Ryan Rockwood: Hello. Hello everyone. This is the 60 minute loan modification insider secrets teleconference series. Today is our Thursday call which is cool because we tried to get into the nitty-gritty and answer specific questions regardless of how hard core they are. As you know, we’re here to beat the bank to save your home and to help you escape bad debt forever. My name is Ryan Rockwood and as usual, I’m joined by my father and business partner, Mike Rockwood on today’s call.
Mike Rockwood: Hello everybody.
Ryan Rockwood: Before we get started, pardon me. A couple of quick announcements. Number one, the email to send email questions to is questions@60minuteloanmodification.com. That’s questions@60minuteloanmodification.com. That is the only email that I’m able to check during this call. Announcement number one, for months now we’ve been getting nothing but bad news from Countrywide B of A but today we had some great news. One of our clients got a modification from $2,870 a month to $1,922.
Mike Rockwood: That’s a sweet one.
Ryan Rockwood: Yeah, that’s $948 a month savings. Pretty impressive. Did you see that email?
Mike Rockwood: No.
Ryan Rockwood: No. I forgot the fellows name but that’s I think he’s in the three-month process of making good faith payments and they’re going to start that. He’s really excited about that but anyway, that was good to hear. I just want to share that with you because no matter what lender you have there is still an amazing opportunity available out there to really dramatically increase your quality of life there. Announcement number two, you should always be skeptical of your banks motives but if they request specific documentation from you – like they’re actively engaging in a dialogue, you got to give them exactly what they want as quickly as possible. Playing hard to get or a hard ball does not include not sending in documents and you’re trying to negotiate basically trying to say you get exemption if it’s – the other thing is they’re not quite so savvy enough to usually – I mean if they’re going to trick you or something like that it’s going to be like example that we’ve seen where people have been tricked, it’s kind of been like hey send us $30,000 and then we’ll consider your loan modification and people have been done that and they’re not stupid people I mean they really give them the impression that they’re going to get their loan modification approved if they send them that $30,000. Anyway, it’s not subtle in other words. Send as a huge whopping payment and then we’ll consider your loan modification is about as tricky as it seems like to get the idea of like maybe they’ll get your rental income and be able to give you a less good loan modification because they think you’re – they look at your payments and maybe you over stated them by so much blah, blah, blah. It’s, I don’t know. Do you agree with that?
Mike Rockwood: So are you saying that they’re not subtle in their – in trickery? Is that what you’re saying?
Ryan Rockwood: Yes.
Mike Rockwood: Yeah. Yeah.
Ryan Rockwood: It’s kind of like –
Mike Rockwood: Well no, and the point you made is a perfect one that’s the most valid and most important one to watch out for and that is don’t be sending them money and don’t commit to a repayment plan because down payment sometimes are 30% or 50% of the arrears. Don’t agree to pay that until you get your agreement on what your modification will be that will happen. You can insist on that and it will be – and it will happen.
Ryan Rockwood: Okay. On tonight’s call is on financial triage. How to pick winners and losers in your personal budget and again questions@60minuteloanmodification is the email to send into – questions@60minuteloanmodification also –
Mike Rockwood: Well you know, okay go ahead.
Ryan Rockwood: Everyone please mute your phone if you can because we’re trying to take some calls because this is the advanced class. Also I want to make a point before we start here Mike and that is a lot of people don’t know exactly what triage is.
Mike Rockwood: Yeah. Yeah.
Ryan Rockwood: Even though we take it around.
Mike Rockwood: Yeah. And I’ve been using that lately because I’ve been harping about the fact that I think it’s just so disgusting that the banks are triage – using statistics to triage our applications, put us in separate buckets and try to figure out. The idea comes from, it’s like three – triage. It’s breaking the problem down into three groups. One, the group that if because you’re trying to prioritize that’s the whole thing. It’s a strategy tool and so you want to take action with those patients it’s actually often use in a war time medical predicament where you have to decide which patients if you help will live, which ones will live in spite of the fact that you don’t help them and which ones will die even if you help them.
Ryan Rockwood: Does that – is it – I mean emergency rooms are still triage, right?
Mike Rockwood: Yeah. You bet they do.
Ryan Rockwood: Okay.
Mike Rockwood: Absolutely.
Ryan Rockwood: So you go in there and your arms cut off, you’re likely to be seen –
Mike Rockwood: Before the guy was cuffed.
Ryan Rockwood: – before the guy get caught. Yeah.
Mike Rockwood: Yeah. Yeah. Just before thought.
Ryan Rockwood: Hopefully.
Mike Rockwood: No wait Ryan, that depends on your insurance coverage so you got to admit.
Ryan Rockwood: Yeah.
