Mike Rockwood: Hi everybody, it’s Mike Rockwood, the Foreclosure Doctor and we’re just about to begin our teleconference, and we’re also streaming live on the internet on Ustream. So, I hope that you can tune in to the live broadcast if you possibly can. The topic of today’s teleconference is going to be communicating with your lender. I am going to be giving you some tips on how we communicate, we think, pretty effectively with lenders because obviously this whole thing is a negotiation. All the workout options are just negotiations, and communicating during negotiations is absolutely critical. So, we’re going to be giving you some tips on written communication and on phone communications. So, that’s what the teaching is going to be about. Before we get started here, we do have some calls coming in already and you can e-mail call or e-mail questions to questions@60minuteloanmodification.com.
This Tuesday night call is open to the public. On Thursday night we also have a conference call where we just talk to clients and get into a little bit more detail. And Ryan always says on Thursdays we talk about the ninja tactics, some of the more hardcore tactics for how to negotiate good workout solutions with your lender. But the topic on Tuesday is the Foreclosure Doctor, and so we take calls talking about any number of foreclosure issues. We really want to focus on the seven basic options that everybody has once they start into foreclosure and talk about options, talk about solutions, talk about strategies, and hopefully bring some street smarts into your planning and thinking about how to respond to a Notice of Default and how to work your way through foreclosure because that’s really our strength.
We bring to the party not a legal degree, not a CPA degree, but a real estate practice and a practice that has been very much focused on the foreclosure market for quite some time and for the last couple of years, in particular in the South Bay, helping people that are in foreclosure. So, what we bring is a day-in and day-out experience. And so what we can do is tell you what people are doing, what kind of solutions they’re finding, how they are making foreclosure work for them because really, this is a whole new paradigm for so many of us. A whole new thing we never thought we would have to learn terms like bankruptcy, and Deed in Lieu, and foreclosure, and default, and workout solutions, et cetera.
But we are having to and we’re having to rethink our whole idea about our real estate holdings and our wealth in general. So, I call it a dark science that we’ve become experts in. Really is by virtue of street smarts and actual practice. And so we will not accept liability for anything that we say here tonight or ever and you should take it as street advice. And you’re about ready to get started there, son?
Ryan Rockwood: Yes. Well, I get started here who was trying to get a favor to help this little guy with…
Mike Rockwood: Video.
Ryan Rockwood: With the DVD. Hello, everyone and welcome. This is Ryan Rockwood and you are at the 60-Minute Loan Modification Teleseminar. And if you’re watching live, you could see that I’m just figuring out some last-minute details today and I want to thank you so much for joining us. Welcome to our call tonight. We’re here to cure sick homes one mortgage at a time. My name is Ryan Rockwood and as usual, I’m joined by my father and business partner, Mike Rockwood. Before we get started, a couple of quick announcements. Okay. Announcement number one, if you have a first, a second, and even a third mortgage on your home, it is very possible to modify them all at once. In some cases, it might make sense to do them in stages if you need to fix your DTI. Okay.
Announcement number two, charge office attorney that you hear getting kicked around a lot of the term use by banks. It’s a legal term because at a certain point banks can’t keep showing a debt as an asset if it’s non-performing. So, what they are required to do after certain amount of time is charge it off. Anyway, why am I telling you this? Because just like anyone, just like any other debt, they may stop collecting but it won’t go away. So, be weary. There are a lot of people out there right now that are excited about helping you to basically eliminate and charge off your mortgage. And that’s fine and dandy in that people will stop calling you and try to harass you about it. But they’re not going away and they’re not releasing the lien in that property. And you will continue to get fees and you’ll continue to get late penalties.
Anyway, it’s just one of those like all around bad cases, bad situations. So anyway, try to avoid it at all possible and it really, it’s something to only approach as a last ditch effort. Okay. For those of you that are new to the call, my father, Mike and I get on a couple of times a week. And we get off the phone to the bank. That’s where we spend most of our time negotiating.
Mike Rockwood: That’s why we look like this.
Ryan Rockwood: Yes. Negotiating loan modifications, talking with clients, helping them do their own loan modifications. Anyway, a couple of times we get on the phone here and join people from around the country. And, you know, you’re 100% welcome and we invite you to check this out online. It’s streaming at 60minuteloanmodification.com/october6. Numeral six. And if you check that out you can actually see us live. Either way, you can submit questions live when we go to live calls or you could simply – there’s a chat down the October 6 web page. You can put it in there or you can e-mail us questions@60minuteloanmodification.com. All right. Thanks so much. Let’s get on with today’s call.
Mike Rockwood: Okay, sorry everyone. We started off a little bit slow there. As you could tell, we were dancing and prancing a little bit because we’re still getting used to all the technology that we’re trying to use. Sorry about that. A little bit of growing pains but we’ll get on with it now. And then we’ll get to a lot of questions.
As we said in our communication to you and over the last couple of days, the topic today is how to communicate to your lender. Because a lot of folks, number one, don’t communicate with their lender much at all, if ever and so they’re not really familiar with how to communicate, what kind of position to take with their lender, the kind of environment that they’re communicating into, et cetera, et cetera. So, we thought we would just do a session on communicating with your lender.
And so what I did is I kind of broke it down into several segments. And first I want to talk about the kinds of things that you do need to communicate to your lender. In other words, what to communicate and the kind of things the day in and day out we are communicating to lenders for our clients and with our clients are things like this. That you’re having problems making your payments, what your hardship is, that you are dissatisfied with the mortgage that you have, that you want to know what your workout options are, that you want to know if you qualify for a refinance, for a modification program under the Making Homes Affordable program, President Obama’s program, that you suspect fraud was perpetuated or that you believe that the lender violated the Truth In Lending act or the Real Estate Settlement Procedures Act when entering into the contract with you for the loan, that you want to know who your investor is that you want to provide. And I say that because as most of you know, I’m sure, the person who actually owns your loan is very likely not the person to whom you write a check each month and to whom you’re going to call for workout solution.
