the opportunity because this opportunity is not going to be around forever.  My own estimation is that by the end of 2010, we’re going to be in such economic disarray that in fact loan modification themselves might even get suspended for awhile, at least the ones that are compensated by the government, all right.

Ryan Rockwood:  Okay.  Now, we got a big one here from Michael P.  Okay.  He’s got some math questions.  Do you have a pen?

Mike Rockwood:  I do, yes, without a calculator though.

Ryan Rockwood:  Okay.  No problem.  I think it’s going to be pretty easy.  Total income $6,200 a month, that’s including rental income.  Okay.  First mortgage PITI with IndyMac $2,406.  The DTI in my first mortgage is more than the required 31%?  It looks to me like it is indeed more than 31%.

Mike Rockwood:  Yes.

Ryan Rockwood:  Just barely.

Mike Rockwood:  Just barely.

Ryan Rockwood:  Yes.

Mike Rockwood:  So it’s like 33 or 34.

Ryan Rockwood:  Okay.  So the good news is I guess that you qualify there.  The bad news is being that you’re not going to get much relief, right.

Mike Rockwood:  Yes.  This is a little bit of a touchy subject.  So Ryan makes a really good observation.  So if you go in with a 33%, it’s going to be really easy for your lender to score big and earn $3000 bucks from the bailout money from the Making Homes Affordable Program by taking you down to 31% or just below 31% on that particular mortgage.  They’ll be happy.  You won’t be particularly happy because they’ll do that by just ever so slightly adjusting that first lever that they’ve got which is your interest rate.  So you won’t get much of a reduction.  So I am always whenever I’m real close to that 31%, I really always try to figure out a way to drive that higher.  You know what I mean is — and particularly because you said you had rental income.  Michael, did you say his getting on?  Michael, particularly because you have rental income that is mishandled so frequently, I can’t tell you.

Ryan Rockwood:  What do you think about that?  Could he — is there a chance to get that separated out?  Where are you finding that?

Mike Rockwood:  Yes, I see.

Ryan Rockwood:  Because I mean you get that $3,200 separated out and now we’re talking about…

Mike Rockwood:  Yes.

Ryan Rockwood:  60%.

Mike Rockwood:  Right.  So it’s a game changer if you can present your rental income as a separate business with a net profit that you pocket.

Ryan Rockwood:  Or net loss probably.

Mike Rockwood:  Probably will be a net loss so it enters your budget only as one expense line instead of at the gross.

Ryan Rockwood:  Okay.  So in other words, we try and I don’t know if we can say we we’ll always go back at [Indiscernible] [0:09:37] list.  Have we ever had success on that?

Mike Rockwood:  Yes, we have but not with — and I don’t know if I just got Bank of America on my brain or does he’s with Bank of America?

Ryan Rockwood:  No, I think he might have said IndyMac.

Mike Rockwood:  Okay.

Ryan Rockwood:  But maybe he doesn’t say.  But anyway, the point being there is income is what we’ll call this is a separate business…

Mike Rockwood:  Yes.

Ryan Rockwood:  …that doesn’t make any income.  It’s an expense or maybe a miscellaneous income on your budget.  It’s a line item of maybe negative $500 a month real estate or maybe it is positive $500 a month.

Mike Rockwood:  Yes, you know Ryan, you shouldn’t assume that.  Just because we’re right here in California where no landlords make any money cash flow wise.

Ryan Rockwood:  Yes.

Mike Rockwood:  We got to remember that there are plenty of parts of the country where they do actually make some monthly cash flow.

Ryan Rockwood:  I want to move there.

Mike Rockwood:  Yes.  So that is the case, then you have a much smaller add to your monthly gross income.  So now, the trick is going to be to present it in such a way that it is in fact the standalone business.  The way I recommend you doing that, since you have purchased the kit already, is to take that.  You’ll see on the black belt CD there is a business profit and loss statement already constructed for you.  Work that into a year-to-date and you might as well do it for last six months or do it for 2009 on entire year a profit and loss statement for your business that shows the revenue line is obviously your gross rent and then put in half or dozen expense lines there not just your PITIA but also maintenance and also any utilities that you have to pay et cetera.  Then if there is still positive cash flow, then just take that amount to your personal budget.

