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-Ryan Rockwood

December 17, 2009, Loan Modification Class transcript

Ryan:  Hello, hello, hello, everyone! Welcome to the show. It’s the Thursday edition, members only “Credit Card Cure.”

I’m sorry, that was yesterday.

[laughter]

It’s “The 60‑Minute Loan Modification: Foreclosure Doctor Series.”

Mike Rockwood:  No, it’s “The 60‑Minute Loan Modification: Foreclosure Doctor’s Tuesday!”

Ryan:  Oh.

Mike Rockwood:  Duh!

Ryan:  Oh, I didn’t know that. OK.

Mike Rockwood:  [overlapping] Oh, that’s next time, huh?

Ryan:  So, the more general one?

Mike Rockwood:  Yeah.

Ryan:  So, we started on a new program called “Credit Card Cure, ” and that is for everyone with credit card debt. Go over and get signed up. We’ve still got an introductory price. You can find that at cc.ryanrockwood.com. Or I think you can also go to 60minuteloanmodification.com/credit. OK?

Anyway, welcome to the show. Everyone here is a client. So, there’s no product pitching or anything like that.

Mike Rockwood:  No introductions needed.

Ryan:  No introductions needed. You know who we are, we know who you are. And I want to thank you very much for joining us.

Tonight’s show, basically, is on‑‑

You know, it’s the holiday season. Everyone as you know is pretty much “out to lunch.” So, how are we going to go about thinking and addressing our loan modifications? Now, I do think that everything is moving slower at the banks. This is the first order of business, right? And so if possible, it’s not ideal.

But it certainly is, I guess, now’s the time to slip up on your diet if you’re going to, I think.

Mike Rockwood:  [laughs]

Ryan:  You know what I mean? You can relax a little bit, maybe not do your calls that you meant to do or something like that. And the worst might not happen. But, let me remind you that some people don’t have that option. We have a lot of people that, or I have one couple who’s got a foreclosure scheduled in early January.

[off microphone production talk]

And that’s not gonna stop.

Mike Rockwood:  Early January? I’ve got one on Monday, Ryan.

Ryan:  Whoa, wow.

Mike Rockwood:  A foreclosure and trustee sale.

Ryan:  …sale….

Mike Rockwood:  And they are refusing to put it off. Unless today we agree to pay them $100 a day, in a reduction in the realtor’s commission. It’s a short sale because we asked for a few more days to put the deal together and we agreed to it.

Ryan:  Wow.

Mike Rockwood:  Just because it’s Christmas week, yeah right. Yeah right, we’re gonna agree to let this single mom ‑ you know, she works like seven days a week and we’re gonna agree to let her get kicked out on Monday? I don’t think so. So, yeah, there were a couple banks. Let’s see, I believe it was Chase or Citi that today, along with Fannie Mae and Freddie Mac agreed that they would… No, the bank agreed that they would not foreclose. That they would not…let’s see take to trustee sale during the next 10 days. And Fannie and Freddie said that they would not…what was it? Issue notices of trustee sale for the next 10 days. So, there is some good spirit out there, holiday spirit.

Ryan:  Oh, really?

Mike Rockwood:  Yeah. Yeah. And it probably will spread to other banks. Mostly because they might as well jump on the bandwagon because they are missing the boat. They’re so far behind. They’re so backlogged with their work right now. They might as well take some political goodwill for it.

But no, it’s always difficult to work with the lenders during this time. And it’s always at the end of the year. Realtors know it, mortgage brokers know it, escrow officers know it. Everybody in the industry knows it. It’s just a difficult time of the year because of vacations, and parties, and vacation mentality.

So with regards to your loan modification, while Santa is checking his list twice you need to be checking your loan modification twice because you need to be sure that there are no errors in it. It’s not that you want to wait three or four weeks before you submit it. But more than ever, you have to redouble your effort to make sure that your application is perfect. Impeccable.

This is the time to triple check yourself before submitting your application because more than ever, your file will have inertia. File inertia. And I say that file inertia is the scientifically proven, galactically accepted fact that a file in motion tends to stay in motion. And a file that is stopped tends to stay stopped. And you know what? I say that kind of in jest, but it’s huge if you think about it.

