Ryan Rockwood: Hello everyone. Hello and welcome to the Call. This is the 60-Minute Loan Modification Insider Secrets Teleconference Series. We are here to beat the bank, save your home and help you escape bad debt forever. My name is Ryan Rockwood and Mike Rockwood is out of town so I’m gonna be hosting the call but I believe he’s on the line right now. Ah, Mike are you there? I can’t hear you if you are. So you star 7 and star 6 to toggle the mute on and off if that’s the problem.
Anyway, before we get started a couple of quick announcements. Announcement number one, if you’re working on loan mod and your lender offers you a 3-month-trial period; that’s very normal. It’s very common. Ideally you want some kind of guarantee that after 3 months your modification will get approved, but you know often that just not going to happen. Either way it becomes better protocol at some banks and is often wise to go with it. Is a way that – Mike, are you there?
Mike Rockwood: Yes I am Ryan.
Ryan Rockwood: Hey there.
Mike Rockwood: Hi.
Ryan Rockwood: You know that the star 6 and star 7 are the toggle for the voice controls right?
Mike Rockwood: Yes, thanks.
Ryan Rockwood: Yes, okay. So I was just telling people about the 3-month-grace period and this week actually I don’t know if it is indicative of that, but we were talking about – we finally got someone approved of the Obama Loan Modification debt and this person has never gone late and this person has to do a 4-month trial period at the new rate, okay.
I mean really it doesn’t matter what the trial period is as long as, you know, it is cool with the bank that you are paying less, right? However, there is one little caviar to that and that is – in this guy’s case the bank said that they are going to insist on reporting to his credit bureau something like paying payment plan or it was something a little unclear. Mike, do you know what it might have been?
Mike Rockwood: Oh, that is something new, but it is something that credit bureau is just developing just for this situation because there is so much to be going on.
Ryan Rockwood: Yes, it’s like – it was something sound – if the is already extremely mild, it was something like paying less than agreed – no paying less as agreed something like that right?
Mike Rockwood: Yes, I think.
Ryan Rockwood: So the idea was they will bill him for four months of that and then it will be back anyway. That would be probably very easy to recover from FICO-wise but say the truth. We can’t tell him how much. No one can tell him how much that’s going to damage him. So it is interesting you won’t get out Scot-free credit wise but it would be interesting to see just what happened.
Anyway, that is often wise to go with that. Pretty much don’t have any other option. The other thing that we have seen this week is one woman got a loan modification and Mike this is one that we are working on. I don’t think you know about this yet but the – I can’t really say the name but one of them are – a big one that we are working on; we were positive that a loam modification actually wasn’t going to be the solution for them. They ended up getting a $400 a month reduction loan modification. So the bottom line is that at least now she feels like the loan modification option has been thoroughly exhausted because you know that…
Mike Rockwood: Yes.
Ryan Rockwood: A month is not – so for a lot of people that would be great but you know when you got – when you have $5000 a month mortgage or whatever it is not going to matter.
Any way to deal with that – the reason I bring that up is because they said something a little even cagier something like “why don’t you make these payments for the next 3 months and then will determine what the payment for your modification would be,” you know and you know so she is still clinging to a little bit a hope thinking, “Oh well maybe she was mentioning maybe I can, you know in a couple of months tell him that I have more expenses or something like that.”
So anyway, I told her, in my guess is not to hold your breath on that one. The modification will probably only be as good as the installment period. You think that is accurate?
Mike Rockwood: Yes, well you know, see that is the thing is people keep doing about the Obama plan and 2% for 30 years and so everybody runs the numbers and I think, “Hey Mike, my loans are going to be cut you know. That is $500 a month. I just know it” and it just – it gives false hope to so many people, but I so I hope she’s, I am sure she is caught up in that hoping for the best and we’ve been telling people you know, really soberly particularly if most people if that’s not your – if that’s not your primary residence or if you have gone late on your mortgage, you are not going to qualify for that Obama plan and your best mortgage – your best loan mod is probably be on a 3% or 4% range. More – the most common ones we are seeing right now is just over 4% like a 4. 1%.
Hey Ryan, I just kind of inundated in the last three or four days after our last teleconference about forbearance; with testimonies about how banks had used – just used forbearance as part of the loan mod or part of the workout process and it should generally an awful lot of interest. I’m glad that we’re talking more about delaying forestalling foreclosure because seems like there’s an awful lot of interest on the part of a lot of our clients in delaying things.
Ryan Rockwood: Okay. I mean, delay is always good. The thing in my mind, you know, any day that that keeps in your house is a good day, right? However, I only think it’s a good thing when it’s kind of soberly and really level-headedly entered into as a measure of desperation you know…
Mike Rockwood: Yes.
Ryan Rockwood: I don’t see that lightly you know, you maybe in desperate times financially; something to be ashamed of. As a matter of fact it’s something to embrace and figure out if you are in that situation sooner or rather than later okay.
Mike Rockwood: Yes.