Ryan Rockwood:  Okay.  He goes on to say, “My total debt not including credit cards is 70%.”

Mike Rockwood:  Okay.

Ryan Rockwood:  – Of his gross income.

Mike Rockwood.  Not in total [Indiscernible] [0:11:49]

Ryan Rockwood.  It’s $4,300.  Yes.  What I’m going to say here is that I’m suspecting — he says, “Am I calculating this correctly?”  It is no way for us to tell but I’m going to guess not because if your total debt is 70%, your taxes are going to chew up your 30.  You have no income to buy food with.  So I’m praying for your sake that that’s dramatically wrong and you’re counting expenses as debt.

Mike Rockwood:  No.  Well, here it is Ryan, he might be talking about his back-end DTI with his mortgage and all of his credit card debts but he doesn’t he say specifically that it doesn’t include my credit card debt?

Ryan Rockwood:  It does.  But I mean yes and so how could it…

Mike Rockwood:  So it’s going to be higher.

Ryan Rockwood:  Well, it’s going to be a first, a second, and I mean his cars.

Mike Rockwood:  Student loan maybe.

Ryan Rockwood:  Yes.  Sure, anything.  But if he gets the 70% -

Mike Rockwood:  No way it will happen.

Ryan Rockwood:  There’s no way that he’s going to — I mean, because we haven’t — he’s talking about gross.  So remember let’s go over debts really quick.  When calculating debts, debts are anything that you already pay for and you owe money on.  It’s not something that is a regular expense such as electricity or even food or something like that.  Those are called expense items and they’re not calculated as debt.  Now, you don’t need to worry about it too much except that you have to make sure that the end of the month everything is zero.  Okay, like just budgeting — basic budgeting.  Okay.  So when you’re saying this, I’m thinking that you’re probably doing all of your debts.  It looks like he’s not including credit cards because he’s not paying credit cards.  So the next answer that we’ll jump into is that will affect your loan mod by reducing your DTI potentially if it’s gone on long enough.  Have you were two months behind -

Mike Rockwood:  Yes.

Ryan Rockwood:  – or something like that.

Mike Rockwood:  That would be right.

Ryan Rockwood:  It’s not going to fly.  It’s just going to be on your thing as your DTI.  It doesn’t matter unless your DTI is 100% or something and you need to reduce it.  But based on what we’re talking about, you never going to reduce that DTI, the entire DTI too low.  Anyway, you’ve got a lot of debt.

Mike Rockwood:  Okay.  You know Ryan, for the sake of everybody else, let’s just a quick review of the ratios that you need under budget.

Ryan Rockwood:  Okay.

Mike Rockwood:  Now everybody, let’s just be clear.  This is really very, very clear.  You need to have higher than a 31% front-end debt-to-income ratio to qualify for any modification program or whatsoever, not just the Making Homes Affordable Loan.  That has kind of become the model for all modification programs.  So you’re stuck with that.  If your first mortgage — the first mortgage on your primary residence with principal interest, tax and insurance and homeowners association, five things, all five things added together.  If that’s less than 31% of your household gross income, you’re not going to qualify.  If it is higher than 31%, then you’re still in the running for the president’s Making Homes Affordable Loan Modification or HAMP program.  Now, when you add in all your other debts, your second mortgage, your student loans, your car loans, your credit cards, your installment, your gas card, your Macy’s, your Nordstrom’s, add in all those credit cards, your monthly debt.  If that amount divided by your total gross household income is more than 70%, then you’re in trouble on the other end of the spectrum.  The lender and the government agreed that you probably have too much debt and you’re going to just tip over because they realize you need that additional 30%, like Ryan says, give some to the government and to buy some food.  So those are the basic ratios and then the third factor that you have to know about is your cash flow.  You really need to submit budgets that are near break even, really close to break even these days.  It’s just how things are.