Our mortgages have been securitized and repackaged into mutual funds and all kinds of derivatives and insurance policies on derivatives and et cetera, et cetera, et cetera to the point where the actual investor who owns your mortgage, who knows who that maybe. So the person that you call your lender is very, very likely just a servicer who is, for a fee, managing that loan. And you have the right to know who your investor is. And that’s one thing you might want to communicate.
Another, you might want to communicate that you want them to provide proof that you have signed the original documents, that you want to be considered for a Deed in Lieu or a loan modification or a short payoff, that you want an update on the progress of your application for a workout solution, or that you want to offer a settlement to them, or you want to counter one of their settlement offers to you. So, those are the kinds of communicaids [phonetic] that we are working with clients day in and day out. And we have specific templates that we use and specific formats that we recommend. And as you become a client of ours, a customer of ours, of course you’ll have access to all of those templates.
Now, how to communicate? Let me give you some tips on the way that I train people who work for us. I train them in a communication method that we have come to believe in. And here are some of the basics of it. First of all, we say always be personal. Never miss the opportunity to further your negotiations by making a personal connection with the employee of the lender. And I always say it that way because you want to remember that this person on the other end of the line is a person who has a mortgage very likely, and who has a family, and who have their own struggles and their own challenges. So, you want to connect with that person to try to get them to communicate as well as possible with you, what all your options are and give you the benefit of any kind of insight that they have on your situation.
So, always be personal. And on the phone, be sure to listen at least twice as much as you speak. And I always remind people that that’s probably at least 10 times more than the other people that these folks are talking just before you and just after you. So, you have a significant advantage if you just listen to them. And honestly, you can almost see them. You can almost see the smile on their face when you actually listen to them and show them respect. I mean, sometimes they don’t even take advantage of talking because they don’t believe you’re going to listen to them. They expect to be interrupted and they expect to be treated rudely. So, on the phone, listen. Then I always say be succinct, you know. Cut it down. Make it quick. These people are more than super busy. They are underpaid and overworked, and they feel it everyday. So be succinct.
Next, be very clear on your expectations. Here’s what I mean by that. Don’t assume that they will take any actions that you don’t specifically request and here’s an example. Don’t state that, you know, like kind of fax. Find the last two months checking account statements attached. Instead you should say things like, “John requested that I send the last two months checking statements to complete my file. They are attached. Please forward them to John to complete our short sale payoff request on the loan number referenced above, on the property referenced above.” So in other words, get real specific about what you want them to do.
Imagine the person receiving those facts electronically or in paper form. You need to tell them really specifically what you want them to do with it. So there’s no question about it. They don’t have to think, get it? They don’t want to think and in some cases, they can’t think. So, be very clear. And then ask for a confirming to your fax, e-mail, or letter, et cetera. But unfortunately these days, don’t expect that you’ll get it, but I still always ask. Please confirm at this number that you received this fax, et cetera, et cetera.
Next, I always add a knuckle note of urgency. In other words, on a preprinted fax cover letter, I’ll always put a knuckle note that I’ll write like in a sharpie – with a sharpie. “Urgent: Trustee sale pending. Please rush to mark,” or it’ll say, “Mark requested this stuff ASAP. Please rush to his desk,” for example. So, that the person first receiving it sees that you interacted with it. It wasn’t just a form. Keep in mind that they receive thousands of faxes everyday.
And then lastly, always follow up and use one communication method to counter another. In other words, I always follow up faxes with a phone call after two days. And I follow up on phone calls with a fax immediately. So, as soon as I hang up on the phone, I jus zip off fax confirming. Mariah, we talked at this time on this date. And I just want to confirm that you agreed that this form would be sent to me via fax by this or that date and I confirm it by fax.
Now, I also want to make a note that written letters are surprisingly effective at getting through. I have a little stack of note cards that I use. And I routinely write a short note to confirm phone conversations and send it through the stale [phonetic] mail, through US mail. And I got to tell you, more than half the time those will end up getting log into the file. So, I think it’s a pretty easy, cheap, and effective way to follow up on a phone conversation.
Following up is a good practice. Not only because it gives you an additional opportunity to interact with the lender, something that most people are trying to avoid during workout, but you really shouldn’t. So, it gives you an opportunity to touch them again, talk to them again, get another entry on your file, and it also uncovers problems quickly. Because, I don’t know what percentage it is but it’s – I don’t know, but I think it’s at least 5% of the time this communicaids [phonetic] do not get through. So, when your fax doesn’t get through, your special request doesn’t get through, it’s not logged in, you want to get to the heart of it quickly.
All right, then I would like to go specifically through the different kinds of communications and give you some tips that I have found effectively. First of all, phone calls. Remember it’s not legal unless it’s written. Don’t count on phone calls to be legally binding. Always keep a log of the conversations. Note the name of the rep and what was said and what followup is required. I like to ask questions when I’m on the phone, ask questions about your file. I like for them to confirm that the last entries were made. Like I say things like, “Could you please tell me if my last call between Jim and I, tell me if that was recorded, will you? Because he told me to wait for a confirming letter and it didn’t show up yet. Is there a note to that effect in the file?” Or I will say something like, “Please check to see if Tiffany noted that we dealt with this issue last Wednesday. And she considered it resolved.”
It’s a good way to ask the question because not only will you get a response from them but you also get them to check your file. Because you want to be sure that they’re doing a good job of documenting conversations. And then I regularly request that the supervisor return my call. I’ve gotten and almost making a habit of that of just asking that the supervisor return my call if you get into any kind of resistance whatsoever, just escalating the problem to a supervisor. I just simply say listen, would you have a supervisor call me on this. And more than half the time they don’t. But then I just ask for it again on my follow up call. I keep asking and keep asking particularly – can you hear?