Mike Rockwood: Okay now so but the whole idea when you and Tracy suggested that we talk about triage, launched me off as I prepare for it – it launched me off into the whole thinking of strategy and thinking if loan modification as part of a strategy for managing foreclosure because an awful lot of the folks that we’re talking to are really wrestling with foreclosure more than half of our clients are already in foreclosure. They’ve received a Notice of Default and really when it comes of thinking about triage, you’re really what I’m talking with most people about is thinking through your options which ones are the A plus options, which ones are the Bs and the Cs and et cetera. And so that really took me off again into that book that I referenced a couple of weeks ago or maybe just last week last Thursday when I explained to all of you that I had just finished and sent to the publisher the South Bay Notice of Default Handbook, a new book on handling the Notice of Default and the whole foreclosure process and for loan modification folks very often, we get into a conversation with them about all their different options and thinking strategically about how they’re going to move through foreclosure and how loan modification is one of the tools that they want to use but sometimes it’s really enlightening for them to think about some of the others. Well like just this morning Ryan when we spoke with Lauren. She just marveled about how she hadn’t even thought about actually getting free and getting out from under the burden of the debt of that property until you had talked with her about other option beyond loan modification. She had just been thinking down one path, you know, “If I can just reduce the price of this thing enough to where it doesn’t hurt me so badly every month then I can make it through.” But how much more freeing it is to think of another option and that is you know what I’m going to get out from underneath this thing.
Ryan Rockwood: Yeah. And all of us, I don’t know if it’s the stages of grieve for whatever they call it there. It was like the denial, the acceptance of bargaining blah, blah, blah. It’s kind of like that.
Mike Rockwood: You bet it.
Ryan Rockwood: It’s like – don’t kick yourself if you do a loan modification then year later you decide to short sale it. That’s okay. That’s part of the process. You know what I’m saying? It’s not like oh I wasted my time. No, you dealt with it and we can only, all of us what they say do the best with what we’ve been giving, with what we’ve got at this moment and if you’re not there yet, you’re not there yet. And if someone pushes you into that position, if we came over and knocked you upside the head and said, “You need short sale idiot.” You probably wouldn’t reap the benefits intended that you would otherwise if you would come to that yourself. You know what I mean? So I was talking to a nice guy out in like the valley here in L.A. and we were just doing some quick numbers on his house and it’s like [Inaudible – 0:09:08] and literally and I just got aligned and did mortgage calculator and what I did was I said okay he’s got to make up. He’s got to get back the price X so 300.
Mike Rockwood: And what was that price? Was that what he owes?
Ryan Rockwood: Yes.
Mike Rockwood: Yeah. Okay.
Ryan Rockwood: The price is 333.
Mike Rockwood: Okay.
Ryan Rockwood: Okay. And so then but it’s only worth 225. So I did some math [Inaudible – 0:09:36] calculator, I did 10 years, 11 years, 16 – anyway we figure out that in very simple calculation, 3% average appreciation over the next 10 years, I think that would be very, very –
Mike Rockwood: Optimistic. Yeah, that’s optimistic.
Ryan Rockwood: Is it optimistic do you think? It’s probably reasonable.
Mike Rockwood: It’s probably reasonable. Yeah.
Ryan Rockwood: Yeah. Okay, 3% total let’s say well who knows but that 3% is pretty reasonable appreciation over the net add that 3% it’s going to take him 16 years to get back to a spot where he can sell the house and not bring money to that table literally. So you’re working for 16 years and best case scenario in his case so it’s like 5% appreciation brought down in 9 years.
Mike Rockwood: Yeah. It’s not pretty.
Ryan Rockwood: I don’t know how you add up that. I mean –
Mike Rockwood: Yeah. And so then most of us are thinking yeah, but at that point I want to be in a good real estate leverage position. I want to be able to take advantage of the growth opportunities then but gosh, there’s always ways to get back into the market when it is appreciating again and there will be vehicles. There will be loans and there will be ways to get back into the market.
Ryan Rockwood: Well, I was thinking about this seller for example. What if he bought his neighbors – he’s not late. What if he bought his neighbor’s house for 225 today?
Mike Rockwood: Yeah.
Ryan Rockwood: And worth for the next 16 years.
Mike Rockwood: Yeah.
Ryan Rockwood: And –
Mike Rockwood: Pay it down to 125. Yeah.
Ryan Rockwood: Yeah. And then that thing’s worth – so anyway, as I was kind of like winning a lottery. So the solution is not, it’s hard on us because things aren’t going the way we would like them to go.
Mike Rockwood: Well and then they’re not going the way that we’ve been programmed to think that they’re going to go. You know what I mean? This downturn is not just a little correction. In the past, we’ve seen correction of course for four or five years and they’re regional usually and they’re based on some economic, some disaster or some industry or the other but this is just a wholesale devaluation that seems to have all kinds of inertia on it. It doesn’t seem like it has slowed at all. Well certainly, it has taken a pause this summer but it seems they have at least another 12 months worth of momentum and then it’s not like a lot of other – it’s not like commodities that are going to bounce back. It’s probably going to be dormant form quite a few years while people you know we get rid of – we do some additional short sales. We do additional foreclosures eventually start writing down principals with loan modifications and finding other ways to revalue the whole market until we get back to equilibrium.
Ryan Rockwood: And you were mentioning to someone on the phone today that couple of your properties on university campus literally.
Mike Rockwood: Yeah.