Ryan Rockwood:  Okay.  So how will they — will they calculate 70% of rent income or use the gross rental income number and…

Mike Rockwood:  Well, you know some people say that it’s real crystal clear but I don’t think it is.  Here are the two methods that have been used for rental income.  First one is take 75% of the gross rental income and add it to your income, 75%.  Then, take all the PITIA of all the mortgages and add that to your expenses.  So what that does is assume that you’re going to lose 25% of your rentals in vacancies, maintenance, and management fees.  It’s really a pretty good assumption and it worked fine but recently because a lot of complaining about how it was disqualifying some people, they went to another method that is just taking the gross rent minus the PITIA and add, and then take that amount over to your budget.  Now, if you think about it that’s better or it should be better for the homeowner because it accepts more income.  But then again some of us are trying to reduce our income.  So the truth is I’ve been successfully using either method depending on which one we need to use.  The third method we talked about just a minute ago and that is spitting off your real estate, especially easy if you have more than two or three properties, into a separate business and then showing a PNL for it and convincing the lender that in fact that’s a separate business, this is a PNL, and we’ll just bring the owners draw over so it impacts your personal budget even less.

Ryan Rockwood:  Okay.  Now, it goes on to ask we’ve been doing short term room rentals in our home.  How do they consider this and do we need to show the leases?  The answer to that will depend on how your budget looks.  I mean, yes they’ll consider if…

Mike Rockwood:  If you wanted to.

Ryan Rockwood:  Yes.  The question is do you want them to?  You got to do your budget and if you can’t and if you need that income, count that income to hit the numbers that you need to get.

Mike Rockwood:  Exactly.

Ryan Rockwood:  You may have to show a lease.  You may — which could be just a little note that you write in a piece of paper which reminds me, do we ever put together that…

Mike Rockwood:  Yes.

Ryan Rockwood:  Trying someone [Inaudible] [0:18:43].

Mike Rockwood:  Contribution, yes.

Ryan Rockwood:  Okay.  It may be as simple as a little letter that you write up.  It could be a formal lease.  It could be cancelled checks, could be bank statements showing the canceled check, and it could be all three of them.  Okay.

Mike Rockwood:  Yes.

Ryan Rockwood:  Finally, my wife has some family money, a separate account only about $5,000.  What are the chances they could find out about that money?  The chances are — I’m not sure.  I wouldn’t worry about it too much if it i $5,000 except that I would make sure that it can’t be used as some sort of offset against any of the credit cards that you’re not paying or any of the home equity loan you’re not paying.

Mike Rockwood:  Explain the offset, Ryan.

Ryan Rockwood:  Well, you know I don’t really know the definition.  You could probably give the definition.

Mike Rockwood:  Well, the offset is the opportunity.  It’s in the fine print of many of your savings and checking accounts.  It gives the lender the opportunity to in fact take money that you have deposited in one account if you stiff them on another.  So in other words if you fail to make a payment they can, they have the right to actually go and take the money out of your savings account.  There can be no arguing about whether or not they have the legal right to do this because they do it frequently and it actually is written in the guidelines of the savings contract.  Because actually, technically, legally when you give your money to the bank for a checking account or for a savings account, you actually have given them the funds and they actually are — they’re not holding the funds for you.  Technically, legally you have given them the money and they now owe you the money.  So it is in fact it’s very rational and it’s very logical and it’s also very legal for them to take money.  So if you’ve got this $5,000 in one of the banks that you’re negotiating with for a loan mod or for a settlement on a credit card, get it out of there.

Now, do keep in mind though, Michael, that you’re talking about a loan modification.  You’re not going to get the kind of underwriting scrutiny that’s going to go around and look at all your assets because in a loan modification they’re looking at altering your modification.  They’re not looking at settling with you.  So not the same thing as if you’re asking for deed in lieu or if you’re asking for a short sale or you’re asking for a settlement on your second mortgage or on your HELOC or on your home equity or on your credit card or something like that.

Ryan Rockwood:  Okay, Anthony follows up with another question.  Is there a minimum amount of money in the HAMP program?  I’m unemployed.  I’ve received $1,900 for the next two months.  My wife works for the school district, earns $3,400 a month.  The house is $3600 a month without taxes and insurance.  Of course, there’s a minimum amount of money on the HAMP program.  I’m assuming you’re saying to qualify and in fact that’s the primary problem — that’s the primary reason people don’t qualify is they don’t have enough money to qualify for loan modification.  It’s probably the opposite of what you might think coming at the problem logically.  So in order to qualify, you are going to have to get your budget including everything to be at about zero.  Okay.  So if you can’t do that, if you can’t get close to that, you’re absolutely tossed.