Ryan Rockwood: No.
Mike Rockwood: Okay.
Ryan Rockwood: You keep going for the web listeners and I’ll try to figure that out.
Mike Rockwood: All right. It’s just this unit, I think, broke.
Ryan Rockwood: No, mine too.
Mike Rockwood: In this regard, recently I’ve been working with Wells Fargo impound account. Here’s how it worked. Our client was in default, late in the foreclosure process, and had a major insurance claim. Because there was the possibility of it going into actually going to trustee sale, and the bank becoming the owner of the property again, the bank took – the lender actually took possession of the insurance payoff and doled it out over a period of time only as they saw progress was made on the loan.
Well, getting that money out of the lender, because it was Wells Fargo, getting the money out of Wells Fargo was incredibly difficult. And we would call back, and it would just be laughable. We would call the next day and the file would have been cleared. So, like let’s say on a Wednesday I’ll call Tiffany and Tiffany will say, “Oh yes, absolutely. I see here where that form was filled out and it was delivered, and it was verified. We check with the IRS and it’s all clear. I’ll go ahead and request the check.” Then we would call on Thursday. And they would say, “No, there’s no note that you talk to Tiffany yesterday.” So, we would ask for a supervisor to call us back on Friday. They wouldn’t call us back. And on Monday, we would call again and start the process over again. This happened for three weeks straight. It was absolutely laughable. I mean if it wasn’t for the fact that we had this contractor strung out for about $5,000, it would have been actually hilarious. And we should have recorded it because it would have made a great funniest audio, world’s funniest audio.
But it’s a good way to see. What we did is we did all kinds of confirming with e-mail. Like as soon as I got off the phone with the supervisor, I would e-mail her and confirm. And so then three days later, when I needed to escalate to her again and she wouldn’t take the phone, then I would confirm again in another e-mail. So, it became just laughable. And then finally, I mean, she just wouldn’t take my calls anymore because she was so embarrassed because her team was screwing up so often.
But at any rate, it’s just not uncommon and as part and parcel of this, the time that we’re in and the disarray that the lenders are in. So, don’t get frustrated with the whole process. Sometimes, I’ll be talking with clients. They’ll say, “I can’t believe it. They lost my file.” And I’ll say, so just get up again, file it again, and start over again. You may have lost a month. You may have lost three months. It doesn’t matter. And complaining about it, being frustrated about it, yelling about it certainly isn’t going to change a single thing.
Okay, now remember that –so remember that the phone calls are not legal. Faxes are barely legal because you need proof of receipt and usually all that you can do is prove that you have sent the document. Are we not on that because I’m not…
Ryan Rockwood: Forget that one. You’re on here.
Mike Rockwood: Oh, okay. Okay. Sorry if this audio quality is not as good as usual. We’ll try to improve it here in a few minutes. Remember that faxes are barely, what I call barely legal because you need proof of receipt. I tried to send to the attention of a person, not just through the department. I always keep copies though and I keep a printout that it was successfully sent. And really, that’s for my own records. It’s my own double check that, in fact, the fax was sent and I didn’t just put it in the machine and it wasn’t able to get through. And then I always include the account number, my name, the property address, and the total number of pages on the cover letter. And I think the total number of pages is really important, so don’t disregard it.
And at the bottom of each subsequent page, every subsequent page, even if it’s a 50- to 75-page fax, include the account number and that page number and circle it on every page. So, 50 times you go through there and you write your account number and that page number. Okay.
Now letters including certified mail, my tip is to write – what I always do it to write as if this is going to be used in a court of law. No equivocations whatsoever. Qualified written requests should be named Qualified Written Request. And state that you understand that according to Section 6 in the Real Estate Settlement Procedures Act, you have a certain rights for disqualified written requests. On cease and desist letter that you might be sending to a collection agency, that you want to have stop calling you, be sure to reference the FTC guidelines for the Fair Debt Collection Practices Act.
So, I always write as if I’m going to be holding that in front of the judge and he’s going to be seeing as, in fact, I was real clear on what I requested and what protection that I was invoking. So, write letters just as if you were a lawyer. You can pretend to be one at work, all right. And then in e-mail, the same guides go as for letters. Only you have to be extremely succinct in letters and you have to accept all e-mail conventions. Do you know what I mean? Short, short, short, to the point, more brief. And then always show that you CC people. If you’re going to be CC-ing people, if you’re going to copy people, always show that you have done that. So, that the recipient knows who else is getting a copy of this letter.
All right, so there’s an overview of how we effectively communicate day in and day out with lenders. And I got to tell you for someone unknown reason, maybe if the lenders are finally getting enough staff, we have been getting through to lenders on the phone at an incredible clip in the last couple of weeks. So, maybe they’re kind of back online. Maybe they’re starting to – they’re staffing up is starting to catch up with the demand. But whatever the reason is, I feel like we’ve been really successful recently.
And in fact, Ryan, on a lot of the Done for You calls, and let me explain that to everybody on the call. We have one product that’s called Done for You. That’s where you buy our basic – that’s a loan modification service – where you buy our basic kit and I think that cost a $149. You buy our basic kit and that’s a Dot-it-Yourself kit for loan modification. If you pay another $147, we add a service called Done for You where we get you on the phone and we actually walk you through the application. And a lot of people feel like that’s a $147 well spent because there are so many little questions you have on creating the budget about debt-to-income ratio, about cash flow, about income and verifying income. And secondly there’s so many questions about hardship letter that rather than e-mailing back and forth or spending some time creating yourself, a lot of people just like to create it with us online. And then at the end of the conversation we e-mail it to you.
