Ryan Rockwood: Hello, everyone and welcome to the call. I apologize for getting started a few minutes late. You have arrived at the 60-Minute Loan Modification Teleconference Weekly Teleconference. And I believe this is our teleconference that is open to everyone. Welcome. We’re excited to have you here with us. Today’s topic is going to be getting off your debt [phonetic] basically and getting a hardship letter cranked out. It deserves about 15 minutes of your attention, although if you’re like us, like me at least, my first time I probably gave it a couple weeks of attention. So a tremendous, really terrible thing to do a job well done that doesn’t need to be done at all, right.
So, my name is Ryan Rockwood. My father and partner here in business is my dad, Mike Rockwood, the author of the 60-Minute Loan Modification. And every week we try to get on and bring you guys the best and the latest of everything that’s going on. We handle topic by topic. We really try to basically dish out our secrets and the hope is obviously that we will benefit you and we have a product that we sell. Let’s say, it’s basically a kit that helps you do your own loan modifications. And we hope that just by providing info and everything that people will basically be able to decide whether or not the product’s right for them.
So, today without further ado, I think I have a few announcements but I’ll get to them a little bit later.
Mike Rockwood: Okay.
Ryan Rockwood: The structure the call goes something like this. We bring you a message and then we open the lines to questions and you’re invited to ask questions. It doesn’t matter if you’re new, if it’s a beginner question or advance question or if it’s off topic. That’s fine. Just ask your questions related to loan modification. And the way you ask is just announce your name, like I would say Ryan. And then I will acknowledge you and you can go ahead and say your question. And that’s just how you know that you’re not talking over someone else when you’re saying your messages. Okay.
So, we’ll get to that a little bit. However in the meantime and throughout the entire conference, you can always e-mail in a question and we’ll tackle it if we can live. The e-mail to write to is help@60minuteloanmodification.com. Okay. Now, on to the call basically…
Mike Rockwood: Ready for me?
Ryan Rockwood: Yes. Do it.
Mike Rockwood: All right. Let me start. Okay, before I jump right into hardship matters, what I want to do is mention a couple of things. This week we had a little bit of interest rates scare, didn’t we? But it seems like in the last 24 hours, interest rates have dropped again. So, in the business, all of us are feeling kind of relieved that what we feel is kind of imminent that we’re going to have some interest rate problems here in the next year. Probably, it hasn’t started yet and we’re all hoping that it’ll be delayed for many months and so we can have a reasonable summer season.
But any rate, I also want to report that the Obama plan announced on March 4 with great fan fair has yet to be implemented at most lenders. Some lenders like chase informed us that they have officially begun the program. Now that’s a lot of hooey because I have, on several occasions, been transferred to that department which they call the way forward. That’s way, way forward department. It’s beyond the care department, beyond the customer service department. Isn’t that crazy, all the euphemisms they used. But anyway, Chase calls theirs the Care Department.
And beyond the Care Department, there’s a special department for people who have not gone late on their mortgages and it’s called the Way Forward. But guess what, you cannot get anybody to answer the phone there. Anytime the day that I call in, I cannot get through the Way Forward. I personally don’t think it exists. There’s an electronic voice that pops on and says that they can’t take your call. So, I really don’t think it exists and I think it’s just a lot of political hooey.
But at any rate, modifications for those of you who are willing to go late on your mortgage are continuing at a good clip. However, the foreclosure rate continues to climb. There have now been over a million foreclosure notices that have gone out in the last 90 days, which is pretty alarming. So, in other words all the loan modification efforts that have been undertaken have not slowed things at all. Most people are expecting at least another month or two of that high rate before the loan modification efforts starts to payoff and things start to settle down a little bit. So, that’s what we’re looking at in the coming weeks.
Ryan Rockwood: You know in California here, big news was a 90-day moratorium on foreclosures. That was announced this week. And I haven’t heard of other states whether they’re doing that or not, have you?
Mike Rockwood: Yes. There is one other state and I think it’s Utah that just implemented a 90-day moratorium. But people are kind of ambivalent about moratoriums and whether or not, they’re really in the public good and whether or not they’re – you know, they do some people some good and certainly some of our clients maybe some of the people on the line even are relieved that there’s the moratorium.
But on the other hand, gosh, there’s an awful lot of foreclosures that just need to take place and we need to swallow the medicine, take the bitter pill, let the banks write off those bad mortgages or let them go to foreclosure, let them get into the REO system and deflate that housing bubble. It’s kind of that natural process that needs to take place. But to the extent that it keeps a single family in their home, I guess who can fold it? But anyway, that’s the news in California. Things will be slowed in terms of foreclosures for the next 90 days.
Let’s jump into our topic. Crafting a hardship letter once was actually quite a task. And a year ago when I first started working loan modifications and did my own loan modifications, I had a pretty eloquent letter written, pretty compelling. However, as things have sped up as we’ve reported on this teleconference many times before, the hardship has gotten to be less and less and less of a subjective matter and very much an objective matter. In fact, most of the lenders are now providing you a check-off form with five or six of the common hardships. You simply select a hardship that applies to you and give a brief explanation if you need to.
And I got to tell you, if you don’t need to, don’t even do that. There’s just no point. But what’s more important than crafting the hardship letter, what’s more important is helping people think through what are acceptable hardships these days. Because honestly a lot of folks come to us and say, “I simply can’t afford my mortgage.” And when we ask them what their hardship is, for a lot of reasons people say, “I don’t have a hardship.” Now sometimes it’s just pride. Sometimes as if the don’t really understand what we mean by hardship. And so we’ve developed kind of a skill, Ryan and I.