Think about yourself in a cubicle, and on your screen and literally at your door are 150 to 300 files. And every time you pick one up, open one up, begin to learn about this file, you have a time of gathering information and learning. There’s almost like five minutes sometimes, of uptime just coming to get familiar with the situation involved, here. And what’s missing, what’s good about this one, what’s not?. What action is required, what action did you leave it off with, and has that action been taken?

I mean, file inertia is very real. And so during this holiday season, you want your application from beginning to end to be seamless.

So I thought it would be really timely to share with all of you some of the tricks and some of the tips that Ryan and I have been using in the loan modifications that we do because you all know we do full‑service loan modification. Absolutely every day of the week, we are working on loan modifications. That’s how we can continue to bring you fresh, new, street‑smart ideas on how to make your loan modification work.

So, for all of you do‑it‑yourselfers, we’re kind of like the professional. And we sit down with you once a week and give you the tips and I think it’s time to just take a few minutes and kind of remind all of you of some of the things that we’re doing to make sure our modifications sail through.

So I’ve got 14 tips here that I want to share with you.

The first one is that you should prequalify early and prequalify often. Learn what the lender needs. Learn their opinion of your modification application. Learn everything you can.

In fact, I’ve kind of gotten into the habit. I bet I contact the lender four times now before I submit an application. Generally when I start it, as I’m assembling the paperwork, I’ll dial the lender. And I’ll just chitchat with them about the status of the loan. You know, because I want them to read to me from the file. I want them to tell me what they know about the situation. Because very often they’ll reveal, ah! This customer was put on a forbearance plan one year ago and failed to live up to it.

Or, this client promised us this ‑ like today, actually I called on one that I was just preparing. And they said, “Well, gosh, this client promised a big payment back in August and then just has never talked to us since then.”

As you’re putting together the file, and as you’re putting together your own file, you begin to get the bank’s attitude about your opportunity.

So, I say pre‑qual early, and pre‑qual often.

Get them on the phone, as much of a hassle as it is to get them on the phone. I don’t know if I’ve just gotten used to it. It must be it, because it just doesn’t bother me anymore to dial them, put it on speakerphone. Then I just work until I get to them, and then I ask them the questions that I was prepared to ask them. So, pre‑qual early and pre‑qual often. It’ll make your applications sharper.

Then the first tip about the application itself that I would like to pass along is one that I’ve always talked about, and that is make it personal. And the way that I make it personal… These days I want you to even make it more personal, less professional because currently, there’s kind of a backlash against third‑party help, because a lot of the lenders are saying that the third‑party people are in fact clogging up the lines, and needlessly forcing the lenders to do an awful lot of work. Now, personally, I understand that, I guess, but I think that a third party can actually add a lot of value.

But at any rate, I downplay the professionalism of the presentation and I up‑play the fact that this is a real person and a real family with real hurts and real needs and that you’ve got a program for them. You should bring that program to bear for them.

So, make it personal, not professional. The way that you do that is, again, I still recommend that even if you’re still using an affidavit for the hardship, that you handwrite it, because it’s just better. Handwritten is just better. I recommend that you put footnotes throughout the application really carefully explaining and even insert a whole other page explaining the documents that follow in your own words.

For instance, if you have a checking account only, which really quite a few people do, explain that in a footnote or in a whole other page, saying, “Yes, this is a checking account only, and you ask for checking and savings. I do not have a savings account.” And then sign it.

Going to great lengths to do things like that and to try to second guess every question they might have about your application will go a long way to preventing yours from getting stopped, because as soon as the negotiator or the phase one loss mitigation officer goes through and they see something for which they can stop the application, they will. And then they just pass it off to somebody else and say, “They’re missing the savings account.” Now your file is stopped, and it will stay stopped, and it has a tendency to stay stopped, whereas if it stayed in motion, it would tend to stay in motion.

I’m telling you, sometimes, even in these difficult times, we’re getting sometimes responses on our applications in as little as two weeks when they’re perfect. So, you go through phase one and they just can’t find anything wrong, any reason to bounce it, so they pass it to the negotiator. And then very often, by several days after they get it, they can respond to it, because it’s complete.