Ryan Rockwood: Because if you’re in financial desperation, you are going to be doing a few things that don’t make sense otherwise, but and so you can’t be every time the wind shifts and you hear some new story or your uncle says that a forensic loan adds – the way they good – some junk like that. You have to have a clear head and know that you know you know what’s going on and that you know forestalling is awesome if you can stop. If somebody of these people are in their house 2 years after they stop making a mortgage payment, that’s wonderful. However, you got to – you have to see that as a clear exit strategy from the property. So anyway…
Mike Rockwood: Well Ryan, I talked with our client just a couple of hours ago who has been having troubles now for a about 9 months and I think – they definitely gone down the loan mod application. She just doesn’t have income, separated from her husband, they have back taxes. She called on all kinds of authorities to try to help her get a modification. I mean like political connection and things like that and we are now at the end of the rope and, so she called me and said what am I going to do, help me think this thing through and she had been offered the forbearance, a wonderful forbearance. Her normal payments have been almost $3000 a month and the forbearance that was offered for 6 months at $1,000 and she was ready to begin the short sale process tomorrow and the more we talk about it the more I came to realize with her that it’s really best for her if she stays in the house as long as possible because her daughter is especially – it is especially important for her to stay in the class that she is in, at the school that she’s in which is one block away.
So they are in fact, on a stick with the forbearance plan and then we’re going to shift to a short sale strategy right after that. So it’s kind of one of those combination plan that we were talking about, but the whole thing you’re talking about being clear-headed about where your workout is going is so important and it’s like people can’t seems like very open can’t get to that place until they really accepted you know the fact that they’re in trouble and they need to be proactive about getting out of it.
Ryan Rockwood: Yes so, that does sound like a great combo deal because it sounds like she’s essentially going to be able to rent for a $1000 a month with this probably half of what she could get anywhere else.
Mike Rockwood: That’s correct.
Ryan Rockwood: She gets to have the least interruption to her life as possible and you know and then you know pursue the short sale strategy and there might be some more delays is in there as well. So anyway, just we just to mention that I also want to say that some banks use their own DTI calculations and they won’t tell you exactly how they calculate it and it is actually pretty frustrating and lame especially for coming up with a really large number and…
Mike Rockwood: So here’s a good, here’s a good story in that regard Ryan. Just this afternoon I was also talking with Saxon Mortgage on behalf of a client who has an investment property and Saxon is analyzing the loan mod and insists on using last year’s schedule E for their taxes. It is an investment property so they went to schedule E and saw that they had all kinds of repair expenses and in fact lost money on the real estate last year which is I mean that’s the purpose of investing in real estate is that, you can show tax losses every year. So it’s ridiculous to have the lender use your last year’s taxes as a gauge for how much cash flow you get out of that property this year. You follow me?
Ryan Rockwood: Well.
Mike Rockwood: If you – it is a bizarre way to do it. I have nerve run into it before.
Ryan Rockwood: Right because – but I guess the underlying assumption there is the people lie on their taxes, right? Because the depreciation should…
Mike Rockwood: But why? You got depreciation in there and you got all the expenses that you always overload I mean you always overload your real state business because it has so tax. It such an extra cash cow so my point is then was…
Ryan Rockwood: Is going to you know you – the wink-wink – it is some kind of wink-wink, nod-nod not to accept the taxes as just because I mean if you think about it you think about if we are all going back to real documentation of loans and real paper work and real proof of income, if so, it does make a sense to do that. You know what I mean but…
Mike Rockwood: Yes, yes but not in the case of – not if the case really is that you’re trying to modify a loan in order to keep somebody in a property and the loan active on the books. As opposed with short sale which will incur, you know during those days they will incur a lot of loss. So they’re force that you know they are arguing foolishly that the home owner in fact should be forced into a short sale and I mean if that’s what they want. That’s what they’re going to get but it just – it’s foolhardy when you have an owner who is very willing you know to put up with the decreasing value and continue to make reasonable monthly payments that the bank would allow it. So it’s…
Ryan Rockwood: That is true I mean if a people will generally – home owners will generally I know, ourselves included do anything to keep themselves in their current misery and I you know I it is truthful because that woman that I was talking about earlier, she is $200,000 upside down on her house, but she’s trying every single way to keep it. Why? Well, you know you really have the factor and emotional things for that to make any sense but…
Mike Rockwood: Yes but there’s just no logic to it.
Ryan Rockwood: Right. But what I mean to say is that, forgive me if we’ve talked about this already, but what’s the name of the big guy investor guy? Warren Buffet?
Mike Rockwood: Yes.
Ryan Rockwood: He was he’s take under foreclosure process is that it’s not at all as bad as it seems because if you offer people a modification almost everyone will stay in their property as long as they can make their payments and that is pretty true. If you think about it you know so if …
Mike Rockwood: Yes.
Ryan Rockwood: I mean here’s a woman who has lost 20% of her property value. It’s a 100% upside down in value and – I am sorry more than upside down in terms of value and the monthly mortgage is higher than comfortable rent and she’s doing everything she possibly can to remain in that position rather than get help and it is true that, you know, loan application – it is does say to me that loan modification really is a solution that can keep this whole system from collapsing.
Now, that said I don’t know if – I think I wouldn’t want to encourage our listeners to use it as a tool not an end game like get your 6 months out of your loan mod and then get the heck out of your property or do whatever you need to do and get okay with it, but you know you want to realize that just because you’re making that payment, you don’t want to overlook or even a better solution if one is out there and one is available.