Mike Rockwood:  He stills within — Anthony, you’re still within a possible, maybe, because if you’ve got 2,000 a month and she’s got 3,400 a month that’s 5,300 bucks a month or 5,400.  If your payment is 3,600 and let’s say just guess your taxes are 500 a month and insurance is 50, you still might be in there.

Ryan Rockwood:  Well, I’m going to say no because…

Mike Rockwood:  It’s getting pretty high.

Ryan Rockwood:  We’re talking about gross income here.  Yes.

Mike Rockwood:  You got credit card debt and you got car loan and stuff like that.

Ryan Rockwood:  But talking about this thing being…

Mike Rockwood:  Yes.  So Anthony your question — you’re asking exactly the right question but no, there’s not a minimum but there — here’s what you can do.

Ryan Rockwood:  Buy your [Indiscernible] [0:22:48].

Mike Rockwood:  No, but here’s what you can do.  You can take your payment.  Add your taxes, your insurance, homeowners association if you have it, and divide it by 31%.  Then you’ll know what the gross household income is that you need in order for that to work out for you.

Ryan Rockwood:  Why don’t we do that mark?

Mike Rockwood:  Yes.  So I mean that’s the…

Ryan Rockwood:  I’m also going to say here that — I mean this is clearly one where it’s very close and so whether you get the — I mean, if you have a kit.  Maybe you don’t have the kit because you’re asking these questions.

Mike Rockwood:  You know, I’m going to say and I can say it over, you know it was a mistake.  So Anthony, take it and divide it by 70.  If you take it, divide it by 0.7 that would be your max.  So take your principal interest, tax, and insurance.  Take that payment and divide it by 0.7.  That will give you a figure that would make that payment 70% of your household income.  I’ll just bet you you’re not that far away.  Now, of course if you have car loans and credit card and stuff like that, it’s going to make it even more complicated.  So you’d like to add that to the number that you divide by 70.  But 70, above 70 in the debt-to-income ratio is really kind of a killer.  So let me say it again slowly because I’ve totally confused myself.  Take all of your debts, your home, your credit cards, your car loans and everything.  Add them all up and get that figure.  Let’s say it is $5,500 and divide that 0.7 and that’s the minimum amount that you’re going to need as household income in order to qualify for modification program.  Otherwise, your debt-to-income ratio, your back-end will be too high.

All right, Pat says in the Making Homes Affordable.  Okay, this is related to what we said, “Is the 31% debt-to-income target for all monthly debt payments or just on the mortgages?”  Pat, be real clear on it.  In the Making Homes Affordable, the 31% DTI target is for your first mortgage only:  Principal interest, tax and insurance, and homeowners association.  Okay.

Cameron says my wife contacted, tapped at our lender directly but cannot make any sense out of what she learned.  I’m not surprised at that.  Now, I will call them back.  What do I need to know before I call?  Okay Cameron, real specifically here’s what you need to do.  I recommend that you — in the kit, I recommend four things that you do.  One is that you listen to that CD, that free CD that’s on the site, because you’ll kind of get an idea for the kinds of settlements that are likely and it’s free so do that.  Second thing; take any money out of the bank that you’re going to negotiate with if you have large amounts of money on deposit there.  Don’t close the account but take most of the money out and put it in a different bank.  The third thing to do is get your — review your hardships so that you know that the hardship that you’re facing is one of those that will be accepted by the government and by the bank.  Those are really easy to identify.  The next thing is to fully understand your budget.  You have to understand the ratios, the front-end and back-end DTI and the cash flow ratios.  Once you have all that down and you’re sure that you have a budget that qualifies and you’re sure that you have a hardship that qualifies, and you have got money and deposited in that bank, then you can feel free to contact.  So you have a little bit of work to do to prepare but honestly it’s so worth it.  Now, what I’ve begun doing before I contact the lenders as well as to do a quick Do-It-Yourself Forensic Loan Audit and I’ll have more information for you on that in the future but because I always like to be aware before I contact the lender if in fact I feel there was some real serious violations or even fraud that took place in the making of this loan because it gives me a lot more leverage in terms of convincing that lender just to move right to the settlement.  You know, cut the crap and settle with me by giving me the modification.