Ryan Rockwood: I think generally the thing is that people are so industrious and hard working, and ultimately optimistic that we don’t tend to define our setbacks as hardships. We seem as – what do you say?
Mike Rockwood: Another challenge.
Ryan Rockwood: Yes and that’s great for life but it’s not great for getting a loan modification.
Mike Rockwood: No, that’s a good insight because in fact, if you think about it, the way most of us were trained is that we’re supposed to face obstacles and see them as challenges overcome them. You know, just work harder, work smarter, save a little more. So, what awful lot of folks do is that hardship kind of creeps up on them. And over the months, it gets harder and harder and harder to make ends meet and then after a few months, they say, “What the heck is going on? Why does this seem to be on my mind all the time? Why do these bills seems to be so difficult and why is there so much month left at the end of the paycheck?”
And then they realize that in fact there is a hardship. In fact their hours did get cutback a little bit. Oh yes, that’s right or in fact, their son or daughter needed a little extra help or a parent needed a little extra help each month or expenses increased like gas increase. Oh, yes that’s right. The mortgage did uptake [phonetic] a little bit. That ARM adjusted.
So, Ryan and I have kind of developed the skill at Memory Joggers or helping people really think through what has changed, what makes it difficult each month. And we run people through it and we give them examples of hardships that people are using. Clients of ours these days, it helps people think through what hardships are acceptable.
So let me run through some of the most common and these are currently current ones. One, of course, is an income decline due to the economic downturn. Now, millions and millions of folks qualify there. Commission sales people, folks we rely on overtime, just an awful lot of people. Entrepreneurs, self employed people, all those folks are probably making significantly less year to date than they had last year at this time. Reduced hours of work because business is slow, laid off from a job, unemployment, benefits are too little to make ends meet. Reduced salaries for all employees, we’re seeing a lot of organizations that are opting for reduced salaries instead of layoffs. A lot of organizations are giving no bonuses this year because businesses are so slow trying to prevent layoffs.
Now, another one is that there’s a separation or a divorce and so one of the household incomes whether or not they’re on the loan, is gone. A death of a relative who was contributing to the household income even if they’re not on the loan, that’s a legitimate hardship. Extended sick leave turned into a loss of pay and high medical bills. Spouse job loss even if they’re not on the loan, the household income is still reduced and additional expenses are incurred by the spouse that is on the loan.
A relative that’s in financial trouble like a cousin who has legal problems that you have to contribute to or you decide you’re going to contribute to, a medical emergency that costs a lot of money out of pocket. Another and I’ve mentioned this one earlier. One of our clients had a child who lost a scholarship. So tuition bills have gone out by quite a bit. A relative had a legal judgment, I’ve mentioned that one. Your mortgage increased.
Ryan Rockwood: Did they ever ask for – I mean, obviously, income reduction is going to be probably demonstrating your taxes or maybe not. Maybe you haven’t done your taxes yet.
Mike Rockwood: Yes. Well, no, and even that’s so removed. You know, that’s full of six months past. Because what they’re really very interested in is the last 30 days and the last 90 days. So, that’s really what you have to document. And very often you can use your taxes as a baseline for what you were making last year at this time. And then a year to date either paychecks or 1099s or personal business P&L or however you prove your income year to date.
So, those are some of the hardships that are currently being used. And honestly, it is very, very rare that I can’t help somebody figure out what their hardship is. An awful lot of folks come to us and just say, “I want in on this mortgage relief action in the loan modification game. And I’ll say to them, “What’s your hardship?” And it’s really rare that I can’t help them think of what their hardship is.
Ryan Rockwood: You know what, base on I think in my level of energy today, people are going to be like following up to phone saying this little topic is boring.
Mike Rockwood: See for yourself, man.
Ryan Rockwood: No, I’m realizing, we’re pretty dull or went out or something is both of us are pretty little keep it. What I want to say here is that the good news about a hardship is that most people don’t think they have them and they have qualifying hardships. So, yes if it is that is what’s stopping you, if that is what’s wondering you if you should move forward, don’t allow it too. I would encourage you to – a lot of the drama is I mean, and it’s easy for someone else, but a lot of the drama is when it’s in your old life, it’s not always a reduction in income. It’s perceived as – I don’t know. My wife’s hours got reduced and we can’t get a babysitter so she can’t pick up extra hours at different times.
Anyway, what I mean to say is, once you boil down all the actual details of what’s going on in your life or your spouses and your families, and get it down to those rude things of reduction in income, increase of expenses, you kind of getting halfway there. And then you can build your letter around that. But that’s all you need to focus on.
Mike Rockwood: And you know Ryan another thing, and by the way you should – if you’re having some energy problems today, you should take care that like take an espresso or something, will you?
Ryan Rockwood: Okay.
Mike Rockwood: But listen, another one that I thought of that I didn’t mention that it’s so darn common is a reduction in rent. There are so many of our clients who have additional properties that are vacant.
Ryan Rockwood: Richard just wrote in to help@60minuteloanmodification.com. And he says that a part of his is that his rents are going down on properties that he wants to modify. That’s part of the problem.
Mike Rockwood: I’ve got four rentals that brought me 25% less income in 2008 and 2007. And I got to tell you in 2009 it’s going to be a full 20% less as well because I’ve got longer times that are vacant. And I’ve had to reduce the rent again on two of them. So it’s really, really common and that’s a very acceptable hardship.
You know, one thing I want to do before we go to some questions, is I want to read to you and remind you of one of the hardship letters. For the purposes of reminding everybody how brief you need to be. This is one that I really like. Here’s how it goes.