Mike Rockwood: Exactly, they all have to keep an eye out for how this things going to be resolved because none of us with the incomes that we all have as working blokes can afford you know a $100,000; $200,000; $400,000 adjustment in a value of our real estate portfolio, it can’t happen.
So we either have to file bankruptcy or we have to rely on the lender or the government to help us adjust to the new real estate reality and I’m sorry, but the lender had the contractual obligation to do exactly that. There is a mortgage document that states very clearly if the borrower is unable to handle the mortgage payments what will happen? And so all we are doing from the business prospective is executing the contract that is very, very large company with very smart people entered into with us and we’re just exercising that clause and so, you know, in some point we have to ask them to do what they said they were going to do and take this home. So you either take it by riding down our mortgages by the amount or you take it by taking the house back or you know foreclosing on it like taking in a short sale or whatever but you have to absorb it.
Ryan Rockwood: And the other thing that important to remember there is that everyone desires, you know, the least movement, the least problem, the least change in their lifestyle but you can’t force something. It’s not going to happen okay? If – you know people call us all the time and tell us that if they have the money they wouldn’t need – you know for to make their budget neutral they would need a load mod right? Yes, it makes sense, but part of these is coming to accept the reality of it is; what it is…
Mike Rockwood: Yes.
Ryan Rockwood: And in how are you going to get – by all standard measurements and any sort of accounting errors, this woman that we talked about earlier, you’ve seen as – from an outside perspective. It is clearly an unsustainable bankrupt out of business, company, units, family, whatever you want to call it, right?
Mike Rockwood: Yes.
Ryan Rockwood: The only way that you could ever get something like that to function is you know basically what we’ve been doing you know with manufacturing from the past 30 years. Shipping it overseas and getting essentially slave labor to work on it and ship it back and so. You know people are really anxious to sign up to be those slaves to mindlessly every mod, can they get mortgage and keep going deeper and deeper into debt if they don’t have to move their house. So you just want to try to not be that slave if you can help it you know because if it was an independent business; zero people would apply for that job if you know every day you went to work and you have to pay $80.
Mike Rockwood: You know Ryan, you should you should do a little bit more thinking and talking about that concept because I think there’s a lot of value there. I’d like to see you produce you know another call on that or write on the blog at good length because that’s really a good concept. The whole idea of slave labor, the fact that someone is out there with a terribly over-valued, over-encumbered asset and they looking for someone to make payments on it for up to 20 years payments that are grossly over what it’s worth.
Ryan Rockwood: You know that (crosstalk)
Mike Rockwood: And if you are willing to do that and sign right here.
Ryan Rockwood: And you know if you took that a little bit further. You could, but you know obviously the thing is you know but people want to do it. Well, so what. People want to get money lent to them at over 20%.
Mike Rockwood: Yes.
Ryan Rockwood: Whatever the legal limits is, right? People desperately want to sell themselves in the slavery all the time. We see that all the time, you know I mean, various differently ways whether it is economic slavery or whatever, you know we could get into it but you know that it doesn’t matter that someone’s willing to do it.
Mike Rockwood: Right.
Ryan Rockwood: It’s in some reason; yes it is a very, very interesting issue isn’t? How is it? Ethical or legal in any sort of stretch of the imagination to ask someone to do that you know.
Mike Rockwood: No, there is a moral issue. There so we are going to do more work on it. It’s a good mind and thought but hey Ryan didn’t you ask me to went through this top seven foreclosing dealings?
Ryan Rockwood: Oh yes, but yes. Let me just say first that I do have a computer for me today and you can e-mail questions into questions@60minuteloanmodification.com. That’s questions@60minuteloanmodification.com. Also I think we should try to take some more calls. I was at a teleconference today for something else and the guy did pick any questions from the audience and it totally gave me the feeling that he only wanted to take his own question. You know what I mean?
Mike Rockwood: Yes, okay.
Ryan Rockwood: And it like it was a like why did you just send it to me by e-mail because I had a question and I couldn’t ask it you know what I mean.
I do want say this that as quick legal aside we’re not foreclosure consultants in any ways stretch or form and none of these is meant in legal advice any way. I’m simply going to share with you some real life experiences and observations I’ve had so you can decide for yourself what to do.
With that said, let’s talk about the process. The NOD, the auction date, the bank, how to stall this thing, and you have to stall it safely because everyone has the risk tolerance and you can take this foreclosure stall to the very limits, right? But if you call for example me the night before your home is goes to auction, I might actually be able to save it, but the point is if you call your local realtor the night before that, he is not going care.
You know what I mean, no one takes your responsibility except for you and there is no one to blame. So if you have to be – [Indiscernible - 0:20:25] a very uncomfortable getting a notice of trusty sale which schedules a date and so if that’s the case, yes you got to know exactly where you are in terms of risk tolerance. Okay, so let’s do it. I am on tonight’s call. Tonight’s call is about foreclosure stalls.
Mike Rockwood: Oh, you’re ready for me?
Ryan Rockwood: Yes.