Ryan Rockwood:  Well, I got a little thing I want to say.  On the previous conversation, the guy had — he mentioned that he had unemployment for two months and I do want to mention that that’s not going to fly two months of unemployment.  Unemployment will fly but it has to be kind of in the foreseeable future and he say he’s really…

Mike Rockwood:  You mean, he’s only got two months left?

Ryan Rockwood:  So these days, you can really renew that unemployment for a long time.  So I mean, you may have been on it for two years already or whatever and maybe up but consider that.

Mike Rockwood:  All right.  Minnie asks, “If I know that my loan broker erroneously inflated my income on my application, can I just explain that to the lender or do I need to get one of those forensic loan audits and hire an attorney?”  Minnie, what I have been doing when I do identify clear violations of any of the consumer protection laws or when I identify clear instances of fraud or discrimination or any pretty serious violations, I always begin the loan modification process with a letter to the lender to their legal department Loss Mitigation Department and Customer Service Department that goes along with the loan mod application.  It does just as you suggested.  It states the obvious.  I don’t try to be a lawyer.  I just said here are the facts and the approach I take is I say please inform me if you can take action on this information or if I need to hire an attorney to represent me to take action against you.  I had really good luck with them coming back and being very proactive actually in handling claims like that and they’ll have one of their attorneys contact me and just talk about — what he’s really doing is trying to pick my brain for what I really know, what will I divulge about the situation but I think that’s the best first approach because you don’t know that you’re going to submit all this and it’s just a loan modification you want.  If on the other hand you don’t, then you can take it to the next level and take it to an attorney know after six weeks or so if you have not gotten a loan modification that you wanted.

All right Jason says, “I have a rental unit that I am selling short.  I lost over a $100,000 on that deal and the 420 gazillion-dollar-bank lost about $50,000 and they’re making me feel like such a bum.”  Tell me about it.  “Anyway, it will be off my books in about 45 days.  In the meantime, I am ready to apply for a loan modification on my own home but the rentals skews my ratios.  Can I just omit it since they might not even approve my modification until after the home is gone?”  Jason, we have had great success doing exactly that.  So I would say yes, go right ahead and do it.  Omit it, but don’t be surprised if your loan modification application gets to underwriter and you get a question about it.  So if by the time, because think about it, if it closes in 45 days it’s going to be 45 more days before it’s off your credit report.  So you’re definitely going to be through this loan modification so what I would do is I name it on my schedule of real estate owned.  I name the property and I just put in Escrow, short sale, stop payment and tell them what date you stopped the payment.  Strange as it sounds, they just accept that.

All right, Allen says, “I believe that my appraisal was inflated to get me into this.”  This one will take awhile.  You go to that one.  How much time we have left?  Oh, we have plenty of time.  “I believe my appraisal was inflated to get me into this loan.  Now, the home is worth about half of what I owe on it.  I’m in Southern California.  How much should I go — how should I go about investigating it?”  I love this question because this was one of the easiest ways for lenders to be able to lend you more money on a home than you really had a right to, and back then nobody thought it was so unethical to do because things for so many years had inflated so steadily that it seemed like, well so what if we’re using a value that won’t really be a reality until next year.  It certainly will be reality next year, right, wrong.  It turned out not to be and a lot of people got caught there.

So now, as they look back on it, they’re saying wait a minute.  How in the world do they ever think this home was worth $800,000?  It never — the neighborhood never got to that level.  Well, there are some really easy ways for you to go back and so this is a really clear violation.  It’s actually a fraud violation and it’s one of those very serious ones that a forensic loan audit can identify. You can do it yourself with a few easy steps.  What I don’t recommend — what I do when I’m trying to validate an appraisal is I get a local realtor to do what’s called the broker price opinion and I tell them the date that it closed and they research other comparables just like the appraiser would have.  But a local realtor looking back with 20-20 hindsight, you give him really clear directions that you want all the properties to be less than or to be the very closest they can be within a two-month of closing of the same time you close and that you want the comparables to be very, very comparable in the realtor’s opinion.