But Ryan, we’ve been so successful getting people on the phone lately that I’ve started at the end of the Done for You calls just asking clients that they’d like to dial their lender right now. And I’ve done that about half a dozen times in the last 10 days. And honestly, it’s really crazy effective because at least half the time, we’ve gotten right through, and in a couple of instances, gotten a prequalification right there that the borrower, our client, was thrilled with.
Ryan Rockwood: This is after you spent the time to do all the documentation and you called him in.
Mike Rockwood: Yes. So, rather than just saying at the end of the Done for You call, “Hey Mary, now you’re ready. As soon as we hang up, call your lender.” You know sometimes, because we’ve been so – I just say, “Mary, do you want me to try dialing your lender right now and I’ll be on the line with you?” And then of course, Mary just gives permission for me to talk with her lender while she’s on the phone. And it’s just a really productive way to do it.
Ryan Rockwood: But if you think about the kind of person that would have – the first product appeals to – it’s definitely someone who says, “Oh well, I can do it but I appreciate you kicking the butt.” The extra phone call with the bank can be god-sent.
Mike Rockwood: Oh man, they just love it. And frankly, I love doing it too because then I’m there to help them through sure enough, you know, there’s some twist or turn like they don’t qualify for the Obama plan, would they like to still be considered for a loan modification? Another twist is your income is too high or your expenses are too low. And then, of course, because I do it all the time, I can just ask the right question. How low? How much too low? How much too high? What do we need to do? So, it’s a real effective way to do it. Should we go to some questions?
Ryan Rockwood: Yes.
Mike Rockwood: I’ve got three of them here already just in the last couple of minutes that we’ve been on. You want me to take one of those, or do you have some?
Ryan Rockwood: Yes. Well, someone on the live chat or the live broadcast of the video…
Mike Rockwood: Yes.
Ryan Rockwood: Asks, “How do you negotiate a lower interest rate during and after the trial period? Because he anticipates he will not be able to do for the new future payment. That’s a tough one.
Mike Rockwood: Yes.
Ryan Rockwood: Do we have a good answer for him?
Mike Rockwood: Well, if I understand the question right, they’re saying that they do have a temporary reduced payment is that with list? But it’s not good enough. That how what it sounds like to me, a lower interest rate after the trial period.
Ryan Rockwood: He’s got a lower interest rate but, yes, it’s not low enough.
Mike Rockwood: Okay, so let me recap. We’re getting a lot of trial periods these days. It seems like a lot of the lenders are defaulting to this trial period and it’s actually a good strategy. What they do is they say, “Okay, you haven’t been paying your mortgage. We want you to get paying right away. So, we’ll get you paying. First of all, we’ll run you to our prequalification calculator. And if it determines that in fact we are likely to be able to give you a loan modification. Then we’ll offer you an immediate opportunity rather than wait for us to give you the loan mod. We’ll give you the opportunity to start paying.” And that’s really what it is. But it actually is pretty smart. So, they give you the opportunity to start paying at what they think will be your loan modified amount. Now, what is this guy’s name?
Ryan Rockwood: Well, it’s a screen name.
Mike Rockwood: Okay, screen name. Screen name says that he doesn’t think that he’s going to be able to afford that amount after his trial period.
Ryan Rockwood: It’s not good enough.
Mike Rockwood: Yes. So, if it’s not good enough, then number one, maybe he shouldn’t have started it at all. Maybe you should have just headed off into further default and started to deal with the fact that you’re not going to be able to get satisfied with this one. However, I can definitely see if you wanted to delay things for three months and then get into that discussion with them. That’s another good strategy. So, if that’s the case, you took it knowing for well that you couldn’t complete it, then I would wait until after a couple of months of payments before you broke the bad news to him because if you break the bad news to him after your first payment, they’re going to immediately initiate foreclosure or accelerate foreclosure or whatever they can do.
Ryan Rockwood: Well, remember this is probably a repayment thing so he might not even be in foreclosure yet. Do you know what I mean?
Mike Rockwood: It might be. Yes.
Ryan Rockwood: Yes they might have given…
Mike Rockwood: But they’re going to accelerate whatever, you know, whatever paying they can inflict on you.
Ryan Rockwood: Getting a better rate is hard because well, when you stop, right, everyone wants a better rate. I guess…
Mike Rockwood: Yes, you’re right. That’s the wisdom that you need to know is, is this as good as I’m going to get. And just for your guidance everybody, we have been getting 2% loan modifications extremely rarely. It’s all the buzz, you know, the 2% money is available and loan modification is a way to get it. But it’s a real rarity if somebody who qualifies for the Obama plan and all the stars align. When it does happen, it’s a beautiful thing. However, most loan modifications today are at the going rate of between 4% and 5% for a short period of time like three or five years. That’s kind of the bread and butter loan modification these days. So, that’s what you should expect.
So if this listener has a 4% to 5% and it’s not good enough, then you better either figure out a way to qualify for the Obama plan. And that’s really easy to figure out if you can qualify for it. We can help you with that or you should just pursue a different workout solution, either start thinking about losing a house in a short sale or another option.
Ryan Rockwood: Okay. This guy’s name is Michael, so we might know him. But he went from 6.375 – it’s a pretty good one to start with so that’s pretty neat that he was able to get it down. Now, he’s down to 4.25. And for those of you listening, you might say, well, this guy…
Mike Rockwood: Hit a homerun
Ryan Rockwood: Hits homerun. Perhaps everyone has a different idea what a homerun is. And who knows, Michael might have been at 6.375 with a negative amortizing loan or…
Mike Rockwood: Interest-only payment.
Ryan Rockwood: Interest-only payment. And now he’s at 4.25 with a fix, maybe. I’m just guessing, okay. But the bottom line is that no matter how that good that interest rate gets, sometimes you can’t nail it. At some point, yes, you do have to figure out if a loan modification, perhaps, is not going to be a solution for you. 4.25, I would say, you know in this case 30-year fixed is 2% to 3% on real estate he has. What do you think?