Dear Mark, thanks for speaking with me about my situation. As I said, I lost my job in September had I had no income since October 25th. This really put a strain on our family budget and by April we are unable to make our payments to you. I have now taken a part time job that I hope will become full time before too long. I know we can make a $2,400 per month payment to you. Please review the programs that you currently have to see if we can agree on that amount for the time being. Thanks for your help.
And what I like so much about that is number one, its tone is friendly, it’s positive about the future but it’s non-committal about the future, and it asks very specifically for a particular payment, and it also nails a qualifying hardship and that is loss of job. So, it’s really elegant. It’s simple and it’s like 75 words, so pretty cool. That’s how simple it can be.
Ryan Rockwood: I don’t know if – I think we send out an e-mail, but one of the things that was pretty interesting to me. My dad, Mike, was on Fox Business being interviewed this week. I think it was yesterday.
Mike Rockwood: Yes.
Ryan Rockwood: And one of the things that they said when the woman announced him, it really surprised me. Actually we never even talk about with her or in the interview. But what she said in doing a loan modification is something you should do that is legal. I think she even said patriotic or something like that. She said it’s the right thing to do. It was kind of interesting, you know.
Mike Rockwood: Yes. Now, it is interesting to see that the popular opinion really has gone and she was – oh man, I sure appreciated the fact that she said, “Let’s not even bring up the topic of whether or not we should be doing loan modifications. Move on. We have to do loan modifications. And people should be using this tax money in the way that it was intended to keep people in their homes.” So, it was a great interview and a great opportunity to make those points. And she was that on. She was right…
Ryan Rockwood: Yes. I don’t know why I didn’t think of saying that in the past. Let’s not just even talk about it because it is so dull and it’s so boring.
Mike Rockwood: Yes and so over done.
Ryan Rockwood: Trying to beat that horse, you know?
Mike Rockwood: Yes.
Ryan Rockwood: All right.
Mike Rockwood: Should we go to some questions?
Ryan Rockwood: Yes. Let’s do it. Let’s take some early questions. Maybe I should get my announcements out of the way because I did have a couple of things I wanted to tell everyone.
Mike Rockwood: Okay.
Ryan Rockwood: We’ve been getting a lot of e-mails about DTI and HTI. So really quickly I just want to tell you the difference. DTI is your reported debt-to-income ratio. Meaning the lender wants to see all the debts on your credit report compared to your income. HTI or house-debt-to-income is your first mortgage only compared to your income only. So your DTI, you want under 60% ideally. And your HTI needs to be much lower, ideally in the 30th percentile range.
Mike Rockwood: Well, Ryan, they want to pull it down into the 30th after the modifications. So I always like to see people with more than 38%.
Ryan Rockwood: Okay so more than – yes, if it’s 30% coming in, you’re probably not going to get it.
Mike Rockwood: Yes.
Ryan Rockwood: So the ideal is in that range. If you haven’t seen an interview to – or the link to my dad’s interview on Fox Business News, there’s a link added to the right column of our homepage. Check it out. Listen. Scrutinize. Also, being underwater in your home is not a hardship in and of itself. We talk about this a lot but your banks don’t really care if you’re underwater even if quite frankly they should because they don’t have anymore equity. Don’t try to get them to care because that’s a [Indiscernible] cost. We’ll get into exactly what a hardship is throughout this call and we’ve already recovered a lot of that.
And so let me go ahead and jump on the line here. Let’s see. Let’s see Richard’s question first by e-mail help@60minuteloanmodification.com. Richard writes, “I have a full-time W2 job with a good salary. I just made some bad investments, stock market tanked, and my rents are going down on the properties that I want to modify.”
So in other words, he says bad investments cause me to overextend. Are the banks going to just say, hey, he got what he deserves? He took the gamble. He blew it. Richard, and so okay, I think that the first thing to say is that I mean perhaps, if you state it like that although so we’ll help you try to massage that into a little bit better explanation. But the other thing is, you have to realize, Richard, that if the bank is in a situation where they can get out of it reasonably – well, what I mean to say is the loan modification really has to be a win-win for both parties.
If it’s like you’re saying – the bank is doing a favor by doing you a modification. In other words, if they can foreclose on you and get their money, they will and they probably should, right. It only makes economic sense, right. But if they’re going to foreclose on you and one whole loan is going to be wiped out, perhaps hundreds of thousands of dollars are going to be lost immediately. And the other loan is going to lose another $50,000, and then we’ll start talking about so alternatives. So, you do have to have some leverage in this situation.
Mike Rockwood: Hey, Ryan, let me make this observation about that.
Ryan Rockwood: Yes, go ahead.
Mike Rockwood: Sometimes we make the mistake of personifying organizations. And banks don’t cop an attitude. Banks don’t have an attitude. I always think that it’s like computer programming. We always used to say garbage in and garbage out. If you put garbage into your application for a modification or your application…
Ryan Rockwood: Well, sometimes they do. I think they have a trickle down attitude at short sales that banks used to be against us.
Mike Rockwood: But I mean, I think that it’s over emphasized. We tend to want to believe that. We tend to try to read that. I mean, we even do that with the stock market. Everyday we say, well, the stock market had an attitude today because of oil prices or because of this and that.
Well, you can’t tell me that all these millions of investors all cared about that today. In other words, I think that sometimes it’s just an excuse and that you shouldn’t let it interfere with your proactive aggressive approach because even when Litton was considered the enemy of short sales, we successfully got short sales through Litton. Even when Aurora said that they weren’t even doing loan modifications, we got loan modifications done. So, don’t let that slow you down. Don’t let it paralyze you. In fact, what I wanted to say about that garbage in and garbage out thing, I think it’s kind of a good analogy.