Ryan Rockwood: Sit unrented and now at 30% off to what you were renting him for the last year.
Mike Rockwood: Yeah.
Ryan Rockwood: So you know what I mean? People say that the worst is, weird article is coming out and I don’t know if –
Mike Rockwood: Yeah.
Ryan Rockwood: – just trying positive now.
Mike Rockwood: Sure.
Ryan Rockwood: They’re like hey I think the worst thing – what are you talking about? People have been rented the clubbing houses.
Mike Rockwood: Yeah.
Ryan Rockwood: The rental market stinks. How can – this go way back anyway, on another tangent, I was thinking about winning the lottery.
Mike Rockwood: Yeah.
Ryan Rockwood: I was thinking like this say what do you think the average California win is? I mean if you – I bet 1000 bucks or something like that. What do you think?
Mike Rockwood: No. I bet it’s more than that but I get your point.
Ryan Rockwood: Really? Okay well if you won 1000 bucks today, this guy one of our –
Mike Rockwood: Yeah.
Ryan Rockwood: – he have to pay 30,000 in taxes and then he pays the rest of his house off and he’d only be under – you know what I mean. So he pay 7500 but if he does a short sale today, he doesn’t have to pay taxes on that $100,000.
Mike Rockwood: Right,
Ryan Rockwood: It’s better than winning lottery.
Mike Rockwood: Yeah. All right. I want to review with you for a minute some of the strategies that some of our clients around the country are using. I know I went through this a couple of weeks ago so I’ll be brief. But there really five strategies that I want to point out to you and I point this out and building on the whole idea of triage and prioritizing your effort and looking at your situation in terms of all the opportunities that are in front of you and deciding where to spend your time and your money and your energy. Some people are determining that the best thing for them is flight not fight and they are just running. They are mailing in the keys or they are just moving out and going dark and that is a strategy that appeals to a lot of people because foreclosure is messy and embarrassing and prolonged and complicated. However, it sure not a strategy that I recommend because then the bank takes the property through foreclosure and there’s nobody there advocating for you to make sure that you are as protected as you can be during the foreclosure process. So as appealing as it can be emotionally I don’t think it’s a real great strategy unless you are just emotionally tapped out and can’t handle the whole deal.
Secondly, strategy that I call cash max and the goal of the cash max is to recoup as much money as possible during the foreclosure and generally what these people are doing is immediately stopping all payments to HOA property mortgage or property taxes mortgage everything and then doing everything they can stay in the house for as long as they can without paying a thing and a lot of times, my cash max clients are able to stay in the house for sometimes up to as much as a year and able to recoup a good portion of what they have lost and in some cases recoup all of what they had put in as a down payment on the house.
A third strategy that a lot of clients are using is one that I called hide and seek. It’s kind of similar to cash max and that you stop paying however, what these people do is they hide and seek. They occasionally get on to repayment plans. They occasionally put the home up for short sale. They may use bankruptcy and they may even double down in bankruptcy and that is where one spouse goes right after the other, right after one chapter 7 is discharge then the other member goes in. So that these folks, hide and seek people, can usually figure out a way to stay in their home for up to a couple of years and they do save a lot of money of course they trash their credit but it’s a way that some people are coping with and strategizing to get through foreclosure.
And the fourth one is what I called the Charlton Heston and this is a strategy that I had employed in terms of my own properties where I just determined that you know what I am going to do almost anything to retain these homes. They can triumph from my cold dead hands that’s how I got the name from Charlton Heston. So what these people do is they go to very great lengths in terms of going to the math negotiating with their lenders on loan modifications, short sales, deed in lieu proposals maybe going using bankruptcy maybe not but in other words they use all the tools that are available to them but their goal is always ultimately to hold on to the property so they always pull the punch right at the very end.
And then lastly there’s a strategy that a lot of multiple property owners a lot of investors are using that I call cherry pick and that’s a good example of triage. That’s where you look through your portfolio and you kind of prioritize those primarily by location or by cash generation rent ability whatever the financial measure is. But you kind of look at it and say long term. If I’m going to have to lose some of these properties because my whole portfolio kind of stinks because so many properties are upside down. So if I have to lose some of them, which ones should I lose and then you prioritize all your efforts on to the winners to make sure that you can defend them by getting good loan modifications on them. So those are the five strategies and those are ways that people are strategizing and thinking through foreclosure and one thing you said at the beginning Ryan that I want to reiterate is that very often, we do go through the grieving process that we’re all pretty familiar with in terms of denial and like you said bargaining and then depression and it’s always so very clear to us when we meet with people who are going through this process and we’re so delighted when they finally break through into that acceptance level to where they realize this is not pretty. It’s not fun. It’s not exciting but it is what it is and we have to keep one foot in front of the other and there are people here that can help you figure out where to put that foot. It’s not right up your butt.
Ryan Rockwood: The thing about this situation is most people they say that have their home foreclose on never call the lender –
Mike Rockwood: Right.