Now, the realtor knows that there are — that every multiple listing service divides areas up into homes that are comparable and value for very specific reasons.  You don’t have one region that has great views in the same MLS area as a neighborhood with no views.  So they’re really grouped together by where they are in the hillside, where they are versus the freeway.  They’re historically comparable values in these areas.  So the local realtor can help you think that through.

Then you get a local realtor to examine the appraisal and examine whether or not the comparables are really good comparables.  Because in fact some homes they can check the tax records real quickly just to see if a two-bedroom almost recorded as a three, a three or as a four or that square footage was misrepresented in any way.

Ryan Rockwood:  One guy writes in the chat.  He says that there’s a 60- — there’s a 500-square-foot difference between the appraisal and the reality of the property.

Mike Rockwood:  Oh.

Ryan Rockwood:  Yes.

Mike Rockwood:  That’s a very serious [Indiscernible] [0:34:13].

Ryan Rockwood:  It’s dramatic.

Mike Rockwood:  Yes.  That’s pretty dramatic especially when you think about some of the homes I know, some of the homes here in our neighborhood are only 1,500 square feet so that’s a pretty big mistake.  Okay, so the other — the third — the last thing I always do is I check because a lot of times the appraiser makes an assumption for appraisals or appreciation, and so what I do is I always suspect that if I’ve seen more than a 10% appraisal in this neighborhood that I’m looking at over a one year period, then I have a problem.  So I always ask the local realtor and help me now get online and look back one year prior and tell him and do some comparables for me.  If I have more than a 10% appreciation then I think that signals also that your appraisal may have been inflated, all right.  So there you go.  That’s just one little tidbit from the upcoming Do-It-Yourself Forensic Loan Audit Manual that I’m about to produce.

Ryan Rockwood:  All right.  Well, congratulations guys, another class well done.

Mike Rockwood:  All right.

Ryan Rockwood:  I wanted to ask and see if anyone on the phone here had a question.

Mike Rockwood:  Good.  We’re always giving those [Indiscernible] [0:35:29].

Ryan Rockwood:  Hi guys on the phone.  Does anyone have a question?

Male Speaker 3:  [Inaudible] [0:35:39].

Ryan Rockwood:  Yeah.  I can hear you.  Go ahead.

Male Speaker 3:  Just wanted to find out [Inaudible] [0:35:43].

Ryan Rockwood:  Try to say it succinctly again.

Male Speaker 3:  The market value is 200 [Inaudible] [0:36:04].

Ryan Rockwood:  If you’re on the phone call and you’re not talking to me, could you mute your phone.  Sorry, let’s try one more time.  I’m sure we’ll get it.  So we heard that the value is 200.

Male Speaker 3:  Yeah.  Basically the value is 200 and that was we hope for but it’s not on the market.  The trust is [Inaudible] [0:36:28].

Mike Rockwood:  Shoot.

Ryan Rockwood:  Yeah.  Okay.  So the property is sold, correct?

Mike Rockwood:  No, the bank took it back.

Ryan Rockwood:  The bank took it back.  What’s state are you in?

Mike Rockwood:  What state are you in?

Ryan Rockwood:  What state are you in?

Male Speaker 3:  California.

Mike Rockwood:  California.

Ryan Rockwood:  Oh, California.  Okay.  You know what?  Let’s handle this one by e-mail.  Is that okay?  Can you just send me an e-mail because we have so much feedback?  Can you — I’m at ryan@60minuteloanmodification.com.

Male Speaker 3:  Yes, I got it.  Thank you.

Ryan Rockwood:  Okay, we’ll follow up and you could send your phone number or whatever.  We’ll follow up with you.

Male Speaker 3:  Thank you.

Ryan Rockwood:  Okay, bye–bye.  Sorry about that.  We had a ton of feedback but basically a guy there is talking about the bank took the home.  He wants to buy it back now but they say they need to send it to a realtor and it sounds like this guy is saying, “Well how can I avoid that?”  The best thing to do is probably lie to your realtor.  Stopping the REO [Indiscernible] [0:37:52.], which is the mechanism as sloppy as it is.