Mike Rockwood: Okay so I wanted to review again the top 7 foreclosure delays and Ryan and I are really have been kind of surprised in the last couple of weeks how many people are really interested in exactly that and maybe we’re just kind of coming out of the closet and announcing that we actually help people do that and that to took care of you or not and Ryan put on the blog and then all kinds of other community case that the kind the people come came out of the wood work and asked you know, that’s exactly what I need. I need 2 more months to determine whether or not this or that is going to work out or you know I got a business deal that might enable me to stay in the home so I need a couple of more months, how can I do it?
And we did list the top 7 ways that people are delaying their foreclosure and the first one is one that kind surprises people and that was constant communication with your lender. That’s why good faith communications about your plans and your actions to resolve your situation and work out a solution to the foreclosure. There’s a really long way toward getting delays. If you just into ask more time especially if it is late in the process that usually it doesn’t happen, but if all along you’ve been answering the phone, you’ve been communicating and send by fax, applying information, talking with them about workout solutions then constant communication is really the best way to get a delay in the trustee sale and delay – you could even get delay through the notice of default.
Now another one that a lot of people asked about because we got a lot of press a few months ago the “produce the note strategy” and people always want me to go over that again. So let me go over it well clearly. The “produce the note strategy” is particularly useful for people in judicial foreclosure states because there’s already a court-appointed judge or attorney who is running the foreclosure and so you already have a judicial process into which to introduce the request for the note. In other words, what you do is you request proof that the foreclosing lender has the right to foreclose by asking to see the original note with your signature. And in judicial foreclosure states that’s pretty easy to do, you already got the court process going and apparently it really is quite difficult for the lenders to produce the actual note and sometimes it takes weeks, sometimes it takes months, and then a few cases around the country apparently they have been unable to do it.
Now it’s much less likely that it’s gonna helpful to you in a non-judicial foreclosure state and remember all like 33 of those, so it’s most of us. So the non-judicial state you actually not to go to court, get a lawyer, and get probably and get a judge to sympathize with you and it does seem to be working around the country very successfully, so that’s strategy.
Another one, another important delay strategy is bankruptcy, but remember it’s a great big howitzer, you know it’s a great big powerful weapon to be using so you want to be sure that it sits in to your whole strategy for what you are doing financially. I wouldn’t recommend using bankruptcy just as the way to force off foreclosure but if in fact your home or your investment property is taking you down and forcing you into bankruptcy then bankruptcy is a real valid way to rearrange, reorganize your finances and it will definitely force off foreclosure. Now some people used what’s call devil down, the use chapter 7, a husband and wife maybe or domestic partners. It’s a book on the mortgage, they may one right after the other apply for chapter 7 bankruptcy. Usually takes about 60 or 90 days to be discharged and then one right after another and so that’s ties the property up so there’s an automatic stay on the property for those you know 4 to 6 months. So that that can be, a lot of people are using that as another way to you know to be able to stay in the home for another 4 to 6 months.
Now you can also contest the foreclosure in court in a judicial or nonjudicial state. You can actually contest it and it is in fact in a month to counter suit. That’s another way that some people delay their foreclosure.
Short sales, Ryan and I have found to be a powerful way to delay foreclosure because the bank is very friendly to the short sale. Because if you think about they’re going to be safe with the same market you know the same value reality in a month or two if they take the property back. So if you already have an offer on a property and they are able to enter into that analysis right away and determine whether or not they offer is reasonable then why not. It is money now as supposed to money later for them. So we’ve been very successful to use short sale and short sale proposals to delay the foreclosure process.
Another one is an application for deed in you and that is where you turn your property over to the bank without going to foreclosure and the bank, the way the bank delay it’s foreclosure is the bank insist that you put the property on the market for 3 months prior to them seriously considering whether they take the property. So in being so, you generally get them to continue to delay foreclosure because you are trying to reach the bidding target date so as another very effective a very, very effective way.
I’ve been frustrated with that one though because some money lenders are kind of shoddy to the fact that they have no intention of accepting it obediently either because the property or so the property values gets so low or because there are lot of junior liens on the part, like there is a second mortgage or a third mortgage you cannot explain. They will not accept the dealing because it’s messy for them. They have to pay off their gains rather than go through foreclosure.
And the last one is the strategy that Ryan and I call hide and seek. Another way where clients very often will enter into a repayment plan and then default on the mortgage after the repayment plan so you get 3 months reprieve, you get a repayment plan and then default and then it’s another 3 months before you get a notice of default usually and then negotiate clearly payment plan or request a forbearance or use another delay strategy so the whole hide and seek plan is to use whatever tool you can just to delay the foreclosure with that in mind that your goal is to kind of hide from the lender and delay foreclosure for as long as possible. And some of our clients use that strategy if they – if the note for a fact that either their work is going to pick up again and after many months, all the known fact that they want to stay in the property for as long as possible and can’t ever possibly afford the mortgage again.
So those are our top 7 candidates for ways to delay foreclosure and we can sure help you think through what is appropriate for your specific situation.
Ryan Rockwood: Okay let’s take like the next 10 minutes and see if we have any calls specifically related to questions about delay tactics.
Mike Rockwood: Okay.
Ryan Rockwood: And then we spend a decent of time on general questions too.
Ryan Rockwood: Hello does one have a question about delay tactics? Go ahead you’re unmated. Just go ahead and ask question if you have one.
Tom: Hi, this is Tom from New Jersey.