Next tip: I’ve been using a cover page, in which I…. And I don’t know if you can see this. Ryan, can you see this at all on the screen? Some of the examples I’d like to be able to show.

Ryan:  No.

Mike Rockwood:  OK, sorry. But this is actually a submittal that I did today. It’s a fifty page fax. Some of your faxes are going to be that big. It’s a submittal for a loan modification. I’m using a cover page and I either on this page or on the next page, I do a table of contents.

I love this idea, because first of all, remember, we always number the pages in very big numbers in the lower right, every single page, 49 pages. And then I do a table of contents explaining what is on those pages, so that the negotiator doesn’t have to fumble through 49 pages. Because it’s right on top, if he’s looking for the 2008 taxes, he can see, “Oh, that’s on page 32.” He can go right to it. I think that’s a great idea.

I also, on the cover page, state any really important points that you want to reemphasize from your hardship letter. Like, if this is a neg‑am loan, or if it’s even an interest‑only loan, and you’re in a real hard‑hit ZIP Code, then I mention that always in the introductory letter. I mean, in the introductory sentence here above the table of contents, because I want them to pick that up right away. This is a loan that your bank wants you to get rid of. There’s a lot of inertia here.

All right, then, number five is, obviously, there should be nothing missing. That’s part of the pre‑qual process. Very often the lenders these days are, again, back to asking for fewer things instead of more things, because when they know that you know what you’re doing, they want and you want your application to go fast.

So, sometimes I’ll get off the second or third pre‑qual call, and I’ll learn that they only need four things from me. And I never miss a single thing. If they ask for three months of statements, I send three, and if they ask for two years of taxes, I send two, and I send every schedule. And I have the applicants sign every single page of the fax because that’s a verification to the lender and to the underwriter that the person has seen that page and agrees with that page, and the third‑party guy isn’t trying to pull anything over on them.

The next thing I want to encourage you to do is nothing is missing, and it’s neat as a pin, and there are footnotes galore. When I say neat as a pin, a lot of times what people send to us is really confusing and hard to determine what it is. So, if this is payroll, then write “Payroll, ” and if it’s Jim’s payroll, put “Jim’s payroll.” If it’s Arnie’s checking account, write it with a Sharpie at the top, “Arnie’s checking account.”

So, really go to great lengths to make this clear. Some of the people who will be initially ‑ like in the phase one ‑ reviewing your application, I’ve said this before, they’re young, they’re not well‑trained, they’re not well‑prepared, and anything you can do to help them move your file off their desk onto the phase two negotiator’s desk is in your best interest.

Gosh, it took me this long, people, to just get a technical problem taken care of, so I apologize. If you have problems logging in and seeing this, check out sixtyminuteloanmodification.com\live2‑‑the numeral two. Lord knows what it is, but it seems to be working now.

All right, another tip. That is, remember, nothing missing, neat as a pin, footnotes galore. Think of it this way: Your application is literally sitting next to as many as they could fit on their desk. It should look good, OK. They should want to go to it because there’s clarity about it, there’s that table of contents, every page is signed, every page is numbered, named at the top what it is. So, it’s an easy file to work on.

Next tip is and this is a really important one and an awful lot of people mess me up on this one and that is fully document your income. Don’t think that you’re going to get by without fully documenting. Sometimes fully documenting can mean just writing a letter and explaining what the situation is, because sometimes people work on cash, have cash businesses, or they get tips, et cetera, but go to great lengths to explain it.

I’ve gotten in the habit now, when I use contribution letters, or if there’s cash or anything like that, I use an affidavit. You can just Google an affidavit for your state. Like for the state of California, I use an affidavit and I have the client go to a local notary, and pay $10 and have it notarized. It’s just one more step so that the underwriter feels greater comfort.

For instance, on a contribution letter, this will say, “Sworn before me, the notary, this person…” You know, I got their identification, here’s their license number, and they’ve signed it, and they say the following. And then the person writes their contribution note write on the affidavit. You know, “I, John Anderson, brother of Jim Anderson, can commit to 24 months of $1, 000 a month to help my brother during this difficult time. The money will come from the following sources.” And then name the sources. So it’s just one more step to prevent any kind of kickback or pushback on your file. Don’t let them find any reason to slow the inertia of your file.