Mike Rockwood:  I can do it.

Ryan Rockwood:  It’s well entrenched.  I don’t — there are too many interests there to get in it.

Mike Rockwood:  Part of the problem is that, especially it was one of the bigger banks, the decisions are made back in New York or in Dallas or something like that.  So it’s pretty hard unless it’s a local or a regional bank, you may be able to pull it off but I’ve never been successful or heard of anybody be successful in short circuiting the REO because the REO process has all kinds of safeguards for the lender.  You know what I mean?  They’ve got a cleanup guy, they’ve got a realtor, they’ve got a syndicator, and they’ve got an inspector and an appraiser, and Escrow person, and everybody handles the transaction in such a way that they have a lot of insurance policies and deep pockets people to sue if they have to.  So there are a lot of safeguards there in transferring the property from now they have taken ownership now to transfer to somebody else.  So to short circuit that, I just don’t think you’ll have luck doing it.

All right, I’ve got one more question here.  “Can Escrow or title give us copies of the documents?  I don’t keep very good records and I need to do a forensic loan audit.”  I say my answer is yes.  Start with realtor.  Very often realtors keep records of the entire transactions.  Sometimes like we always have a month on DVD or on CD.  So very likely he can even just e-mail it to you or mail you one of the CDs.  He’ll likely have records of all the docs.  If not — if he doesn’t think all the title company or Escrow to handle the closing transaction, and they’re usually right in your neighborhood anyway so you can drive down there and pick him up, that’s a lot easier than trying to work through the bank.  Usually I find it at least a couple of weeks if you have to work through the bank.  But surprisingly, the banks are actually pretty responsive, and we have a letter that we use routinely because when we begin loan modification now for clients, we routinely ask for all the closing documents for a couple of reasons.  I’m always surprised when two weeks later I received a stock of information from the lenders.  So they’re more efficient in that area than I ever would have thought they were.

All right everybody, well this has been the 60–Minute Loan Modification Weekly Teleconference.  We thank you for your questions.  We thank you for your support and we really want to encourage you to push, push, push to get that loan modification submitted and to push, push, push to get a good settlement because it can really change your financial life and number two, it’s only one of many things that we all need to be doing to get our financial house in order.  Another one is to deal with our credit card debt and we really encourage you to join us in the Credit Card Cure.  Ryan tells me that right below me on the screen, there’s a place for you to sign up for the Credit Card Cure Co-Op and it’s a group of people that are banding together and sharing a lot of information.  Ryan is brokering a lot of information from a lot of sources and helping people work through settlements and their credit card debt because we’re headed for tough economic times and we need to get our mortgage and our home settled when you get a credit card debt, when you get all of this debt, just off our back so that we can get back to living debt free, paying our way as we go in this financial monkey off our backs, our individual backs as well as the back of our government has to deal with it as well but that’s their problem, right.  You have enough to do just taking care of your house.  So get your house in order.  Get your financial house in order and the next few years will not be nearly as stressful as they will be for those hopes that are in complete debt disarray.  All right, thanks everybody.  Good night.  Talk to you next week.

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Prepare before you stop paying your credit cards

Part of the C4 System for Credit Card Debt Settlement is a speedy credit score recovery method. Preparing BEFORE you stop making your payments is critical. Here’s an excerpt from The Credit Card Cure that has some great advice.

Preparing for Rapid FICO Recovery while preparing to stop paying your credit cards!

• Get a secured credit card now
  

  These cards are really similar to a debit card but the use is reported to the credit bureaus. Get one at your local bank, credit union or online.
  

  The reason to get this card is that you will need several credit lines to rapidly build-up your score after your settlements. You will be closing the cards you settle with so this will provide a credit card for your use as well as a report to the bureaus from an unsecured credit source.
  

  The sooner you get the card the better – older is better. This card MAY be a good place to save your payments for a settlement.
  

• Get a copy of your credit report now
  

  Go to www.annualcreditreport.com now and get your free annual report and pay for all three FICO scores. You will want to have your reports with scores now for two reasons: 1) to use as a credit score benchmark for your recovery, 2) to become familiar with how negatives are reported and 3) to be sure you have all your debts on your Credit Card Debt Worksheet and 4) check any old debts against the statute of limitations to determine of some are too old.
  