Ryan Rockwood: Hey Tom.
Tom: How you doing?
Ryan Rockwood: Good, good.
Tom: I wanted to ask…
Ryan Rockwood: Yes go ahead.
Tom: So if you consider another method being – like a qualified request, the bank asked me with not only the note but all the paper work including the [Indiscernible - 0:29:10] and everything else. Typically, you have to respond in 60 days and this is a good way I believe also to delay it for a period of time.
Ryan Rockwood: Sounds like it could be good. Have you had success with that at all?
Tom: No. I can’t say any personal specifics, no.
Ryan Rockwood: Okay. Let me mute it and one sec. Okay. Tom from New Jersey asked he also heard that in a [Indiscernible - 0:29:40] you can ask for the note and perhaps other correspondences between you and the bank and the other paper work related to the loan. Maybe the paper work where they acquire the loan and with that – you know fit in to that. What do you think Mike? Have you ever heard that?
Mike Rockwood: Well here’s what I know about that is there are number of people that use that as a method to delay foreclosure and I – [Indiscernible - 0:30:07] about 3 months ago because there’s actually quite a there was quite a bit of thought about it. That it turned out that – and I did try it on a couple of occasions but I didn’t have success getting them to stop the foreclosure process.
I did you know successfully get them to have been getting that qualified written request response process; however, they went ahead initiated foreclosure during that process and for an awful lot of that stuff that they considered scrupulous, they just said it’s not available, not available, not available and in talking to my – the attorney that I talked to on this kind of matters, she said you need a thing to get away with that because if it’s not available, it’s not available. They responded to you with the best that they could. So I’m not convincing it’s a great one but it’s a least one to know about.
Ryan Rockwood: Okay. Okay and let’s just jump back on. See if anyone else has question there.
Anymore question specifically about stalling tactics? Real life examples, okay. Alright, I’ll mute. Okay, so either we write such a good information or a topic does not resonate with folks.
Mike Rockwood: Hey Ryan. Ryan if you do mind if I just want to chalk in to a couple of frequently asked question about delay?
Ryan Rockwood: Sure, go ahead.
Mike Rockwood: It is very, very common for people to ask us late in the process because you know everybody how we all have gone through kind of a normal grieving process when we realize we are in tough financial states. Unless you very experienced at it you go through this kind of emotional FICO that’s a lot like the grieving process and very often, you don’t come out of it until late in the process so you wasted a couple of months of time. So it’s very, very common for Ryan and for me to get calls from people that say – “Hey listen I finally got this notice of trustee sale and now is there any way now that I can delay that foreclosure?” And the answer to it is an emphatic Yes and like Ryan insinuated earlier in the call, we can stop or at least temporary delay the trustee sale right up until the day that is certainly it is better to have more time.
So the sooner you kind of snap out of it and you know get really proactive, the more options you have in terms of ways that you can slow things down and give yourself more time to figure out the best option. So that’s the real common questions is how, you know, can I even stop the trustee sale if it is – as soon as a week from now.
Ryan Rockwood: Yes. The point that I mean at some point you’ve got to start handing over cash and that’s for a number of reasons. If that maybe obvious to someone but if it is not obvious to you – you know most investors won’t even talk to you if you’re foreclosure is a week away and therefore you have to have you know, someone like us who can figure out way to get paid off of it and also if you even have someone like us, you are going to have to fork out 3 grand perhaps up front to a bankruptcy attorney if that’s would going to take to stop it. Okay so you know the bottom line is you have to throw more money is the problem the later you…
Mike Rockwood: Yes. Hey Ryan, another real common question or a surprise here is I know you will agree with this is very often when we sit down and the client has figured it out that in fact they probably should try to get out from underneath this debt.
So let’s say there a quarter a quarter million dollars upside down. Let say, you know what I better get away from this thing. This is just not good. So when you begin to talk about the short sale and why it is better alternative to foreclosure and once we start talking about it and explain how the whole process will work people are so surprised that number one, in a short sale you have great control if how long the short sale takes I mean really good control. You can control you know I mean within, the short sale, certainly will never take less than 2 months, but if you pay your cards right, you can make short sales take; sometime as long as a year. That’s number one.
And number two, you can – you are in complete control of when it begins to hurt your FICO score because that is the point of which use stop making the payments. So it’s really up to you.
And then also people are very surprised that a short sale is 100% free of charge that in fact the lender who allows the short sale or approves the short sale pays for title, pays for escrow, pays for everything, pays for the brokers. So these are three points about short sale as a workout option. The people are really surprised about that – but as a delay tactic, it is a powerful one.
Ryan Rockwood: Okay. I drop in to some regular questions that were emailed in. Theresa says “I have 3 loans with Aurora in a process of mod. I am three months behind and they advised me to send one-month payment. Should I do it?
Mike Rockwood: Yes. We kind of talked about that last week too. And it’s kind of crap sheet there. I always advise people there’s going to be some point of which you decide this property and I are going to part ways. And so – if that always at that point that I [Indiscernible - 0:35:46] kind of starts feeling comfortable, never sending another dollar of their own money that way. So it is kind of depends Theresa, if you have that point or not. If you still plan to really work hard to keep this property then what do you care if you send them one month now to keep the plates spinning. Because once it starts to tear up you know because they better probably doing is so much and you will not send a notice of default. We will not tell the trustee to go ahead and send a notice of default if you stay 90 days late. So that’s probably what they are insinuating and so it’s not about strategy if you fully intend to keep the property. But if you’re on your way out of it then it seems to me that every value you spend is a value you shouldn’t have spent.