Mike Rockwood: Well, a 2% or 3% fixed 30-year is probably unrealistic. But 2% to 3% for five years is not unrealistic. But you will figure out if you qualify for it
Ryan Rockwood: What about on a second, I mean – oh, it is?
Mike Rockwood: Yes. It’s really easy to figure out because what you’re doing is you have to ask the question “Does my first mortgage PITI and HOA – that’s gobbledygook for principal, interest, tax, and insurance, and HOA – Homeowners Association. If you add all that up, and that is more than 38% of your gross household income, then you may have a shot at it.
There are some secondary factors like we will need to know your overall debt-to-income ratio and we’ll need to know your cash flow at the bottom of your budget. Is there any cash left and if so, how much? So, we can figure out before you contact your lender whether or not you can qualify. It’s really fun. I had a client this week, Ryan, who we didn’t think did qualify because in fact her first mortgage was 28% of her gross household income. But then as we talk we realized that her gross household income was her income and her husband’s income from a business they ran together.
And so I suggested to them that they think about moving some expenses that they currently carried on their own books like their medical premiums, like their car expenses. They could very easily shift that to their business expenses and then show a significantly reduced monthly household income that would bring them into the target range.
Ryan Rockwood: It’s fine because they didn’t already have that with taxes and stuff, you know but imagine…
Mike Rockwood: Well, no but I mean it was simply a bookkeeping, a matter of bookkeeping because they were in control of what their monthly income was because they had their own business.
Ryan Rockwood: Yes.
Mike Rockwood: So, it was a simple change, perfectly legal, perfectly ethical.
Ryan Rockwood: That’s a lot, cars, health.
Mike Rockwood: But they’re real common business expenses.
Ryan Rockwood: Right.
Mike Rockwood: I mean most businesses assume at least your medical and some, of course, your car.
Ryan Rockwood: Okay. Art asks, “Do you still need to be behind payment to start a modification?”
Mike Rockwood: Not to start a modification Art, but boy you sure do to get any kind of respect. I’m telling you the clients I have who are not late are so pissed at me because they think it’s me. But I just keep month after month reporting to them that they’re not getting respect and that the negotiating reps admit to us that they’re not getting respect because they’re not late even though they qualify for the Obama Program.
You don’t need to be late to start the modification. But as soon as you have it all dialed in and it’s a strong modification application and you really want to get a treatment in less than three or four months, then you have to be late. I dealt with a client today and the lender, Bank of America, God bless this rep. She was really clear with the client on the phone. She said listen. “You do not qualify for the Obama program, so we can’t help you, and this is not your personal property. So, because you are not late, we cannot help you. If you are late, we could help you. But we can’t consider you for a loan modification.”
So, we got off the phone. We talked about it and she’s like 78-year-old person who lives in Nevada. She and her husband have never in their life missed a mortgage payment. They’re so proud of their FICO score. But they’re seriously considering now whether or not, in order to get – they’re eating up their savings every month. They need $300 or $400 relief every month and so they’re seriously considering whether or not to take that action. Go late. Get a modification and stop using what’s left of their savings every month. Because at this rate, they’ve only got about a year’s left of their savings. All right, do you want me to take one of these, Ryan?
Ryan Rockwood: Yes.
Mike Rockwood: Lavan from Phoenix says, “I was left with a non-secured HELOC, Home Equity Line of Credit, when I sold my Arizona home short in the spring. What are my options for dealing with it?”
Okay so here’s the situation. She had a mortgage and a Home Equity Line of Credit, apparently. And the Home Equity Line of Credit held her personally liable for the debt, maybe release their lien on the property that they must have in order for it to be sold short. But the short sale person, her lawyer or her realtor who did the transaction for her, did not get a release of personal liability from the holder of the note. So, let’s say it’s Bank of America and they’ve got a Home Equity Line of Credit. They release their lien, the home gets sold, and then they sue her for the remainder of the HELOC.
So now, she is stuck with this non-secured HELOC. So, the bad news is her short sale transaction was handled poorly. The only way to deal with that, because now they have a legal right and they can seek a deficiency, a judgment against you and then start collection procedures, start garnishing you wages, the only way that you can deal with it now is to offer a settlement. And if, Lavan, if you are in dire financial straight now would be a great time to argue with the lender for a settlement.
There are specific ways to word your offer and I can help you with that. And it’s reasonable to expect that the lender will not consider your settlement offer until you’re at least six months late on payments. And that’s because that’s the point at which they have to charge it off an accounting term only and hat means they have to take it off their books as an asset. They have to recognize it as a bad debt. And then it becomes likely not to be collected.
So, once they are faced with having to do that, they get very serious about negotiating with you because now they’re going to have to take it off their books, that’s bad, and they’re going to have to probably either sell it for, like, 3 to 15 cents on the dollar or farm it out to a collection agency to work and then they have to pay that collection agency probably half as much as they collect.
So, either way it’s bad for them. So, they get very good at negotiating with you as you get over 180 days late. So, that’s your best debt, Lavan. Try to buy this thing out. Offer them 10%. They won’t accept it but they will come back and say 50%. Then you got to come back and say 10.5. Go back and forth. And in these times, I think if you can afford it to settle for 20 cents on the dollar is kind of the going rate. That’s kind of what people are – that’s about as good as it’s getting. All right, I’ve got another one if you want me to keep going.
Ryan Rockwood: Go ahead.
Mike Rockwood: Okay Wendy from Torrance, California says, “I want to try to give my rental home back to the lender in a Deed in Lieu transaction. Because my realtor told me that this is the best way to protect my FICO score. Do you agree and how do they work?”
Ryan Rockwood: Remember to talk in the speaker here.