The next is, I’ve gotten in the habit now of using the lender’s forms at all times. So if you’re applying to Chase, go to the Chase website and use their forms. It’s just one more thing. I didn’t used to do that, I used to use my own forms. But I’ve acquiesced and gone over to their forms. It’s just one more thing that they just can’t argue with.

The thing I find kind of difficult is transposing from the calculators that we use and the Excel spreadsheets that I provide that make it easy for you to calculate HTI, and DTI, and your cash flow. I’m telling you, in the transposing of those numbers onto the lender’s forms, I think there’s something magical about the lender’s forms or something. They just screw things up. But very often, I have to check two and three times and throw away the copy two or three times before I get it right. What’s with that? I don’t know what that’s all about.

But I always use the lender’s own forms. And I’m very certain about the financials. Be very certain that what you put on there results in the debt‑to‑income ratio that you need to qualify for the program that you’re qualified for. OK?

All right. Next, another common mistake that people make in sending me their stuff is, not sending every page of the checking and savings accounts. The top page with all the activity summarized is not good enough. They want to see the activity. And also, do things like checking… If it says page two of three, there’d better be three pages there. Because what they’re looking for is any way for you to be hiding any assets from them or hiding any cash flow from them. So if it says, page one of one that’s fine. If it says page three of three, make sure there are three. Or else, get rid of that note.

The next is footnotes. Again, I guess I’ve already said that I recommend that you go to great lengths to explain things throughout. Even inserting whole pages just to explain what’s coming next. Like, if you have income from three sources, it’s pretty smart to insert a page saying, “the pages that follow verify my income from source one, my job, source two, my rental company, source three, my part‑time job.” And explain them. Just like you would try to explain it to them in person. So you’re making it personal.

Then, Ryan, in terms of handwritten hardship letters, can you give the folks any ideas that you have recently come to in terms of hardship letters? Any recent innovations that you feel are making a more effective…. Do you have things that you’re doing?

Ryan:  Well, no, not really. The only thing that I can say on hardship letters is that I used to be a lot more clever with them than I am now and creative. Now it’s just been so many dozens, or hundreds, or whatever of them now that have never met with a single resistance in the hardship department that I’m not really too worried about writing it out anymore. I don’t really think that that’s very important. Although, again, it’s not like I have evidence for that. It’s just a gut feeling.

Mike Rockwood:  Yeah.

Ryan:  OK? And I have really poor handwriting also. So, I’m inclined not to do that.

Mike Rockwood:  Well, just, like yesterday we had two clients. One who had wonderful handwriting. So we had her hand write the letter. And this other guy, his came back so terrible that we had to just say, “Hey, forget it. Just sign that document that we sent you.”

Ryan:  Oh, really?

Mike Rockwood:  So, yeah. A lot of people have lousy handwriting , so that’s it. But in terms of actually things you’re stating though, Ryan, one thing I like that you’re doing is you’re making statements at the end asking for a particular amount ad saying in no uncertain terms that this is a number that I know that the payment that I can make on time, every month.

Ryan:  Yeah.

Mike Rockwood:  I like that.

Ryan:  Well, the other thing that I should probably mention is that sometimes my wording is getting a little bit more aggressive and I guess if you are gonna walk away from the house, and if you don’t get a good loan mod, I fail to see why anymore you shouldn’t just say that. I guess in the past, I felt like it was rude or maybe somewhat posturing. Or something like that. Yo.

But, I mean, if you’re willing to back it up, hey fair warning is my kind of thought right now. Also, in regards to the language and reasons for hardships, that’s always kind of a creative necessity to kind of come up with some way to label it well. Like, if someone loses money I don’t call it loss of money. I call it investment loss or something like that. I try to make it so it seems like it’s a thing instead of a description. It’s like a brand name or something.

The other thing I’ve written a lot about recently is eldercare. What I write is something like, elderr medical long‑term care. Just to get some keywords in there, you know, that they’re probably trained to identify.