Ryan Rockwood: No, don’t say that. It’s so terribly overused.
Mike Rockwood: You’re just tired. No, I’m serious. You’re just tired. It’s a good one.
Ryan Rockwood: It’s horrible.
Mike Rockwood: No, this is good. If you put in a lousy application, you’ll get a lousy response. If you put in a killer application, you’ll even get a good response from GMAC. And GMAC is hard to work with in the best of times. So, don’t let it slow you down. You decide. You take control. That’s the whole thing about loan modification and handling workouts and foreclosures on your terms is you should dictate which properties you’re going to let go, which properties you’re going to have the Charlton Heston attitude and prime from my cold dead hands. You’re in control and you can be if you use loan modification and short sales, and deed in lieu, and bankruptcy, all effectively and all at the same time. These are just weapons that now people are just having to get to using. It used to be that we didn’t need them.
Ryan Rockwood: So really rapidly, how can you help Richard restate his situation?
Mike Rockwood: I don’t know the details but all you can say is if I were you Richard, I wouldn’t look for your bank to have an attitude towards you. You have to tell them what the attitude should be.
Ryan Rockwood: Well, I don’t know. He’s also saying, “I made bad investments.”
Mike Rockwood: Yes. But the bad investment could be a Phoenix condo that’s 25% upside down and it’s downtown.
Ryan Rockwood: But it’s investment that went bad. I think. You know what I mean?
Mike Rockwood: Yes.
Ryan Rockwood: It wasn’t like he went out and bought a bunch of tech [phonetic] stocks. Maybe did but…
Mike Rockwood: Yes, but I mean you talk about an investment that went bad 16 million to 20 million of them went bad. So, I mean this is a really common problem. All right, so Richard, roll up your sleeves, take courage, get us involved to help you, and you take control.
Ryan Rockwood: Well, write that draft that hardship letter and e-mail us.
Mike Rockwood: Oh, his hardship. His hardship is a piece of cake. He’s got investments that are killing him.
Ryan Rockwood: Yes.
Mike Rockwood: Yes. So your hardship’s a piece of cake. Let’s pick and choose which ones you want, which ones you don’t want, and make this work to your benefit.
Ryan Rockwood: Be sure you take advantage of our hardship letter, our hardship letter.
Mike Rockwood: Coupon review.
Ryan Rockwood: Critique review.
Mike Rockwood: Yes.
Ryan Rockwood: Free thing that comes with our kit. Basically, once you get the kit, bang out a little hardship letter. Outline letters as best as you can and you can send it to me or my dad and as part of that the kit we review it and rewrite it if necessary and send it back to you. Okay, so be sure to take advantage of that and it looks like Richard’s question here, it totally borders on this thing, do I deserve it? You know or am I [Indiscernible] off that kind of thing. And that’s great. However, from…
Mike Rockwood: However, for most people…
Ryan Rockwood: Yes. However for most people, our attitude is we got – we have to fight for that modification. What are picking up there? Your message is on, isn’t it? Yes.
Mike Rockwood: No. No.
Ryan Rockwood: You’re off?
Mike Rockwood: No, I’m on.
Ryan Rockwood: Okay.
Mike Rockwood: Yes. We’re just fine. Okay. Now, I want to take – let’s take one of these e-mail callers. My bank, Chevy Chase Bank – I think it’s in DC or in New York. DC – okay Chevy Chase Bank says that they are not processing loan modifications. Is this legal? Is it true?
Unfortunately, that is one of the banks that has not accepted any TARP funds. I know that for a fact because I arm wrestled with them about – if they in fact own your loan, that there s a good caveat. The situation is that any bank that has accepted TARP funds is required to be actively seeking to offer modifications along the guidelines that the president has produced.
So, I know Chevy Chase Banks specifically has not accepted any TARP funds. However, they, like most lenders result some of their loans over the last five years. And so certainly the holder, the actual investor of your loan, may not be Chevy Chase Bank. So, what you have to do is write a qualified written request to them and you can fax that or send it by certified mail. But you have to send them a qualified written request asking for the name of your investor.
And then I would also secondly ask them to please clarify for you whether or not that investor has accepted any TARP funds. I believe that they will write back to you and tell you the name of your investor. And I believe that they will not venture an opinion or a guess as to whether or not the [Indiscernible] take a further step but give it a try.
Ryan Rockwood: Good news everyone. I’m back on the phone.
Mike Rockwood: With all your energy
Ryan Rockwood: Yes. I had some technical difficulties and if you missed out on what I said, it was really some gems. So, we’ll have to share that next week.
Mike Rockwood: What are you talking about anyway?
Ryan Rockwood: I don’t know. I was briefly trying to figure out getting my phone working again. Okay, we got a quick one here. We got some internet questions, help@60minuteloanmodification.com.
Male Speaker: Mike, would you agree that the lady who interviewed you was hot?
Mike Rockwood: This is Melvin.
Ryan Rockwood: No, I don’t think it’s Melvin.
Mike Rockwood: No, I think it’
Ryan Rockwood: All right. All right, anyone else have a question?
Christine: This is Christine from Hawaii.
Ryan Rockwood: Go ahead, Christine.
Christine: When my ARM adjusted, my husband decided to take a hike and separated for five months. So that point, I was current in my mortgage payments. I had to make in the mortgage payment in order to afford a divorce attorney. I’m looking at being four months back taking on all of the bills, all of the everything on top of paying a lawyer.
Ryan Rockwood: Yes. So, you got to get only a hardship. I think your primary question or obstacle is right now towards getting a loan mod.