Ryan Rockwood: – or never respond to the lender. And in fact that’s why the lender sometimes send us out to go knock on the door or get someone in touch with someone. Anyway, to the people on this call, I really want to commend because not only have these people like the top 1% of people they’re actually looking around, looking at their own situation identifying a problem, identifying possible solutions and exploring them. I mean that’s –
Mike Rockwood: Right.
Ryan Rockwood: – it’s just huge so we have the –
Mike Rockwood: The crème de la crème.
Ryan Rockwood: Yeah. Yeah. We have the honor of working with this kind of people and helping – it’s very satisfying but among the most rational and sane homeowners that we still find that they’re doing things that are silly by any objective sort of standard.
Mike Rockwood: Yeah.
Ryan Rockwood: And those sort of things are continuing to pay, I’ll just give some examples. People continue to pay things when let’s say well how I can I put this most simply. People are generally good and if they can pay your bill, they’ll pay it even if it doesn’t make a lot of sense to pay off an HOA bill that month to stay current on your HOA when you’re not paying your mortgage or your credit card or anything like that. The many things like mortgages and credit card stop being paid in the my mind. It’s time to stop paying everyone cable bill, utilities you know what I mean and only give them money when they’re trying to turn everything off. You know what I mean that you need maybe that’s a cable bill but HOAs man, you go years without messing with them. It’s only a hassle if there’s some neighborhood pressure or something like that but believe me, an extra 500 bucks in your pocket every month and so on. So anyway, the triage here is also about trying to look at your expenses from an objective point of view and saying what can I slice and dice and just ruthlessly get rid of here. If it’s – what are some of the things that people can get rid of that they probably don’t think they can.
Mike Rockwood: You mean in terms of their monthly budget?
Ryan Rockwood: Yeah.
Mike Rockwood: Oh gosh, so many things. The thing is it’s like anything else until you get really under a lot of pressure. You don’t think outside the box. You know what I mean? You just think inside the same paradigm and you think you have the same pressures and the same expectations but so many of us are spending so much money on entertainment and on meals out and on –
Ryan Rockwood: I’ve got one. You’ve got $900 a month Mercedes payment.
Mike Rockwood: Yeah.
Ryan Rockwood: And what can you do you say to yourself because you have purchased your lease this sucker and the thing to do the same thing to do is to drive that sucker back to legal with a note and suddenly you’re saving 900 bucks a month. You know what I mean?
Mike Rockwood: Right.
Ryan Rockwood: But that really seem like a realistic option. You know what I mean? If you’re not – because – but you take the same couple of 900 bucks up.
Mike Rockwood: Well yeah but the thing – and the point that you’re making Ryan is that it does become an option as you get more and more desperate.
Ryan Rockwood: Yeah.
Mike Rockwood: And that’s why we keep encouraging people to do because gosh, they come to us after having already exhausted every option. I feel so bad for people when they come in and they say listen, just mailed in my last – just vent last of my last 401K every savings account that I have is now extended. I literally haven’t got a dime. My credit cards are max up. I have $17,000 worth of credit or some people have a $170,000 worth of credit card debt. And you just feel like gosh, now you’re going to take some drastic action. Now, you’re going to dial Capital One and ask them to accept $5,000 for that $65,000 amount that you owed them. Well gosh, it’s too bad you didn’t do that six months earlier and so in the same way, you got to get really motivated on your loan – on this loan modification because this is like this is like a no brainer. It’s cheap. It’s easy. It’s fast and it’s just a quick way to get a little bit of relief but it isn’t enough and the people that we’re working with are doing six or seven or eight things to try to trim their sales, cut their budget, increase their income, get ready for difficult financial times.
Ryan Rockwood: Every once in a while we do meet someone whose and don’t get me wrong dear listeners. We’re pretty much as stupid as they come money wise but we made every mistake in the book okay. We’re only preaching from a position of firsthand knowledge of having made every mistake in the book but occasionally we will have meet the client that is surprisingly lucid about their situation. The other day I met with a guy and I don’t know. He’s in his 70s and nice guy.
Mike Rockwood: Sure.
Ryan Rockwood: Kind of just very easy going and –
Mike Rockwood: Easy to talk to.
Ryan Rockwood: Yeah. Not pretentious and I found him sitting in his garage as a matter of fact. Anyway, he tells me you know what, I kind of done that a little bit backwards he says. Anyway, he says – because I was urging him to take action before he eliminated his savings and stores and stuff. I kind of do the things backwards when my business is failed and I lost a million dollars last year, I just stop paying everything and he tells me he got 500,000 sitting in the bank so we can’t declare bankruptcy. That’s a great problem to have. You know what I mean? But the bottom line is this is the guy, pretty savvy business guy. When the business goes under, he stops paying all the bills until everyone of his debt is renegotiated. You know what I mean? His $500,000 his dealing with it with a position of power and I don’t know things are kind of – another is a very quiet, easy going woman of [Inaudible – 0:26:14] she’s struck you as particularly savvy. She’s very quiet. She’s very –
Mike Rockwood: Yeah, but she makes the tough decisions. Wow.
Ryan Rockwood: Yeah. So an example of that just kind of person that you would assume will get bullied frankly.