I try to get those in there, elder medical care, unexpected, you know. You might say, “Well, didn’t you kind of expect to have to do this thing?” Well, you could always throw an “unexpected” into the sentence there, and then you’ve got a more recent hardship. The unexpected medical deterioration or something like that.

Mike Rockwood:  Yeah.

Ryan:  Someone recently had ‑ well, that’s probably a little too specific to really help people out.

Mike Rockwood:  Well, another thing you’re doing that I like is you’re using three or four bullets.

Ryan:  I am using bullet points.

Mike Rockwood:  Yeah, I like that.

Ryan:  And I am actually using bold.

Mike Rockwood:  Yeah. Yeah.

Ryan:  Because, keep in mind now, these are phase one loss mitigation people are really just scanning for keywords and they’re looking for whether or not your hardship letter passes their hardship filter. So they’re really just looking for those key phrases like, “lost work, reduction in income, divorce, death, ” et cetera. OK?

Mike Rockwood:  All right. And then lastly, just in the presentation, there’s a couple of things. I always have clients, like I said, sign every single page, account number in the middle and page number over on the right. The lenders ask you to do that because they say that if it gets printed out and gets separated it’s easy for them to get it back together in the right order. All right? So, some of that is just housekeeping. Some of it is administrivia, but some of it, I think, can really help you to get your modification inertia to continue.

Now, in terms of follow‑up, in the book we recommend a daily fax and honestly I got so much pushback on that and I think I was the only one for almost a year, I would think I was the only one that really did that. So I have gone to a twice‑a‑week fax program and then I call once a week. I find that really adequate, about once a week. And every time I call, I always call for a reason. I really advise that you do that. Not just call and ask them for an update because that’s irritating to them because you’re taking their time and it’s not really moving anything forward.

So I always call with a need to understand something that we talked about last time, or a need to get clarification on something, or I need to change a financial. And you can just change it a little bit. You know what I mean? Tell them you’ve learned after really figuring, your medical is not $216, it’s $195. So, always call with a purpose but do call once a week. And try to get them to read from the file, any action that has taken place. All right?

Ryan:  All right, very cool. Now, I have a question from one person writing in. What they are asking is, it is actually a client named Teresa. What I am going to do is, I am going to send, you know there is some details here, it is this, this, and this, what we are going to have to do is have a talk. The way to talk to us is actually on the page that you are looking at right now.

There is a schedule an appointment button, and if you click on that, you can select a product, and the product is a free client consult, if you are a current client. If you are not, you can buy time. If you’ve already used your free client consult, buy some time, and book some time where we can talk. That is probably the first step, because whether or not you go this way, this way, or this way, has some particular implications.

Everyone knows, that sometimes you just have to lay them all out with someone, and in a half an hour, we will spend an hour with you if we need to, on the phone, and we will get that taken care of, that is at 60minuteloanmodification.com/schedule. If you go down on the page as well, you will see an interest list where you can opt‑in to find out more information about the credit card cure program.

That is the program that is already responsible now for eliminating about, almost a 100 thousand dollars worth of credit card debt for participants. We are going to do a million dollars worth of debt reduction this year.

Mike Rockwood:  After you get that first client that reduces 60 or 70 thousand, makes you think maybe a million is even a little bit conservative.

Ryan:  Yes, yes it does. It is amazing how fast, we are going to do it. That will be really fun. So anyway check that out, that is at cc.ryanrockwood.com. Just sign up for that right away. OK.

Mike Rockwood:  All right, I have a question here, that came in.

Ryan:  OK, go ahead.

Mike Rockwood:  Mark asked, how can a short sale be pre‑approved? So Mark asks, how can a short sale get pre‑approved? I bet Mark is responding to some news that came out recently, what was it called, part of the Making Homes Affordable program that has to do with short sales, is coming out with a set of guidelines for banks that have taken TARP money.

It does deal with a couple of issues. One of them actually is pre‑qualification, but they are definitely just guidelines, and definitely have not been implemented yet. The hope is that a realtor working in conjunction with a homeowner, could get a pre‑approval to some percentage of market value.

