So settling is a fourth way that we are seeing some principal reduction so the balancing act that we’re in is to for government and the banks to send out enough programs out into the marketplace to keep all of us psychologically and some of us actually getting relief to stem the tie up foreclosure so they’re going to speed up the number of principal reductions and slowing down to coordinate with the numbers of foreclosures to try to prolong this, the length of the decline so that the actual impact to any fiscal year is minimized. So, a lot of economics dabble in there maybe a little bit too much but the point I want to make to you is street smart individual understand that just like in the loan modification game, the principal modification game is going to be played hard ball. In other words, you have to get out of line. Do not simply apply for a principal reduction. I mean you might as well get in line for a making homes affordable loan modification without going late and with allows you debt to income ratio. It just ain’t going to happen. So just like all these other efforts, you have to get out of line and this is the place where we’re going to bring you products and ideas and tips about how people are getting out of line and actually getting some of this really, all right.
Ryan Rockwood: Do you think on that note – do you think that there should be a fifth category from what we’ve talked about and that category would be I’m thinking something like – how best put it. Something like forced or illegal.
Mike Rockwood: Cram downs.
Ryan Rockwood: What I’m trying to communicate is this idea of maybe suing the bank or using forensic loan odds.
Mike Rockwood: Yeah.
Ryan Rockwood: For some of these things that are originally intended for other reasons for the principal reduction or do you think that settle – that fits in to the other.
Mike Rockwood: Yeah. I think it’s pretty much fits in to other categories Ryan. It’s just – it’s kind of a subset.
Ryan Rockwood: Yeah.
Mike Rockwood: You might be used in any one of the programs particularly I guess the bank sponsored one certainly.
Ryan Rockwood: Yeah.
Mike Rockwood: Yeah. Probably a subset of the banks sponsored ones where I really do believe that there was so much creditorial lending going on and the suits against Goldman Sachs and the revelations recently about what the WAMU practices and WAMU was probably – it was far and away biggest but it was also of all the subprime lenders. It maybe was the most ethical of all so you got to believe all the dirt that’s going to come out about some of the others is really going to be ugly. And so, a lot of that is going to lend itself to lawsuits and claims by homeowners that they in fact deserve a complete rewrite of their mortgage and so, forensic loan audits I think are going to be continue to be or really grow in significance and then, we should also add that category. I also believe that the courts are going to be empowered in the coming years to process what we call a cram down where they reviewing – in bankruptcy court, reviewing the financial situations of the borrower may just force like they do with auto loan sometimes cram down a new mortgage down the throat of the lender. At least that’s how I like to describe what a cram down is. I forgot some of my questions over here Ryan.
Ryan Rockwood: Okay.
Mike Rockwood: I had half dozen of them before we start.
Ryan Rockwood: All right. Can you bring over the – here it is. The sheet with the phone number on it. If you don’t have your email handy, the phone number to call in today is (323) 476–3672 begin_of_the_skype_highlighting (323) 476–3672 end_of_the_skype_highlighting and we’re going to questions here in a little bit. Also send your email questions to ryan@60minuteloanmodification.com and you can always try the text board too. I will also point out to viewers tonight that in your email tonight, there was solicitation from a journalist and I don’t really know anything about her, but I talked to her for a few minutes and she seem really nice and so being really nice matters. Anyway, a lot of the people that we talk to, they feel I know in talking to them that part of the process is just being heard and so if you have – if you like to talk to someone about your story in your process, in your struggles or your success or whatever, go ahead and contact her. It’s really a shame when a lot of journalists and stuff has a lot of administration contacts and statistical models and bank contacts and everything, but don’t really know what the average homeowners is going through because as we all know the process is so grossly and horrifically different from “Oh well, here’s the criteria, buy for a loan modification [Inaudible – 0:19:58.3]. We know that’s not really true. But how other people supposed to know? So anyway, if you need to bet, you can use that and save on your psychiatry bill or whatever and –
Mike Rockwood: Or talk to them about your other problems.
Ryan Rockwood: [Inaudible – 0:20:15] to your email. Should I try to take a phone message?
Mike Rockwood: Yeah.
Ryan Rockwood: [Inaudible – 0:20:19] a short draft. Let’s see if this will work.
Male Speaker: [Inaudible – 0:20:32] chill out.
Ryan Rockwood: I know. I’m not looking good.
Male Speaker: [Inaudible – 0:20:40].
Ryan Rockwood: All right. Well, you got a question. Anybody who got a question there on the line tonight? All right, good.
Mike Rockwood: Ryan and I had an interesting call from a client yesterday. We are reviewing their loan modification application for making homes affordable loan mod and in the process, they happened to mention to us that they were liquidating some of their other real estate assets and that one of their homes had recently sold short and we just talked about it a little bit and it turns out that he is in Washington state and he had sold the home $100, 085 short. Wow. Even by California standards, that’s a lot short right? So he sold it $100, 085 short and he fully intended to pay the bank the $185,000 simply because he was not aware of the fact that the banks are willing to accept short sales. Hello. So while we had a very –
Ryan Rockwood: It’s hardcore.