Mike Rockwood: Yeah. Yeah. Exactly.
Ryan Rockwood: She’s a mom.
Mike Rockwood: Yeah.
Ryan Rockwood: Owns a townhouse, speaks very quietly, looks down when she talk that kind of thing but when she got called up and the bank said listen, you better pay us. We’re going to charge that off.
Mike Rockwood: Right.
Ryan Rockwood: And she said so what is that mean? And they say well that means that we’re going to stop calling you. That sounds great.
Mike Rockwood: Well, that would be fine.
Ryan Rockwood: Yeah. So anyway, people are out there doing it and hopefully –
Mike Rockwood: Yeah.
Ryan Rockwood: – hopefully some of our listeners – hopefully a lot of our listeners here can join those ranks of people.
Mike Rockwood: People that are dealing with it.
Ryan Rockwood: Yeah. Okay.
Mike Rockwood: Should we take some of these questions?
Ryan Rockwood: Yes. Do you want to take a question here?
Mike Rockwood: Yeah. I’ve got Cindy from Rancho Cucamonga, California says I have been unable to get a loan modification on a rental property that I have in Las Vegas. I’ve never been late on the mortgage but I’m told that Countrywide, my lender, does not offer mods on non owner occupied property. Is this true? It’s not true Cindy but it is true for you because you told us that you have never been late on your mortgage so for you that is the truth but for anybody who has been late on their mortgage that’s not the true. They will in fact modify mortgages on rentals. I personally have had three modified by Countrywide on rental property but not until I went late on my mortgages and for clients literally dozens. So that is reality if you’re not willing to go late, you will be treated with great disrespect on rental property. Now some people are starting on their own property, we hear rumors of some people starting to get treated with loan modifications without going late on their own homes.
Ryan Rockwood: Treated with respect.
Mike Rockwood: Treated with some respect. But that certainly will probably not take place on rental property. That probably isn’t down the pike that’s not going to happen okay.
Ryan Rockwood: Okay Theresa asks she has three GMAC second loan and today she was told there were transferred to Aurora –
Mike Rockwood: Okay.
Ryan Rockwood: – which is also the primary lender on the three investment properties. It’s kind of weird.
Mike Rockwood: Yeah.
Ryan Rockwood: Is this normal? Is there something? Sure. Yeah. Theresa they can tell us anything they want and anyone that will buy it frankly and in most cases they can’t find anyone dumb enough to buy these things but perhaps on the second if you’re not late and so they might just look like – they might look like complete winners. You know what I mean. Who knows how their actuaries have re–tabulated the home prices in your area and your credit score and I really doubt whether or not they’re able to run your name against their database of buyers. Do you think that would be illegal to, I mean sure thing it’s reasonable but to somehow it seems kind of illegal to say I don’t buy it from this person or something like that.
Mike Rockwood: I don’t know. I don’t think they can. Another thing Ryan you would want to point out to her is it’s very likely would be a great time if you’re in a position to try to buy out those mortgages because Aurora if they bought them or if they’re just taking over servicing but somehow something changed hands and somebody pain somebody pennies on the dollar for these mortgages. Second mortgages are routinely being sold for like a dime on a dollar so let’s just make up a number –
Ryan Rockwood: Well, two other –
Mike Rockwood: Two other investors. So we don’t know if Aurora, if GMAC even owed it and this just might be a switch in servicers.
Ryan Rockwood: That’s true.
Mike Rockwood: But here’s something to think about is a lot of times when they change servicers, they’ve in fact changed hand and when they change hand they have been deeply discounted so it’s a great time if you’re in a financial position to do so to propose either a buy out or a principal reduction. If you’re in a position to ask for a principal reduction and the numbers are right, you know what I mean, if the properties have devalued now could be a great time to be negotiating with these guys particularly because they have the first mortgages as well so they have a vested of interest in the entire property. So this could be a good time for you.
Ryan Rockwood: All right. Yeah, go ahead take another one.
Mike Rockwood: Litton has charged off my second mortgage when I submit the application for the modification on the first also with Litton. Should I list the second as a debt item on the budget? That is a fantastic question and I’m surprised with my answer because it’s illogical and the answer is you need not included as a debt payment on your monthly budget and they won’t dispute that even when it gets to the underwriter for approval. Isn’t it bizarre? You know what I mean? They’ve charged off the second mortgage and now they’re going to allow you take it out of your debt to income calculation. It’s crazy but that’s how it works. That’s how I’ve been advising people over the last six months and it routinely works. So get it off your budget.
Ryan Rockwood: This is another example of broken system, right?
Mike Rockwood: Yeah.
Ryan Rockwood: You are penalized the profane.
Mike Rockwood: Yeah. So you got this second mortgage and just for those of you who need to be reminded. When it’s charge off that really means that in accounting vernacular, Litton had to take it off their books for good accounting practices. So what they did is they did something called charge off where they now reported as a bad loan not collectible and they probably have given it to their collections department to monkey with for four to six months before they decide if they are in fact going to sell it and then they may sell it for a nickel on the dollar or something like that to a collection agency but they continue to have a lien against that property and they just never will release that until you reach some kind of settlement with them.