Christine: Correct. I mean, I’m four months back. I went with WaMu and they switched over to Chase [Indiscernible]. Their biggest concern with me is getting my tax return which I would normally do joint with my husband who had the income. And so I have no tax return.
Ryan Rockwood: I see.
Christine: That’s an obstacle. What I’ve done…
Ryan Rockwood: …question that I can help you out with. Have you tried to start the loan mod process yet?
Christine: I started it with WaMu and then they switched to Chase and we’re stuck on the tax returns. How do I get tax returns without my husband’s deadly W2?
Ryan Rockwood: Okay. I’m going to mute you and repeat the question so everyone can hear. Thank you so much Christine. Okay. For those of you that didn’t hear, the first caller asked if the interviewer on Fox, we agreed that she was smoking hot and we opt to not answer that one. We’ll just take the fist or whatever.
Then the second person, her name is Christine from Hawaii. And what she asked was she’s got – it sounds like she did a very tough situation. Okay. They have the loan. She and her husband are paying it. The ARM adjusts, that means the payments go up. Her husband and her split up at the same time.
Okay, so you know, these things always happen once, right? Everything’s coming down around or so. Basically, now without her husband’s income, now she’s got additional expenses with divorce. She’s got decreased income because he’s gone. And her main obstacle, she believes to getting a loan modification at this point is that she doesn’t have the tax she and her husband used to file jointly. And perhaps the real problem is that she does not have the income sufficient to qualify for a loan modification.
Mike Rockwood: Yes I bet that’s right, Ryan.
Ryan Rockwood: People who are listening on this call, I’ll tell you that the one of the most ridiculous but most used reasons to turn someone down for a loan mod is they don’t have enough money to pay for their loan modification.
Mike Rockwood: And what’s so cookie about that is that they lent him the money in the first place.
Ryan Rockwood: Yes. But that sinks in.
Mike Rockwood: Just let us stay on that for a minute.
Ryan Rockwood: But whatever the fact that is what it is, okay? Don’t bother talking them out of that. We have spent a year doing that trying. All you get is a stone wall. Yes, go ahead.
Mike Rockwood: Can I join? Okay, Christine, here’s what you have to do. First of all, forget about the tax forms because if they’re hung up on tax forms, just plead with them. Just tell them “Listen, I’ll sign the 4506-T which you’re going to ask me to sign, it’s a form that allows them to go direct to the IRS and verify your income and your husband’s income on the joint return. Now, even as I say that, I’m realizing what you’re going to say and that is, “My husband needs to sign that 4506-T.” And you’re absolutely right he does. So, I’m not sure I have such a smarty solution for you.
Ryan Rockwood: Well, how about this? Frequently, we have someone file a request for extension. And that gets rid of the problem of the past taxes. And we still have to fill that form out, I think, that you’re talking about…
Mike Rockwood: Yes. How did that apply Rock? I don’t understand what you’re…
Ryan Rockwood: Well if you request for extension for 2008 or whatever, we’ve gotten away with just not submitting an [Indiscernible] in these taxes.
Mike Rockwood: Oh, yes. Christine, I really think that if your bank is telling you that they’re hung up on getting your tax, I think that’s the paper tiger. I think they’re not telling you the truth because that is a minor…
Ryan Rockwood: It’s not that they’re lying. It’s that it’s a checkbox that you can’t just…
Mike Rockwood: Yes, it’s not check so they can’t…
Ryan Rockwood: The minion can’t check off.
Mike Rockwood: The minion can’t check it and pass it on to the next minion. So, you got to get pass that and there is definitely a way around it. This is not a show stopper but you are at a dangerous time because you said you’re four months late. That’s a real dangerous time because four months, you probably already received a Notice of Default, and I think Hawaii is a non-judicial state if I’m correct. So, you only have a couple of months left before they’re going to take some action to take your house away with a Notice of Trustee Sale.
So, you have to get right on this. Get very proactive. I recommend that you escalate the situation at Chase. You call in and ask them if in fact your loan modification if it’s completed and it’s in the system. Wait a minute now, Rock. I just want her to let that sink in. Is your loan mod application in the system and is it completed? I’ll bet you, it’s not.
If it is in the system, it’s completed, and they’re telling you they won’t let it progress because you don’t have your taxes and they’re asked for to talk to a supervisor and get them to tell you the same thing. And then get us involved. And you can e-mail us at help@60minuteloanmodification.com. But I really encourage you not to waste another day. You got to do this like tomorrow morning.
Ryan Rockwood: You know just from experience, I make a lot of assumptions when I hear people say stuff. And so Christine, forgive me if they’re just way off. But maybe there be on target for someone else that’s listening. So, I’ll mention it, okay.
When I’m concerned about when I hear you calling in is I’m concerned right away that you do not have the income to support a loan modification. And you can bluff a little here and polish a little there. But if you flat out can’t have a – I don’t know double the income every month that your mortgage is or something like that. If you can’t document that to some extent even in the flimsiest possible way, there is zero chance that you are going to get this loan modification.
So, if you’re talking about a divorce settlement that’s going to go on for probably at least four months, and then perhaps you’ll get a settlement in a monthly something or rather out of that, I can tell you that this is not the route for you, loan modification. You know what I’m saying? I’m saying, she’s not going to be able to hold this together. And I think that you’re in a little bit more serious situation than we might have thought in earlier. I think you need some one-on-one help whether it’s a bankruptcy attorney or it’s just real estate experts like us. You want to do some one-on-one stuff.