Ryan Rockwood: The bummer here is there is just no clear you know I wish we could make a table you know we have a question over here…
Mike Rockwood: Yes.
Ryan Rockwood: Aside but it depends on where you’re coming from and let three loans with Aurora so let’s just speculate here. Three loans – she probably got them months on two homes. Maybe she got them on one home but I’m guessing whatever she’s got is worthless unless she has got three loans on three little different single family properties right?
Mike Rockwood: Yes.
Ryan Rockwood: So, are your payments – is your payment right now 6,000 a month and in order to make it you’ve got to need a loan mod at $2,000 a month is – because that is a Hail Mary right?
And it’s cool in throwing Hail Mary, but you might well keep that $3,000 in your pocket. I mean right now, you are three months behind; that does not even qualify you for an NOD in California. So I could see the argument of trying to avoid – trying to avoid going 6 months late where you get the trustee sale schedule you know that. It’s not bad idea to avoid getting a trustee date scheduled, but in order basically if your – if correction thing, you’re only three months behind you haven’t even receive a notice of default yet so you have to get that and then go another 3 months before they can schedule a sale. So, I would start thinking about making a payment to send off the notice of trustee sale not the notice of default. Okay. And then…
Mike Rockwood: No Ryan, the other thing is we didn’t think of the fact that maybe there are second mortgages and I want to remind all the listeners that we treat second mortgages with well-deserved disrespect. They can really hurt you in terms they taking away your home. So in terms of prioritizing, I used to talk to people who have other properties as well that we should kind of prioritize your mortgage lenders and the people that can really hurt you are the one who holds the first mortgage on the property that you love and you live in and then second mortgage for that property not for taking foreclosed because they won’t but it’s important because that is the property you want to retain and I then kind of just go down the list and you know the first mortgages are always to be treated with more respect coz they can hurt you. The second mortgages can just hurt your FICO score.
Ryan Rockwood: And that’s assuming that the home is over mortgaged I guess.
Mike Rockwood: Yes.
Ryan Rockwood: We’ve got Kelly and Lisa. Have a friend named Vic who’s got a 90-forbearance. Anyway, it’s a low payment. Now, he wants to know if he can go for a loan mod too or was the 90 days of low payments kind of all he’ll get from Citibank. What do you think about that Mike?
Mike Rockwood: No, I think he should jump right into a loan mod application and they tell you real quickly if they‘re not going to consider that – they may not consider it for like 30 or 60 days but I bet that they’ll be glad to consider it and after that. It actually is a real nice strategy. Take the forbearance and then get busy on the good loan mod.
Ryan Rockwood: Theresa has a follow up. She says the three loans are in three different investment property with Aurora, so that potentially the only thing that changes in my mind is you hopefully are drawing – you hope the others – these things rented out and hopefully drawing income off of them and you want to just continue to milk that as long as you can. A notice of default will attract people to your door to knock on your door and inform your tenants about your situation so that they can get to you and so you have to do a little interference beforehand, but that’s simple and that’s easy to do but chances to do before you are going to have some pissed off tenants on your hand. And the – but other than that, the only that going that the only thing that I think of when I see this clarification is super. That means you’re getting three checks a month coming in and none coming going out. Okay.
Mike Rockwood: Yes.
Ryan Rockwood: That sounds like a great situation. Okay we have Neil. He’s not clear what’s the best advice for an individual with a primary residence needing the prerequisite for Obama Program Modification to get the optimal relief. Is it to be current on the first mortgage or in default? What are the pros and cons of in default versus not in default. And you know I think he’s probably picked up on something you said earlier today. You mentioned that now – that you think the people can’t be in default, but I thought you and I had discovered that it is not the case.
Mike Rockwood: I know I’m quite sure on a further making homes, affordable program for that, a paper program, you can’t – like the 2% deal, I think you can’t be in default.
Ryan Rockwood: Ah, oh in default.
Mike Rockwood: Yes. Yes. So you know the advice is you know to put together a carrier application that fits all the debt to income ratio numbers so you will have more than a 40% – or more that a 38% first mortgage principal and interest divided by your gross income; that would be more than 38%.
Secondly, you would not be late and you will have a good hardship and you will have a loan that is willing to be adjusted so it probably more a 6% fixed or any kind of adjustable like mortgage then you will have a real good shot at winning the lottery and getting one of those really a good modifications.
Ryan Rockwood: Alright. Let’s see if we have any general questions from callers.
Mike Rockwood: Please come again.
Caller: Hello?
Mike Rockwood: Oh hi.
Ryan Rockwood: Any general questions?
Caller: Yes. Question would be is, I possibly could get a loan modification, but I prefer a short sale. What should I do first and if I do go for a short sale how do I start that?
Ryan Rockwood: What state are you in?
Caller: Florida, the property is in.
Ryan Rockwood: Okay, got you. And you’re a – the property is obviously over mortgaged. Correct?