Ryan Rockwood: Let’s see if some callers out.
Mike Rockwood: All right.
Ryan Rockwood: Hello. Does anyone have a question?
Male Speaker: I love you guys. I love you guys. I’m going to change the name from 60 minute loan modifications to 45 second loan modifications. I love you.
Ryan Rockwood: All right, cool. Who else can we help?
Male Speaker: Yeah, I got a question.
Ryan Rockwood: Go ahead.
Male Speaker: Okay. When you were talking about second mortgage, I got my primary one that I’m ready to submit to my lender very shortly once I complete everything. But I do have HELOC okay but there’s no balance on it. Now when you’re saying about charging off the second mortgage I mean they’re going to do anything about having that second mortgage on my I guess debt income zero to it.
Mike Rockwood: No. No. It went affect your debt to income ratio and on your credit report. It will just saw that it’s available credit. How much is that?
Male Speaker: It’s 35,000. I mean here’s what it is. My primary is 417 and that’s the one I’m trying to get – submit to get modified.
Mike Rockwood: Yeah.
Male Speaker: But it’s got 35 – when I first look at it obviously, I have enough LTV –
Mike Rockwood: Yeah.
Male Speaker: – to get a $35,000 HELOC on it and it was from another institution and there second in line obviously. Now, that shouldn’t have any affect from the loan mod.
Mike Rockwood: No.
Male Speaker: Or do they have the subordinate [Inaudible – 0:34:31] for that?
Mike Rockwood: Yeah. The second certainly is subordinated but that will not impact your negotiations one bit on your first. At 417, what kind of interest rate have you got?
Male Speaker: 30–year tenure IO.
Mike Rockwood: What’s the rate?
Male Speaker: Six.
Mike Rockwood: Oh man, you got kind of sweep deal there. What’s your hardship?
Male Speaker: Loss of income well not loss of income, reduction of income.
Mike Rockwood: Yeah. [Inaudible – 0:35:07] residence right?
Male Speaker: Yes.
Mike Rockwood: And what’s the home worth about right now?
Male Speaker: I look on [Inaudible –0:35:15] and it’s 490.
Mike Rockwood: No kidding.
Male Speaker: When it was appraised, it was at 540.
Mike Rockwood: Yeah.
Male Speaker: That was back in ’07.
Mike Rockwood: What city are you in?
Male Speaker: [Inaudible – 0:35:28] Town.
Mike Rockwood: Man, you’re in such a good position compared to most people that we’re working with.
Ryan Rockwood: Yeah, [Inaudible – 0:35:34] him. I mean decline his income.
Male Speaker: Well, the [Inaudible – 0:35:38] is that I was played originally I am now negative about $870 a month.
Mike Rockwood: Okay.
Ryan Rockwood: Okay. Now for the budget, have you read the part in the book where it talks about having to get your budget down to a minimum negative –
Male Speaker: I did.
Ryan Rockwood: – almost negative 500?
Male Speaker: It can only be negative $500 a month.
Ryan Rockwood: I’m sorry at a maximum. Yeah. At a very maximum, you can only [Inaudible – 0:36:05] 500 a month. So when you put that budget together make sure that you are no more than 500 negative and better if you’re less than $250 up or down.
Male Speaker: Why would that – I mean if its’ real numbers that I’m negative 860,000 because of reduction of income –
Mike Rockwood: 850 bucks a month, do you mean?
Male Speaker: Yeah.
Mike Rockwood: Yeah. And you know Ryan remember, we have been stretching that to a thousand negative to a 500 positive but we have been letting – we’re advising people to go 700 or 800 bucks. Yeah. So I think you’ll be fine with 800 but you are getting up on the edge where they’re going to be afraid you don’t have enough cash flow. But what do you do for – how did your debt to income ratio look? What are the debts have you got?
Male Speaker: Not a lot. I don’t have a car loan. What is it? Well, if I do by the gross versus my expenses –
Mike Rockwood: Yeah.
Male Speaker – I’m about 48%.
Mike Rockwood: Yeah. You’re in a really sweet position. You could get a really nice loan modification.
Ryan Rockwood: But couple of things we get against them and that is he’s got a decent loan right now –
Mike Rockwood: Yeah.
Ryan Rockwood: – nothing imperative coming up, no resets or something. Also to answer your question about why it doesn’t really make any sense. The number one reason people get turned down for loan modification is because they don’t make enough money according to the bank to get a loan modification which is totally stupid right because if they made that money, they wouldn’t need a loan modification. But you just have to be careful so that’s how we arrived at the plus or minus $500.
Mike Rockwood: Yeah.
Ryan Rockwood: It just seems like it’s a magic area.
Mike Rockwood: So yeah, dial that budget in right, you should be able to nail a really nice modification.
Male Speaker: Now should I give you the exact number why I’m negative because I mean or should I just try to go this 500 because I mean I got everything to back up all my financials obviously.