Anyway, if that’s from us, get some help from someone rapidly because I have a feeling in just talking to you and in hearing a few of these things that you can recover from this. But you might not be able to save the house. Now, it would be nice if you didn’t have to lose the house. So, if you give it up to short sale or something else, it would be highly, highly preferable. And I won’t go into the reasons why. Okay. But hopefully that was helpful.
Mike Rockwood: Yes, good. If it wasn’t helpful then you really offended her.
Ryan Rockwood: Well, we’re all just on a total…
Mike Rockwood: One way or the other.
Ryan Rockwood: Well, yes, what I heard her say is that her husband is the one with the big income.
Mike Rockwood: Yes. She may really have income problem. Now that’s a good point.
Ryan Rockwood: And a divorce, you know, depending on how amiable and how rapid it is. And if they fight over things – oh, my goodness, you know and combined with the cost of the time with that. Anyway, enough said. We’ve got an online question here. Kevin asks, pre and post DTI, what’s acceptable range when you apply and what’s acceptable range post modification? Are they also looking for $500 left-over post modification? Want to take that one?
Mike Rockwood: Yes. Forget their cash flow. They’re not even looking at cash flow post modification. They don’t care and they don’t – they work the post modification DTI so you need not be concerned about it. You know what I mean? It’s really up to them and really it has to do with whether, in most cases, whether or not they can get paid by the government. So, they’ll offer you a good or a better loan modification based on what steps they need to take in order to get money out of the government.
So, I wouldn’t even spend time thinking about that. They’re going to try to dial your first mortgage on your primary residence into the 31% to 38% range because that’s where they make the most money. But they’re certainly going to try to modify your mortgage no matter what. What you need to be concerned about in terms of debt-to-income ratio overall that’s your total debt, all mortgages, all credit cards, all student loans, all car loans, that total – and remember the credit card debt are the minimum payments, that entire debt divided by your monthly income, net income can’t be more than 75%.
Ryan Rockwood: You know if you’re listening to this call and you’re saying it’s your first time on one of these calls and you’re freaking out because you heard some math, it’s okay. You don’t have to know what my dad just said. I don’t know what my dad just said. And I do this all day long.
Mike Rockwood: That’s what are computers are for right, Rock?
Ryan Rockwood: If you’re interested, these are the things that you can educate yourself on. They know how to get a better loan modification, okay. We’ll help bring you the tips and tricks for that. Let’s take another quick caller.
Mike Rockwood: All right.
Ryan Rockwood: Go ahead. Does anyone have a question?
Gerard: Gerard
Ryan Rockwood: Gerard, go ahead.
Gerard: Quick question. I’m new to this and I just got your package like maybe an hour ago.
Ryan Rockwood: Oh wow, okay.
Gerard: So, I got a lot of reading to do tonight. Quick question on a duplex income property. I’m having a hard time writing up the hardship letter when you’re current. Of course, I have a situation where no income is coming in. I got laid off. But that’s the only thing I can come up with.
Ryan Rockwood: That is sufficient.
Gerard: That’s sufficient.
Ryan Rockwood: Yes, absolutely.
Mike Rockwood: Yes, that’s a ringer.
Gerard: Even if it’s current.
Ryan Rockwood: The problem that you’re stating is the problem that a lot of people say. They say, well, I’m making it. Well, how are you making it? Obviously, savings, right?
Gerard: Savings exactly.
Ryan Rockwood: Yes. That is a dramatic hardship and you want to stop that as soon as you can.
Mike Rockwood: Man, this is a perfect example of what we’re talking about, Gerard. You got an incredible hardship but because of your attitude, I mean your attitude is…
Ryan Rockwood: You have a great attitude. You have a positive attitude. [Indiscernible] working with. Well what I’m I saying? One [Indiscernible] dozens of people. It sounds like you’re calling us and it hasn’t gotten too far. Well, I shouldn’t assume that. But many people have gone on for years with your income and now it’s like…
Mike Rockwood: They get into loan modification when their savings, when their 401K runs out.
Ryan Rockwood: Well anyway, let’s help Gerard. Basically Gerard…
Gerard: And again, I haven’t tapped this any of the savings quite yet. I got laid off when I made my last payment.
Ryan Rockwood: Okay. We don’t have to get into that because basically I mean the hardship letter is going to look something like this.
Mike Rockwood: You want to mute this so that they can hear better?
Ryan Rockwood: Okay. For those who weren’t able to hear. Gerard has a situation where he got laid off. He owns a duplex, perhaps he lives in one of them. And he’s wondering, “What is my hardship because I’m current. I’m making these payments.” And we said, “Well, how are you going to make those payments?” And he said, “Well, savings.” And that right in there, that’s enough. We don’t even have to go further.
So, let’s outline a quick outline for Gerard. And Gerard can write it up and send it in for his hardship letter critique. And we’ll just nail this one, Gerard. You’re golden. So basically, the first sentence…
Mike Rockwood: Well, here’s where Gerard is going to run into problem is now he’s unemployed. So, we have to move really quickly.
Ryan Rockwood: But you’re talking about different issue.
Mike Rockwood: Oh yes, got you.
Ryan Rockwood: You know what I’m saying? Let’s tackle the hardship issue first. I mean the hardship issue is just similar…
Mike Rockwood: Okay, here, I’ll give you a nanosecond. Go ahead. I’m serious. That’s how long you’ll state. I lost my job
Ryan Rockwood: Oh, your bank, I’m sorry. I never wanted to write a letter like this. It’s very humbling. I want to keep the house at all cost. And I hope that you work with me to give me a loan modification.
Second paragraph is in whenever, on whatever date, I lost my job, laid off from my job, whatever. My normal income of such and such, look at my history of good payment, and now I am working off of savings. I expect that’s the last X amount of time. And in the meantime I hope to get a job immediately.