Mike Rockwood: Okay, okay.
Ryan Rockwood: Hey, you know if you can.
Mike Rockwood: A Deed in Lieu transaction can be a very, very good transaction for you, the borrower, the homeowner. The way it works is you ask the lender just to take the property instead of waiting for the foreclosure process to take place. They get the house faster. You lose it faster. They report it as paid as agreed. And so you begin to rebuild your credit faster. It’s good for everybody. So, why isn’t it very commonly done these days? There are several reasons.
And in Torrance, there’s a possibility it will work, Wendy. Number one, if you only have one mortgage because if you have two, that first mortgage will not accept your Deed in Lieu because they know that they’ll have – they don’t get relieved of the responsibility to payoff the second. If they take you to foreclosure, then they do. They get paid first because then they would just liquidate the asset. They’d sell it and they would get paid off before the second. And they don’t have to pay the second.
So, they would not accept it if there are additional liens but you might only have one mortgage. If you have one mortgage, then you have a good chance. The second reason they might not accepted is because your property may have declined in value way below what they owe you and they want to try to hold you personally liable. Especially because you say it’s a rental property although in California, very rare.
The third reason on Deed in Lieu, that they’re not real popular during this downturn is because in the REO process, the Real Estate Owned Process and then the short sale process. The lenders have in place a kind of a good regulated way of taking ownership of property. There are realtors involved, inspectors, and appraisers involved. And so they know what they’re getting and they have insurance policies to cover them because they have experts involved.
There really isn’t as good a process in place for accepting property directly from the homeowner. So, that’s another reason why your bank might not accept it. But here’s how you start the process, Wendy, you just contact your lender and say, “I’m in trouble and I want to explore the possibility of giving you this house Deed in Lieu or foreclosure.” They’ll tell you to list it immediately because they want it on the market for 90 days before they agree to take it back. Because they want you to try to sell it yourself first even if it’s a short sale.
So you being in Torrance, I highly recommend that you contact us, the best realtors in Southern California and we will help you list it and start that process. That doesn’t mean you’re going to sell it. You still might do a Deed in Lieu but at least we’ll get it listed right away for you and you can begin the process. You got a question there or you want me to take this one?
Ryan Rockwood: Yes. Let me fire off a couple. We got a lot of people writing in. Theresa, sorry. Why do I keep reading people’s names?
Mike Rockwood: Well, it’s a good thing she got a seven syllable last name and you only said the first three.
Ryan Rockwood: She got a question here. AHMSI has denied loan mod due to investor rule.
Mike Rockwood: Yes.
Ryan Rockwood: I think we talked about this last time too.
Mike Rockwood: Can a loan mod still be done? Now this is a tricky one. Listen up everybody. Several lenders, IndyMac, Saxon, and American Home, are three of the ones that come to mind right away have, declared that they, in no way, will ever do modifications any longer on rental properties. They’re absolutely overwhelmed just trying to do primary residences. By and large, that is the case and they’ll stick to it right up to the point of owning the property. I know with Saxon, I have had to go within weeks of the sheriff sale before they would change their tune. And here’s the deal. They don’t officially change their tune. They just ignore the fact that it is a rental property.
Here’s a case in point. I was asking for a modification, had to have a modification on a rental property that had one mortgage from Saxon. They say, “No, it’s a rental property.” Absolutely, it can’t happen. It can’t happen, went on for nine months, they were about to own the property and a negotiator said to me, “Can you send me a utility bill from this property, which the client was able to do because they happen to be paying the trash and water.” That’s all the negotiator asked for and then we ended up getting the modification. So, you know what the negotiator did is they put it through as a modification on a homeowner’s property and didn’t state that it was a rental. So, don’t expect them to admit that they’re breaking the rules but in fact, they will break the rules.
Ryan Rockwood: What do you think would inspire them to do that?
Mike Rockwood: Yes, what inspires them to do is they really don’t want to own the property. They just overwhelmed with properties. So, they are paid. They’re incentivized to try to keep, to try to do modifications especially ones that they didn’t get paid on from the government and to prevent them from owning property at this time because prices are still declining. Foreclosures are still on the rise. They don’t want to own property. And you know what? It really comes down to poker. It’s a game of poker and it’s a game of negotiating. And so you really have to prove that you are willing to lose this house to them before they’ll take action.
Ryan Rockwood: Okay, let’s keep firing away another online question from the chat. Is 38% measurable by looking at the prior year’s growth income shown on tax return or gross monthly, gross income? What if the payment amounts vary month in month? Average month is low due to year-end bonus expectation, something like that. I think for that one, and correct me if I’m wrong, the answer is whichever one looks better for you.
Mike Rockwood: Absolutely.
Ryan Rockwood: And so to this guy who’s writing in, what you have to do is you have to – you could show last year. You could show the last six months. You could show the last 30 days. What you have to do is decide which one of those works for your plan. Meaning, you have to know what amount you need to hit. If you have read our books, you know where you need to be exactly. There’s no mystery about it. You know where you budget has to be. You have to earn enough money. You can’t be more than $500 negative a month, okay. You know what comes in and what goes out on your budget. And so you got to look at all these different elements in there, also your debt-to-income ratio, your housing-to-income ratio is going to factor into it too.
Mike Rockwood: Yes, so we’re not flying blind here. We know what the ratios are. We know what the right answer is to all the questions. So, in answer to your question, just like Ryan said, whatever is best, that’s what you use and stick to it.
Ryan Rockwood: Okay. We have a question here from David. “Do we work with commercial loan mods?” Not at this moment. We don’t do anything over four units right now. However, there’s nothing indicated that the same exact rules don’t apply.
Mike Rockwood: That’s absolutely right.