In other words, they would agree that the bank says yes we will accept, and it is going to be high, so it is going to be like 95% of market value, and then over the course of the sale, a current appraiser will assess the current market value. So, that will help the realtor to be able to price it, although it is really for realtors that are not experienced in the field, because experienced realtors don’t have any problem with pricing on a short sale.

So Mark, the whole thing about getting a short sale pre‑approved, now that I think about it, it may really be just for rookies. It is really addressing the whole short‑sale issue from a perspective of the vast majority of realtors who really are not involved in it. My best advice to you, is get a local realtor who is very involved in short sales. That means that they have done primarily short sales for the last year and a half, and not only ask them if they have primarily done short sales, but also, how many have they done, because some darn realtors only do three or four deals in a year. All right?

The next question that I had picked up is from Jill. It says, can a modification be for the entire term of the loan. Jill must obviously be operating under the misconception that in fact that a modification is for a short period of time. Some are, I do not know what percentage are, but it is not uncommon for a modification to have particularly good terms for two to five years, but the modification to be written over the life of the whole loan. So that is actually most common.

Lets say, if you have a 7% loan, you might get written down to a 2% loan for 18 months, and then it begins to gradually come back to a Fannie Mae, Freddie Mac, level which today would be right about 5%, but it would only come back in increments of a half of a point. It would be capped at Fannie Mae and Freddie Mac limits for the rest of the loan. That is a pretty typical one. So, there you go Jill. Very often full term of the loan. Do you want me to keep going?

Ryan:  Yes.

Mike Rockwood:  Melanie says, forensics loan audits, do the violations that are found mean anything or are they just a bunch of hype? Here is my take on that Melanie, if you go get a forensic loan audit, you will be surprised at how many violations were involved in the making of your loan. Particularly, if it was made between 2002 or 3, and 2007. I mean, they are every where. It is really rare that a forensic audit would come back with fewer then six violations. Of those six, it is really common that one or two are really substantial.

What I mean by that is, a serious claim other then something that would just be either embarrassing, or get a slap on the wrist for the lender from a regulatory agency. Here is how it is used effectively, if you have five or six failures to disclose, then when you list those, you can do just like your lawyer would do, and say that this shows a pattern of deception and gives us reason to believe that we were not fully informed about what we were getting involved in, and therefore we were put at great risk. So even the ones that seem insignificant to you, when they are used effectively, they can be significant.

So lets say you had six, four of which were relatively insignificant, you might even mention that, that these four, of course, seem administrative and just seem to be mistakes, but they show a pattern of disregard for the law and my rights to know about what I am getting into, and then you name the two that are more serious. So it is really all in how you use the results of the forensic loan audit. Actually, the more I learn about forensic loan audits, I think 80& of the magic is actually in how you use the information, not in the audit itself. The audit itself is pretty straightforward. All right? Those are all the questions I had before.

Ryan:  That is all we have tonight, then? I think it is a short one.

Mike Rockwood:  I think we are coming up on the holidays. We should note to everybody that we will definitely won’t be on next Thursday, but Tuesday we are going to have our regular teleconference, right?

Ryan:  Christmas isn’t next Thursday, is it, already?

Mike Rockwood:  That would be Thursday, Christmas Eve.

Ryan:  Yes.

Mike Rockwood:  I don’t know. I don’t think people will gather around the TV set in lieu of opening presents. You think, and chit chat with us about loan mods?

Ryan:  I don’t know. OK.

Mike Rockwood:  Hey, I would like to encourage everybody though, please think about, I am serious, this is a nice gift to give to a daughter, or a cousin, or a friend, or a co‑worker, who you know is having a hard time with their mortgage, give them a gift of one of our kits. It is fully guaranteed, if they get it and they do not find it helpful, they do not use it, they can return it, but it is a wonderful gift.

Ryan:  We got to get one of those bows, like Lexus, like Lexus has a bow on the car.

Mike Rockwood:  Yes, also, please, our books, the kit itself, the do‑it‑yourself kit, is selling like hot cakes, but we have unlimited capability. We literally could sell five times what we are selling now, because our capacity is huge. Everything is printed, everything is done and ready to go.

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