Mike Rockwood: Yes exactly. And see, Ryan, that what you said there is so critical. And that’s why Gerard, I recommend you move really quickly. Because you said you haven’t tapped into your savings. That means if you probably lost your job less than 30 days ago, that means you still have a check stub from last month and good prospects for a job in the future. You may be able to get a loan modification in 30 days and mess a beat. You know what I mean? And be able to shave $500 or $1,000 off your loan and make it right through this thing without missing a beat. So hats off to you for moving quickly and I would say, you know, double clutch, down shift, and even move more quickly.
Ryan Rockwood: Now my dad brings up another point. And that is while your hardship certainly qualifies you, it also unfortunately in a way disqualifies you for a loan modification. Okay, and that is the heart of how ridiculous the standards are for loan modifications.
Mike Rockwood: You don’t need help so you can get a…
Ryan Rockwood: Yes, well it’s like any loan, right. As long as you don’t need the money you can have it. I guess it’s the reason why we’re here and we wrote the book and we’re talking on this call today because it’s whacky. Okay. So, here’s the problem, Gerard. And that is, you got to have sunshine in the future. You got to have a way of paying this or you will absolutely not going to get a loan modification. So, you’ll notice that in my hardship letter, I just wrote for you over the phone, I included a part about your prospects to the future, how it’s looking up, how you sure you’re going to be able to make these payments. Now, in the immediate term, Mike, what do you think – do you think it’s going to be acceptable over him to say I have X amount of savings and that will last me a year?
Mike Rockwood: Yes. Here’s the problem. It is acceptable.
Ryan Rockwood: Would that qualify his income?
Mike Rockwood: Yes. In certain circumstances, it will. However, here’s the Catch-22 you’re in. You’re going to go into the Way Forward Department because you haven’t missed a payment.
Ryan Rockwood: The Way Forward means no one’s going to be really concerned about you for a long, long time.
Mike Rockwood: I mean it’s so frustrating. I bet we’ve got 15 clients now that haven’t gone late and they’re just sitting there and every week they want to hear from us. And they’re frustrated that they’re not getting action. “What can I do? How can I invent a way to move the lender forward?” Well, there is no way. You aren’t late on your mortgage, so you’re not getting treated with respect. So, Gerard got a little bit of Catch-22. He hasn’t gone late, so he’s going into the non-urgent file. Yet, he wants to move urgently because he just lost his job.
Ryan Rockwood: I say, this is a little mind field. You’re in one minute and that qualification bumps you out for the next.
Mike Rockwood: A mind field, that’s a good way to put it.
Ryan Rockwood: You know, so it’s like…
Mike Rockwood: But listen, but he’s got to move quickly because…
Ryan Rockwood: So what you do? Bottom line, should you go late immediately? What would you do in this case?
Mike Rockwood: Okay, that’s the best question. And Gerard, let me approach you from that perspective. What I would do is I would immediately go late. First of all, I’d call him and write him a letter right now saying, “I have to miss my next payment. I’ve got an income interruption. And as soon as you go late, I would submit – as soon as you are 30 days late, I would submit a loan mod application so that it goes into the right department. And I would use your last pay stubs to document your income. And I would write a glowing letter about your prospects and what you’re doing to get a job. And that’s how I would handle. And I would also probably document your savings and try to kludge together additional income either from the renters or from a contribution letter from a spouse or a significant other, or stuff like this.
All this stuff you’re going to learn when you open up that binder and start reading. You’re going to discover there’s a whole language that you’re going to learn about how to talk to these people in underwriter speak that will help you get your loan modification. But let’s move together on this one. Let’s move quickly. Schedule your conference with me.
Ryan Rockwood: Yes, your free call right away.
Mike Rockwood: Yes. Call and schedule that right away like for tomorrow or for the next day.
Ryan Rockwood: You got a brief one-on-one with Mike. And should I say a little legal disclaimer there or should I just forget it? You know, everything that we say here is not intended as legal advice. But what we try to do is unlike some other places, what we try to do is tell you what we would do in a blatant – we’re blatantly on the consumer’s side basically. We want to basically make you benefit as oppose to the bank. So, obviously, you have to get legal advice and counsel on anything that you decide and all that kind of stuff. And this call doesn’t sufficiently qualify as that.
Okay, let me burn through a couple here so we can make sure to get some great answers. Anthony has two properties. One is rented. Rent does not cover the mortgage. I’m about a $1,000 short, although it was modified at 4.24, excellent. They assume my impounded taxes will rise even though my property is worth less. My payments are higher now than they were before. Oh, bummer, and I think he probably had an interest only, and now he’s at a 4.24 fixed.
Second property is a condo. And the tenant moved out for a lower rent. I can’t find another even for lower rent. The bank wouldn’t even listen to me unless I’m 60 days late. Now, it’s sitting there empty. I wish I could sell. I would give it up in an instant, my salary. Okay, several things, Anthony. The fact that you want to sell a property that you’re willing to get out of it is probably a good indicator that probably on that one a loan modification might not be the right thing for you to pursue other than as a stalling tactic for foreclosure.
Mike Rockwood: Yes.
Ryan Rockwood: If it was me, I would go late immediately on the second one. And I would short sale it with a qualified short sale specialist immediately.
Mike Rockwood: You know of any?
Ryan Rockwood: I happen to know of a couple. You can call us, Anthony. And depending on what state you’re in, we’ll refer or we’ll do it for you. It doesn’t cost you anything. The other one is – the one that you have modified. Let’s talk about taxes first of all. There is a form. I don’t know what it’s called depending on where you live. But you can call your county assessor’s office. Get the form for basically a request of tax adjustments. Go ahead. Do that immediately even if it cost you $50, $100, $200 to get a realtor or an appraisal done on it, probably won’t.