Ryan Rockwood: It’s just that we don’t have access to a market of commercial mortgage holders. If we did, we essentially, I presume, doing the same thing. Sure there’d be a few wrinkles here and there and so on, you know, triple net or whatever the lease agreements are and so on. But probably we have to – we probably have to do more of documentation there to prove the income of the property and so on and so forth. But I would say if you got that loan modification on commercial property you have, just go ahead and get our regular kit and go for it.
Mike Rockwood: Yes. In fact, Ryan, let’s say it’s Tuesday. So, it would have been about Friday, I was in a conversation with one of our clients who’s doing a number of loan mods in the Inland Empire section of Southern California. And she also had a little strip mall and she had use the same – our same guidelines and same principles and gotten a wonderful modification on the strip mall. She said that the only thing that was a little bit scary about it was that they took her right to Trustee Sale. That it was right to the very end and she’s a real gutsy negotiator. And she said, “This one really had me worried that I was going to lose the property.” But she did end up getting really tremendous modification. So, like Ryan said, I think all the same rules apply just – we just don’t have a lot of experience with it.
Ryan Rockwood: Okay. “The lender insists that I can afford a larger payment because my DTI is 31% of my monthly growth income. Does this sound right?” And it does.
Mike Rockwood: You’re not under a lot of duress. You didn’t show them a lot of duress.
Ryan Rockwood: Yes. Well let’s say that, yes, you don’t get anything at 31%. Not even 35%, right? You have to be 38% or…
Mike Rockwood: Yes, we always say to people we try to dial them in at 39% to 70%.
Ryan Rockwood: The key here is that almost certainly, you’re showing your debt-to-income ratio, A, either off, something’s wrong with it, or it can be manipulated somehow fairly easily. Because if you have a debt-to-income ratio at 31%, I really doubt you’d be wasting in your time learning about loan modification.
Mike Rockwood: A lot of credit card debt…
Ryan Rockwood: Yes unless you have like FICO…
Mike Rockwood: Nice cars…
Ryan Rockwood: And that does creep up on you fast. But what are common quick ways to reduce or increase debt-to-income ratio?
Mike Rockwood: Yes. Well, some of the common areas people make on DTI is that they don’t use their minimums on their credit cards. They put loans on their budget that aren’t on their credit report. Make sure to check your credit report because you need not to tell them about any debts that aren’t showing up on your credit report. And then also you might want to torture those income numbers to make sure there isn’t – that you’re not using a wrong period of time, that different segment of time like the previous 120 days instead of 90 or the previous six months instead of 90 might not look better. So, those are just a few quick answers about how you might torture the numbers.
Ryan Rockwood: Let me see if I can get someone on the call here. Maybe someone on cellphone or something like that, that’s not watching on the computer. Give me one sec.
Mike Rockwood: Sorry about that.
Ryan Rockwood: Sorry if you’re on a mobile phone.
Mike Rockwood: You want me to take this one from Mark?
Ryan Rockwood: Oh yes, yes, go ahead.
Mike Rockwood: Okay. So Mark from Houston writes, “We’ve been rejected for a loan modification. We’re only two weeks away from sheriff sale. What are our options for forestalling foreclosure?” Okay, so Mark got rejected for the loan mod and, of course Mark, that picks my interest why did you get rejected and I hope, you know, I don’t recognize the Mark from Houston. So, I believe we haven’t work with you. Let us review your application to see if we can help you get that loan modification. But your options at this point to delay foreclosure are getting to be very few if you’re only two weeks away from the sheriff sale.
The best one, and again, I need to know your preference. Are you really set on staying in a property or do you just want to delay? If you just want to delay, you certainly should submit, posthaste, a short sale, a short payoff request. That will send the lender into at least a 30-day and maybe as much as a 90-day analysis of whether or not your proposal is good. It will require that we come up with an investor’s offer for your property. But I got to tell you in this environment that’s kind of easy to do because there are a lot of people with a lot of money that are out in the market willing to make low-ball offers to help people like you.
On the one hand, let’s say somebody came in and made a low-ball offer on your property. They really would love to buy your property at the low price that they’re offering. But if it only serves you to help you delay your foreclosure for two months and then workout your loan modification, it’s neither – it doesn’t matter to them. They’ll just move on to another property. And some of these investors have as many as 10 or 15 and this offers out at anyone time. So, I recommend you to contact us to talk about a short sale. Another option, let’s say – that’s probably the best option with only two weeks left.
Ryan Rockwood: Well, I mean, bankruptcy it’s always the big whammy there.
Mike Rockwood: Yes.
Ryan Rockwood: It’s worth talking with the bankruptcy lawyer and looking at your situation overall because if you go that way anyway…
Mike Rockwood: Yes. Ryan and I always say that using bankruptcy to forestall foreclosure is a little bit like using a sledgehammer on a little tack. It’s a big, big weapon that you want to be sure you want because there’s a lot of collateral damage sometimes. So, you want to be sure that you’re a good candidate for bankruptcy that you’re not just using bankruptcy to forestall foreclosure because they’re a lot easier, simpler, cheaper, faster, lower magnitude ways of forestalling foreclosure. But Mark, please send us more information if you want a help. If you want to enlist our support, we’d be glad to help you. That’s kind of one of our part of the dark science is a way to forestall foreclosure because a lot of people don’t take action early enough and so when it gets late in foreclosure, they just need another month or another 90 days to work out the best solution for them and their families.
Ryan Rockwood: Hey, I wanted to thank everyone that ordered this week. We ran out of books and so we had to do another printing. Bottom line is we sent a bunch of stuff out today overnight. So, if you’ve been waiting a couple of days too long, sorry about that. Everything’s back on track. Also, I wanted to – on the chat here tonight I did talk about some of our full service options that we have. We do have some of that stuff. But usually on these calls, the people that tune in are usually interested at how, like, learning about it and doing it for themselves. So, we help you do that with basically a kit that teaches you everything, got you recorded ourselves talking to the lenders and you get that CD. You get a video walking you through. Well, it has to be to walk you through, anyway, filling out your budget.