Caller: Correct.
Ryan Rockwood: Okay and how late are you?
Caller: Ah right now I’m 30 days late.
Ryan Rockwood: Okay great. So the question is how best to start a short sale. Is that correct?
Unknown: Correct.
Ryan Rockwood: Okay and what city are you in, in Florida?
Unknown: In Daytona.
Ryan Rockwood: Daytona, okay. Hold on one sec. Hey Mike, you’re worked on a couple of short sales in Florida right?
Mike Rockwood: Yes. Actually we have three of them going in Florida right now and let me just tell you how we operate and…
Ryan Rockwood: Do you think it’s something you want to continue to do or is it too little margin with the prizes being low in you know states like Florida.
Mike Rockwood: Well, it’s not a matter of too little margin. It’s a matter of – here is the deal. You want to get hooked up with an experienced and effective short sale realtor in the Daytona and the reason I say that is because 90% of realtors don’t do short sales and other one would do, you want to be sure to get hooked up with somebody who successfully negotiate short sales because there are tricks to it in terms of making them – making the whole process move quickly. You want to be able to get an offer in a property within days not within – you know I mean some like realtors put the property on the market and leave it up market price and wonder why they are not getting any offers. A good experience short sale realtor will drop the price real significantly or already have a whole bogie and investors who are willing to make low offers to start the process with the bank.
So when I’m on their deals, that I would do is I would contact a realtor for you and Daytona Beach and see if they want to work with you or with us and I would do the negotiations with the bank or else you can just work directly with the realtor in Daytona Beach, but you have to have a state of Florida real state license to do the transaction. That initial unit is really no different than listing the property in a normal sale. You just have to – what you do is you lower the price real rapidly so that you snag the next offer in that neighborhood.
Ryan Rockwood: You know you can have.
Mike Rockwood: And then…
Ryan Rockwood: Sorry, go ahead. Go ahead.
Mike Rockwood: And then what you are going to do is you’re going to submit to the bank not only the offer, but you also going to submit a request for a short pay off and in Florida the short pay off are so deep like they are in California. But the difference is that Florida is a recourse state and so very often you’re going to have to negotiate with the second and maybe then with the first on how you’re going to handle deficiency judgments.
The second let’s just make up some numbers and say if your second is for $40,000; if you may have a second. They may ask you to accept a promissory note for some percentage of that maybe 50%, maybe 75% percent of it and they will offer you the opportunity to make very, very small payments for at least a year at which time the two of you will negotiate how to settle that debt. And honestly as ugly as that sounds it maybe the very best way to get yourself out of that property. So there’s a good way out, a short sale is a great way out of property. It is not as neat and tidy as it is in a non-recourse state but it is still a very effective way to move on from the property.
Ryan Rockwood: And it is your only hope for effectively settling those debts so there will be no recourse later on you know…
Mike Rockwood: And you will not have a foreclosure on your credit report which really is kind of a big deal. I mean if you can avoid it why not.
Ryan Rockwood: Yes. Yes. The other thing that I would mention there is that this gentleman sounds likes he does not live in the house. Okay so, hopefully he’s got renters and they’re mailing him checks every month and he is just sick of mailing twice as much to the bank every…
Mike Rockwood: Yes.
Ryan Rockwood: And so one strategy that I would certainly consider if I were him is to find an agent that you know like us or like any one that like I said they – the thing is you got to really know what you’re doing or you’re in big, big, big trouble okay. And you won’t know it until 6 months later so that’s you know what I mean? That’s the problem.
Mike Rockwood: Yes.
Ryan Rockwood: But here’s what I would do. What if you walk up to your local realtor and said “hey drag this out as long as you can. I will pay you $500 every month that you drag this sucker out and then short sale it,” you know and that way the realtor is getting paid a little bit. The problem is there’s a very little incentive for most realtors to draw it out for 6 months or something like that you know because and let me know, obviously check with your local laws make sure it’s legal and everything but the – you know realtors have to get paid so you can’t spent the whole lot of time and longer. The first goes on, the less likely it is to close and so you know all these things working you know statistically against you.
Anyway, just acknowledge the economic reality of the situation and also if you do go that strategy of saying “heck, let’s just you know let’s just totally drag this sucker out,” a couple recommendations for you for like an emergency preparedness or whatever.
Number one is be in communication with your tenants and explain to them that in order for you to get a loan modification you’re going to need to go late on the mortgage and that they need not be disturbed if people drop by the house or you’ll get letters sent to or home owner you know I mean or to your home owner and they will read, I mean, the letter say you know your home is in default blah blah blah.
The other issue is something you may want to check out is the county clerk, the tax record recorder – county recorder I just called here. They have the – you know essentially the tax records on your property. Now, if you’re an absentee landlord or absent landlord it would be very wise I think to call the county recorder and for you know whatever the cost, 10 bucks probably to update your contact information; make sure that your mailing address is updated on your tax record associated with that home and it is your current home not your home, home – not the home in question, the property in question. And the reason I say that is good percentage of the time that you know I spend is visiting people’s doors and if and you know I don’t want to talk to the tenant if I can’t help it, but I have no problem talking them if I need to. So if another address is given I would gladly call, visit, and mail that address rather than the first address because my first priority is to get in contact with the home owner okay. And so basically while you stop is all those people like me and you know 10 times more who are just total scammers that will bother your tenant and stop you some getting paid.