Mike Rockwood: Hey, Ryan, I think I heard him say that the bank built in a tax increase when in fact he is going to get a tax decrease. So I think what he was saying about the taxes, is that he’s getting hit for a monthly that’s building up his escrow bigger than it needs to be. So, that’s the one frustration that he has. And that one is going to adjust in a year anyway.
Ryan Rockwood: Yes, but I mean this guy is on the edge probably. He can’t afford to have an extra $50 a month or something built up in that escrow.
Mike Rockwood: But what’s wrong with applying for another modification? I mean, 4.24, let’s think if I have successfully gotten on second rounds. I have successfully gotten the same modification. But you know, listen. There’s nothing wrong with applying for one of the 2% if you think that you can qualify. So, there’s no limit on applying for another modification. Why not? Go for it. It sounds like you want to try to keep that property. $1,000 short is kind of a bummer.
Ryan Rockwood: Regarding the taxes, I may be off but if I’m right on, go to your tax assessor’s office and apply for a reassessment of that. And that’s probably the only way that I can think you can give into your bank to balance out your escrow accounts on that. Okay.
Mike Rockwood: Yes.
Ryan Rockwood: And the other thing is that your payments went up. I’d include that in my hardship letter. I guess, it’s not really a hardship letter because of a modification you perhaps felt pressured into under the gun, something like that.
Mike Rockwood: Absolutely. Yes.
Ryan Rockwood: So e-mail us on that, Anthony. John asks, “My credit card debt went up due to bad ARM I had. My rate adjusted down in April, but it’s subject to adjust up at any time. Could this be a valid hardship?” A fluctuating interest rate on a credit card is – do you think that qualifies as an increase in expenses?
Mike Rockwood: Boy, that’s a little unpredictable. It could go down as much as it could go up. Is that correct?
Ryan Rockwood: Yes. Here’s my thought. Not bad to include. Don’t want to rely on. So John, I suggest you give us an e-mail and let’s do a little bit more.
Mike Rockwood: Hey, should we call it a junior hardship?
Ryan Rockwood: A junior hardship.
Mike Rockwood: Mini, kind of mini me. Kind of like a mini hardship.
Ryan Rockwood: A moment [Indiscernible] fast guys because I want to get a bunch of these in. So please don’t be offended that I’m just burning through a bunch of these calls here, okay. The purpose of all this is very simple. We want to help people lower their monthly mortgage payments. Sometimes principal reductions happen very rarely. And sometimes, second mortgages disappear. Usually, they are settled. But most of all, what we do is – but most of what we do is get, for example, a $3,800 payment knocked down to $3,200 or an $1,800 payment knocked down to $1,400.
If you knocked 20% off your total monthly mortgage expenses that adds up very quickly. And that kind of tells you if you’re in the realm of reality because we want to have realistic expectations here. And you know we want people to have success with loan modifications. They’d be happy and feel that we are delivering overwhelming value. And I think setting realistic expectations is part of that.
Mike Rockwood: That is well said. We haven’t said that in a long time but that really is important to say because, I mean, this is not a miracle. We’re seeing incremental improvements in the area of $300 to $500 to $800 as most typical. You’re so right.
Ryan Rockwood: I mean it matters to me but if that doesn’t matter to you…
Mike Rockwood: Yes. If that does not going to matter to you, then you should think about another solution.
Ryan Rockwood: Yes, and you shouldn’t go a loan modification commercial that promises for a principal reduction. You shouldn’t fall into marketing – they only say what you want to hear. Okay. Don’t be tricked into hearing what you want to hear because obviously if it was happening, we’d tell you and brag about it.
As we always stress, the loan modification frenzy will come to an end. The question is when? Was it six months, 12 months? The window of opportunity here to get in this rare opportunity to fix your bad mortgage terms and lock in a good rate is limited. So, with that in mind, I encourage you to take action. Order our 60-Minute Loan Modification kit. Get your application done and schedule your coaching call before you contact the bank. And then proceed to aggressively modify your loan.
You know, I can’t say that we did have a really good – someone wrote in just before the call. And they said they knock a $3,200 payment down to – gosh, I think it was $1,800.
Mike Rockwood: Oh, yes. There are lots of examples of those but most people. I think it’s smart to talk about the average. Because people can’t look at this as the only thing that you need to do to prepare to get through this tough economic time that we’re facing. It’s one thing, and it may be even the biggest thing. But there’s got to be a lot of $300 and $400 things that you do in order to get by without debt in the coming months and the coming years and just as a way of life because this debt craze didn’t work.
Ryan Rockwood: So, order the kit. Proceed to aggressively modify your loan. The average processing time is getting longer and longer. Occasionally, we have success in as little as two weeks but realistically, it’s a three- to six-week process, so don’t wait. We’re huge advocates of the do-it-yourself modification, but that doesn’t mean you need to do it alone. You need help. We’re here to help. We’re here to help try to get you educated. Go to www.60minuteloanmodification.com. Click on products on the navigation area to learn more. We spend most of our days on the phone. So, e-mail is the quickest way to get a fast response to any and all questions. Please e-mail us at help@60minuteloanmodification.com. Thanks so much for joining us on the Insider Secrets Teleconference Series.
Mike Rockwood: Hey now, I’m taking you out for cappuccino.
Ryan Rockwood: Okay, great.
Mike Rockwood: All right.
Ryan Rockwood: Thanks so much guys. Thanks for joining us. Bye-bye.