Mike Rockwood: Yes the whole application. It talks the hardship letter. It talks the budget. Yes. Oh, yes.
Ryan Rockwood: It’s a little while since I looked at that.
Mike Rockwood: We’re retired on that, Ryan.
Ryan Rockwood: We are huge advocates to do it yourself loan modification. So, that’s what we want to help you with. But I understand that’s not for you. Give us a holler and we’ll help you with a more full service approach if that’s in your budget. The other thing that may be a nice happy medium is the Done for You service. It’s like $150 add-on. We actually get on the phone with you and fill out your application with you. And we can do that by the end of the week, so your application can be done by the end of the week if you order, like the next 24 hours.
Mike Rockwood: Sometimes that is just way beyond most people’s expectation. You know what I mean? Some people are now on the call learning about workout options.
Ryan Rockwood: Actually, people never call after I say that. So, maybe it freaks them out. It would be like, “Oh, I wanted to get it done but more like in a month.” You know what I mean?
Mike Rockwood: Yes.
Ryan Rockwood: It’s like a logical way of how to get your mind around.
Mike Rockwood: That’s one thing we believe in you guys is that loan modification is only one thing that we all need to be doing to reduce our expenses, to get our expenses in line during this tough economic times. So,- we think it’s worth about 60 minutes. Not only should it only take you 60 minutes, it’s only worth that. I mean you’re going to save $300 to $1,300. Some people save more than that but most people save in that range. So, this is really important but it’s about 60-minutes worth. It should be that simple. It should be that easy.
Ryan Rockwood: Oh, but I got some exciting news. We’ve got a copycat. Some other website copied us this week.
Mike Rockwood: Is it called less than 60-Minute loan?
Ryan Rockwood: Yes. So, if 60 minutes is too long for you to get your loan mod.
Mike Rockwood: Yes, if you can’t wait that long.
Ryan Rockwood: There’s another service out there that promises only 20 minutes.
Mike Rockwood: Now, we’re going to have to start telling people that it really takes longer than 20 minutes. In fact, you should take an hour. Yes.
Ryan Rockwood: So, you can get their resources and tools so you could go for that 20-minute one. I guess for the 20 minutes, they do charge about $600 or more. But anyway, we’ve also got an option. You could schedule a private call with Mike, my dad. It’s cheap. You can go and just lay your stuff out on him. He’s a good sounding board and a pretty nice guy. And so a lot of people realize they don’t have – the newspapers, your friends and relatives, they’re great in stuff but not so great when it comes to actual specific. Because on Hilda [phonetic] or whatever who got a loan mod without asking and all this kind of stuff. Well, you try to repeat that or there are so many extenuating circumstances and it is ridiculous.
Mike Rockwood: And you know Ryan, often times spouses aren’t even talking about it. Don’t you think 95% at least of the time we’re dealing with one of a couple?
Ryan Rockwood: Yes.
Mike Rockwood: You know what I mean? And very often they’ll say, “How am I going to explain this to Paul. How am I going to explain this to Mary?”
Ryan Rockwood: Talk with Mike.
Mike Rockwood: Yes.
Ryan Rockwood: So, marriage counseling is our next product coming out.
Mike Rockwood: You should write a book on marriage counseling.
Ryan Rockwood: And if you’re ready…
Mike Rockwood: Sixty minutes to a finer marriage.
Ryan Rockwood: We could do 20 minutes to a finer marriage.
Mike Rockwood: Yes.
Ryan Rockwood: Beat up competition. If you’re ready to be working on your loan mod application, check out 60minuteloanmodification.com/products. And if you want a good kick in the butt, go /getitdone, okay. With that, I’ll sign off. We do spend most today on the phone. You guys are awesome. Thank you so much for your time and good luck out there.
Mike Rockwood: Thanks, everybody.
Ryan Rockwood: If you have purchased the kit, don’t forget that even our most basic kit comes with e-mail support. We’ll actually go over your hardship letter. To be honest…
Mike Rockwood: I mean, you should be honest.
Ryan Rockwood: Yes, I’d be honest. I really write some good hardship letters for people that just get the basic package. You don’t have to get the hard – the advantage of the Done For You is that I talk to you and a lot of times we can uncover more hardships. Okay. So, thanks for joining us. E-mail us at help@60minuteloanmodification.com.
Mike Rockwood: Can I add one thing?
Ryan Rockwood: Yes.
Mike Rockwood: Okay. A lot of those forms and letters that we talked about during our communication session today when we’re talking about communication, a lot of times people want to write those letters but they need a template. And I’d be glad to provide a template for you for a cease and desist letter, for a qualified written request, for any of the communicaids [phonetic] that we talk about today. In fact earlier today, I had a person tell me that they were getting a settlement offer or wanted me to critique their settlement offer. They were writing a settlement offer on a second mortgage. And I’m always glad to do that and I have templates because we write these letters all the time. I have templates or examples, I mean, that I can just send of to you. Because a lot of times it’s easier just to take somebody else’s letter and make it your own than to create your own. All right, so you can get that from me at help@60minuteloanmodification.com and just ask that in the body of the e-mail. Ask for that.
Ryan Rockwood: If you’re watching on the teleconference right now, I think you can go up to that just above the video and there’s some links to the products [Indiscernible]. Anyway, thanks a ton guys.
Mike Rockwood: Thanks, everybody.
Ryan Rockwood: Go for it and good luck. And hopefully, we’ll talk to you this week.
Mike Rockwood: And we’ll get some more audio questions in the future. We’ll get that working on.
Ryan Rockwood: All right, thanks again.
Mike Rockwood: Bye.