Mike Rockwood: Hey Ryan, that is really good advice and then the other thing I would like to say to our friend who is questioning the short service as long mod, I’ll be very often ask or very often recommend the people pursue both at the same time and almost all the lenders will allow you to do that because they don’t even know that you’re doing it.
So, there’s no reason why you can’t do that. Keep that in mind. And in terms of the process for how you will get started on a short sale your choices are either contact us and tell us you would like to get started with us and we’ll run the short sale and will make an arrangement with the Florida realtor to handle it or here’s the tip, if you’d rather work with a realtor there. Call a local office of Kelly Williams or Remax and ask for the broker, ask the broker to call you back and then ask that broker to recommend someone in their office that is willing to do short sales who has done a lot of short sales. Okay?
Ryan Rockwood: Yes. And then and then you’re probably a 50/50 chance of getting someone good.
Mike Rockwood: Yes.
Ryan Rockwood: Okay so, yeah Neil follows up on the question about Making Homes Affordable. He’s now 30 days late in arrears on the first mortgage. Can he cure that? And then not be late then file a modification request?
Mike Rockwood: Yes.
Ryan Rockwood: Really?
Mike Rockwood: Yes. Yes, it’s when you when you are applying.
Ryan Rockwood: Oh, you’re kidding me.
Mike Rockwood: No.
Ryan Rockwood: So, it’s not like you can never have been late.
Mike Rockwood: No. No, no, it’s just when you are applying.
Ryan Rockwood: I didn’t know that. Okay…
Mike Rockwood: Yes. So the lender can cash in for the full payment if they’re working on alone that in fact, it is current.
Ryan Rockwood: Okay.
Mike Rockwood: And you told the other requirements.
Ryan Rockwood: Okay. And then he follows that up with I understood the loss mitigation department who are not lunch if any attention the situations where there is no default. So, doesn’t that cut any other direction? Yes. Am I correct?
Mike Rockwood: Yes. You know. Yes, you know you are thinking real clearly. You completely understand. You’ll get a better mod if you would work for Obama Program. It will take four months…
Ryan Rockwood: If you’re lucky. Yes, yes.
Mike Rockwood: If you’re lucky. So, that’s the risk that you take.
Ryan Rockwood: Yeah. Now…
Mike Rockwood: You’re understanding it perfectly.
Ryan Rockwood: Are the statistics available on this. There are as a matter of fact you may – what was the name of that reporter that was put out recently Mike you remember?
Mike Rockwood: No, no.
Ryan Rockwood: I don’t know but you may just Google something like success of Obama Making Homes Affordable plan or something like that and don’t bother looking at anything but something like it in the New York Times or something like that because I mean in a major paper I mean to say. But this statistics are absolutely pitiful. It’s…
Mike Rockwood: Yes.
Ryan Rockwood: Essentially they’re doing – I mean they are down like 15,000 or something but they are proud of it but the bottom line is just like 15,000,000 that needed to be done. So it’s totally pathetic. It wouldn’t matter if they weren’t doing this program, statistically. Isn’t insignificant…
Mike Rockwood: Right.
Ryan Rockwood: We in fact that’s why we made such a big deal. I already mentioned that we just got someone approved for it because we argue about it, but they got their initial approval thing this week and I think it was five, six months ago. Mike thinks it was more like three months ago. We have to go back and look at the date and stuff but I mean…
Mike Rockwood: But I think I’m only 35 years old too.
Ryan Rockwood: But there was – I mean there was literally zero communication, zero hope, zero anything and then damn six months later you gets it, it’s going to be a good one. It’s going to be 800 bucks a month.
So anyway, that is that and I think that I think we accomplished a lot on this call. We’re getting near the end of it. What do you think Mike? You have anything else you want to add?
Mike Rockwood: No, I’m glad if we get any more questions coming in?
Ryan Rockwood: Nope. Not on our line. Okay. So, everyone thank you so much for joining us tonight. As you know we also have a little add-on products that we’re trying to get our minds around. It’s a $100 and if you pay an extra $100 we call you and actually interview you and do the paper work for you and send it to you and you’ll have it in a day.
Now, the only problem to that is we have some technological problems that have prohibited us this past week from getting like any of them done. So I really, really apologize for that. We got to get our systems in placed, but for a $100 you know within a week, hopefully you’ll be rock and rolling with your due things submitted so. If you want to do that, I don’t know if it’s online or not but if you want do it just write to help@60minuteloanmodification.com. It’s help@60minuteloanmodification.com and just ask about the $100 done-for-you special and if you want to move ahead with foreclosure stall or any other unorthodox strategy and you want to spend some time talking with Mike on the phone, you can do so.
Check out www.60minuteloanmodification.com/talkwithmike. That is www.60minuteloanmodification.com/talkwithmike. M I K E with that I’ll sign off. We do spent most of the day on the phone so email the quickest way to get a fast response to any and all question.
Please email us at help@60minuteloanmodification.com. Thank you so much and have a great night.
Mike Rockwood: Thanks everybody.
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