Mike Rockwood: Yeah. And you know what they won’t ask you for a lot of back up so it really is – you really want to prepare it for just the first blush, first time through so if you’re rock solid comfortable with everything and 800 or 500 negative per month, I don’t think that’s going to make any difference if you’re one or the other. The key for you is going to be that you’ve got – have you got W2 income or 199? How did you get your income?
Male Speaker: Yeah, I got W2. Yeah. I can – I mean I got a package from my lender back in May.
Mike Rockwood: Yeah.
Male Speaker: And before I’ve been with you guys and everything, I was [Inaudible – 0:38:48] get everything together making sure it was right.
Mike Rockwood: Yeah.
Male Speaker: I was investigating and that’s how I found you guys. By the way, you guys do rock. You guys are good.
Ryan Rockwood: Thanks a lot.
Mike Rockwood: Thanks.
Male Speaker: Yeah. I just wanted to go – I’m sorry go ahead.
Mike Rockwood: Have you sent us your budget to review before you send it in?
Male Speaker: Yes.
Mike Rockwood: Okay, good and it looks – and we approve and everything and its ready to rock and roll.
Male Speaker: Well, the only thing is – I think the hardship letter, the budget you said it was okay but on the budget sheet, this is what I don’t understand. On my budget sheet okay real way from 800 and like $80 negative from the budget sheet that you put in, I did add a few things to it.
Mike Rockwood: Okay.
Male Speaker: Like you guys didn’t have cellphone bill there you know –
Mike Rockwood: Yeah.
Male Speaker: – things like that.
Mike Rockwood: Sure.
Male Speaker: But I did add to it and with that, I’m about $380 negative. It doesn’t make sense because –
Mike Rockwood: Yeah. You’re right to add to our list. Our list is just a guide.
Ryan Rockwood: No, but he’s saying that I think what’s happening is the table is not working. You might be adding some rows without adjusting the formula for the calculation.
Mike Rockwood: Do you think that what’s going on?
Male Speaker: No. No [Inaudible – 0:39:59] I know how it work.
Mike Rockwood: Okay.
Male Speaker: My biggest thing is that when I put my numbers, my PITI okay.
Mike Rockwood: Yeah.
Male Speaker: We should do and have on the first line.
Mike Rockwood: Yeah.
Male Speaker: And then I did my gross and my insurance and all that stuff but then I also have to worry about this one thing that you don’t guys put in. I don’t know if you put that on the front end of [Inaudible – 0:40:24] so the back end, I have child support okay.
Mike Rockwood: Sure.
Male Speaker: So if we’re taking calculations of the gross –
Mike Rockwood: Yeah.
Male Speaker: – with the DCI the next one thing, if I’m doing all the net then I’m more negative than that.
Mike Rockwood: Yeah, but that’s okay. If you’re in the 40s on your gross that’s fine so if you’re in the 50s or even low 60s on your net, you’re absolutely fine.
Male Speaker: Okay.
Ryan Rockwood: So what is child support? It’s not a debt so it’s an expense?
Mike Rockwood: Expense yeah.
Ryan Rockwood: So okay.
Male Speaker: That’s an expense that you can write it off and the other –
Ryan Rockwood: Yeah.
Male Speaker: – it doesn’t have to claim it. It’s like a limbo money.
Mike Rockwood: Yeah, it is.
Male Speaker: [Inaudible – 0:41:04]
Mike Rockwood: Yeah.
Ryan Rockwood: Great talking to you. Thanks for the compliment and –
Male Speaker: Yeah. You guys are very good and I can’t wait to get this thing through and hopefully give you guys a good successful letter.
Ryan Rockwood: Yeah. That will be sweet. Thanks a lot.
Male Speaker: Okay, thank you.
Ryan Rockwood: Okay. Who else is out there that we can help? Anyone else have a question today?
Larry: Yeah.
Ryan Rockwood: Go ahead.
Larry: Mike.
Mike Rockwood: Yeah.
Larry: This is Larry from California.
Mike Rockwood: Yeah Larry.
Larry: I’ve done everything in the book.
Mike Rockwood: Okay.
Larry: I’ve written you guys a couple of times and I am on my third request. This is unbelievable. I don’t understand what it is that I have to almost struggle that I needed the modification.
Ryan Rockwood: Hey Larry, are you the Larry out like Las Vegas?
Larry: Sacramento.
Ryan Rockwood: From Sacramento.
Larry: Yeah. I talked to you once before you call me at my house.
Ryan Rockwood: Is your email like [Inaudible – 0:42:03] or something.
Larry: Yeah, that’s me.
Ryan Rockwood: Okay. Cool. Good to talk to you. Yeah. Yeah. You have been keeping us. I’ve been looking at that and you’ve been going through the ringer there with –
Mike Rockwood: So he’s gotten turned down three times?
Ryan Rockwood: Yeah. Yeah.
Larry: This is the third time.
Ryan Rockwood: And for presumably crazy reasons too right?
Larry: Right.
Ryan Rockwood: So I think we looked at your last mod going in and we thought that it look – is it true that we thought it look okay going in and is that –
Larry: Right.