  Write to me for a copy of my article on how to read your credit report. It’s like Latin…or Sanskrit…you know it means important things but who can understand it!!
  

• Summarize your Credit Card Debts on the Worksheet
  

  This is a critical step because 1) you do not want to miss any of the debts 2) you are probably more in debt than you think 3) you will want to have this info to prioritize your settlements and 4) you will want to have this info to help you with the next step
  

• Choose 4-10 accounts that will help you recover.
  

  You will want to have oldest possible accounts and a variety of credit types (installment, credit cards, mortgages, etc.).
  

  These are the accounts that you will use to recover – with 2X per month payments and low use of available credit.
  

• Plan a place to save
  

  Remember, you will need 10-25% of the balances on your accounts in order to settle. You need to have a place to save the money that will not be taken in offset (!!!!!) and will be safe from your other inevitable needs.
  

  Consider having a friend or relative hold it for you.
  

   

• Take time to let it sink-in that your score is headed south
  

  Accept how far south it will go and how long it will be gone. Some members are seeing declines of 100 points or more. But, recall how much you are paying for that score and how much anxiety the debt is causing you.
  

  Think of it like a friendship that has gone bad and you need some time apart. When you are re-united, I bet absence will have made the heart grow in fondness!
  

• Get ready to piggyback
  

  Identify a friend or two who will allow you to piggyback on their good credit after you settle. That is, a spouse, friend, parent (be careful!), or significant other who will let you sign on as a co-signer on one or more of their accounts. This is a big help to speed your recovery – it is also a huge favor to ask. That’s why I recommend you start to think about it now.
  

  
   

Next Page →

• Loan Modification 101

  • They can’t hurt you if you don’t care
  • Loan Modification Limbo & Questions
  • Ethics of Loan Modification and Walking Away
  • Loan Mod TV | Hardships and Questions
  • One Talk Radio Host dubbed me the “Loan Mod Mercenary”!
  • Success Secrets of the 6% | Loan Mod TV
  • Loan Modification TV | Jan. 19
  • Credit Card Debt Settlement – 5 Terms for Today
  • Credit Card Debt Settlement and Credit Score Pain
  • How to read your credit report
  • Loan Modification TV | January 14, 2009
  • Test
  • Prepare before you stop paying your credit cards
  • FAQ Debt Settlement
  • Credit Card Debt SettlementTerms
  • Foreclosure Doctor TV | What happens when you walk away?
  • FAQ – who qualifies to settle credit card debts
  • Credit Card Debt Settlement – Terms 1/12
  • FAQ – Credit Card Debt Settlement
  • Credit Card Debt Settlement Terms
  • Credit Card Debt Settlement – Terms for Today
  • Loan Mod TV Live | Short Sale v.s. Loan Modification
  • Settling Debts
  • 5 Terms for the Day
  • Statute of Limitations on your Credit Card Debt
  • Credit Card Debt Settlement
  • Fast FICO Recovery
  • December 29th Loan Mod Class: FICO 911
  • Fast FICO Recovery
  • Members Loan Modification Class | Dec 17
  • Mommy, where did my home equity go?
  • Members Call | Dec. 17th
  • Loan Modification TV | Dec 15
  • Loan Mod TV: Dec 10
  • December 1 Loan Modification Teleseminar
  • Short sales stimulus! MHA Rocks
  • Monday – more pressure on lenders?
  • Ethics in Foreclosures
  • Get “out-of-line”- Now Call Him!
  • Get “out-of-line”- Write the CEO
  • JP from Hawaii says:
  • Avoid Foreclosure Scams – Duh!
  • Seven Sure-fire Ways to Delay Foreclosure
  • Fannie Renter
  • Tax Credit extended until next spring
  • Loan Mod & Bankruptcy: Should You File?
  • 650,000 Trial Mods may be a sham
  • Bankruptcy as part of Foreclosure Workouts
  • Fannie To Rent Homes Instead Of Foreclosing
  • Forensic Mortgage Loan Audit Checklist

• Loan Modification Resources

  • Loan Modification Forum - Ask questions… get answers