Ryan Rockwood: – why it get turned down?
Larry: That’s correct. I just spoken last week and on my table, I’m at 39% DTI.
Mike Rockwood: Yeah.
Larry: And they [Inaudible – 0:42:47] 28%.
Mike Rockwood: Okay so that’s the problem. That is the problem. That’s what we got to figure out why is that happening.
Larry: And I’ve talked to the Wells Fargo several times asking them what is it that you guys [Inaudible – 0:43:00].
Mike Rockwood: Yeah. Okay. So they’re not accepting some debt or they are including some income. They’ve got the wrong income figure or something like that.
Larry: Right.
Mike Rockwood: Yeah Larry, let’s – email us the budget that got rejected for that purpose will you?
Larry: Sure.
Mike Rockwood: And right away in the morning. Let’s get on this one because that is the problem because if you’re at 28% you get bumped out right away.
Larry: Okay.
Mike Rockwood: All right.
Larry: Thank you. Bye.
Ryan Rockwood: Sure thing Larry.
Mike Rockwood: Hey Ryan, here’s a question that came Saxon Mortgage which is one that there is dear to me. For some reason, I do a lot of work with Saxon. Is that all clear? Yeah, I’m clear. You need a different unit there.
Ryan Rockwood: Hey guys do you hear me?
Mike Rockwood: Yeah. So let me take this question about Saxon Mortgages that just came in and that is they say that Saxon – my lender Saxon told me not to bother to apply for a modification on a rental property that I own that it’s a Saxon policy not to do any modifications on rental properties and I have – I can tell you absolutely that is the truth it is their policy and I can tell you also that they absolutely will modify your rental property but only once you get very late in the foreclosure process. They’re very serious about enforcing when Saxon owned loans but all the rule at Saxon, all rules change with Saxon as things approach foreclosure so that has been my experience with them is that they will in fact modify but only if you’re willing to go quite late. All right, you have another one Ryan?
Ryan Rockwood: Okay. Kelly and Lisa, they’re keeping us updated and they have been working on this, this couple has been working on this for a long time and we’ve encouraged them go get it in and they have some good news to report this week. They said that they called had all their documents out, were ready to go and we’re asked like three questions.
Mike Rockwood: Yeah.
Ryan Rockwood: So anyway that is really good. They were asked – basically for listeners, they were initially had to do much less than people usually have to do and much less than people who have to do in the past.
Mike Rockwood: I’m hearing of that pretty frequently Ryan is that the lenders are just when they can for whatever reason, whenever the statistics tell them to do it, they just really cut to the chase and three questions Wham, bam, thank you Ma’am! Here is your modification, next!
Ryan Rockwood: I told them that was nice for several reasons and one is that people actually didn’t want any information from them.
Mike Rockwood: Yeah.
Ryan Rockwood: – documentation –
Mike Rockwood: Yeah.
Ryan Rockwood: – at this point and I said that’s nice for a couple of reasons. One, because someone is trying to help you or get paid or do something but also if it doesn’t go through, you have a little bit easier time –
Mike Rockwood: Oh sure.
Ryan Rockwood: – revamping numbers and stuff like that because you didn’t put anything. Now, I’m reading a letter that they’re just they’re writing in. I’m putting the house first, house 97… okay this is…. This is something this is complicated. It seems like when you’re on the phone on these calls, simple email that you could just bang out and kind of like what are they asking me so I’ll have to shoot them any answer to this later because I can’t handle the stress. As you know everyone we’re huge of advocates of do it yourself modification that does not mean you should do it alone. We’re here to help with that. I will almost sign off. I do have a request this week of you guys and that is we’re always revamp on the product and so on and so forth and try to make a living in helping people do this and one of the ideas we had this week was to add some technology to our site and that would allow you to go online and put everything, all your information in online and generate a package, a loan mod package with literally come out from whatever bank you were a part of. Is that makes sense? Did I say that clearly?
Mike Rockwood: Yeah.
Ryan Rockwood: So anyway it’s all – basically now we put it in Excel forms or stuff like that but if you’re like me, I can’t work Excel. I’m like a computer wiz but I can’t work Excel so it’s daunting. You know what I mean? And so anyway, just little feedback from you guys. It’s going to cost a ton of money just to put together. It looks like it would cost at least 5,000 bucks so we have to figure out if that would be consider valuable to people and if that’s something, I don’t know that people would pay an extra $200 for. So basically help us with our market research will you because this is not going to happen –
Mike Rockwood: We almost double the cost of our kits.
Ryan Rockwood: It’s not going to happen with you guys. Yeah. But it could be an option. It could be an option. You can get the kit and if you want you can get this additional so we have to take a lot of loan mods to work out price off not loan mod kits. But anyway, just an idea thanks for your feedback on that. We spent most of the day on the phone so email is the quickest way to get a fast response to any and all questions. Please email us at help@60minuteloanmodification.com. Thanks so much everyone. Thanks for joining us and have a great night.
Mike Rockwood: Good night everybody.