Mike Rockwood: Oh man, we have very – I mean this guy was obviously he was well to do and he was able to actually bring that kind of money into closing but we were talking about a $1500 a month savings on his making homes affordable loan on his own home, but that paled to insignificance compared to what we save him just by tipping him off as to how to handle a short sale. So there’s a lot of inconfident professional advice out there. His realtor had put the home on the market, taken an offer, opened escrow and was not far from closing escrow without informing his client, the seller, that he probably should ask his bank to accept a short payoff on this note. Oh boy. So that’s a question that kind of came in out of left field that I thought I was just passing along to it.
Here’s one from Mike. Mike says we are finally giving up on our loan modification the final offer from Bank of America is just not good. So now we have to admit that we have to sell our home, but the trustee sale is only 10 days away, okay. Mike says can we convince the bank to give us more time to put it on the market and get a good offer? And Mike the answer is yes, you can; however, the only way you can at this late day is to submit an actual offer to them because they won’t accept your offer to put it on the market. Here’s why. They can put it on the market in just a very few short weeks. If they can put you out of the house starting you say just 10 days even after they evict you 30 days later, they can get the house and then put it on the market within 30 days. They really aren’t interested in drawing things out with you. It’s not all that significantly better, but if you brought them an offer this week then, they would have the opportunity to actually get their money 30 days from now. So 30 to 60 days from now. So what I recommend Mike is that you get with the very experience short sale realtor and if you were in California, shame on you if you don’t call me.
Ryan Rockwood: Where was he? [Inaudible – 0:24:37]
Mike Rockwood: No. He says trustee sales though.
Ryan Rockwood: I don’t know. Here’s the thing. I hate to blow some real estate agents commission at the last minute because I’m sure they’re just ignorant. Nobody could be that devious.
Mike Rockwood: No, this guy has been going a loan mod. He has not even been put it up for sale yet.
Ryan Rockwood: Wait, isn’t this guy you’re just talking about that had the [Inaudible – 0:25:00]
Mike Rockwood: No.
Ryan Rockwood: That was before.
Mike Rockwood: Yeah. [Inaudible – 0:25:02]
Ryan Rockwood: Never mind.
Mike Rockwood: So this one, here’s the deal Mike. You need to get with a very experienced short selling agent, and in California that would be me. Anywhere else in the country, I can act as your short sale specialist, but we need a lawful person to help us get that offer and to actually do the deal, the paperwork. So you need to get an offer and honestly that isn’t as hard as it might sound because at some price, your home will get an offer today. So your realtor needs to list it. List it low and aggressively lower that price and aggressively market it and get you an offer in 48 hours and submit that to the bank with a request for short sale. Then, they will postpone because it takes them 30 to 60 days just to evaluate the short sale offer and then if they approve it or not then, at least you kind of got your balance and can move on to another buyer if that one doesn’t work out.
Tina asks without my ex–husband’s income, I can’t keep this condo. Chase, my lender, has determined I don’t have enough income to get a modification that would lower my payments very much. I want to keep the place, but I don’t have any idea how to do it. Tina, one of the things – okay, you say you want to keep the place. So the key is you have to get more income. Now, you say Chase has determined you don’t have enough income to get a modification that would lower my payments very much. I’m going to read into that that you don’t qualify for the making homes affordable because if this is your home and you qualify for making homes affordable, that lowers your payment really significantly. So what I’m going to suggest to you Tina is that you pull out all stops to get your income up to exactly the point it needs to be qualified for a making homes affordable modification.
We have a whole little tutorial on handling income and or handling the whole income part of your budget and some of the suggestions that come out that session are there are ways to increase your income by taking in a renter. Number two, get a contribution letter from a relative or friend and that simply a letter that states that during this tough economic times, they can assist you to the tune of X number of dollars every month and then they just provide proof that they can do that either that they can afford to do that from their budget or that they can afford to do that from a stash of cash that they’ve got somewhere.
Other ways are two that a lot of people think of is that they actually serve their parents by taking them to and from their doctors and otherwise, their parents wouldn’t have to pay for that health. Some others actually begin to charge their adult children for their rooms in order to increase their income.
Ryan Rockwood: All right.
Mike Rockwood: Part time jobs is even a good opportunity Tina, but the key is you got to get your income up to where you qualify for making homes affordable and you should know exactly what that point is, okay.
Ryan Rockwood: All right. Bill asks number one, is it smart actually ask for a trial modification. He’s heard that sometimes lenders don’t convert them into a permanent mod even if the home moderates all the payments on time which is of course that has been true. But there hasn’t been – we haven’t seen a whole lot of that, so I go for it not that it’s going to matter what you ask for.
Mike Rockwood: The deal is very often people don’t get the trial modifications because they fail to document precisely what they told them in order to get the mod. So if you disregard the financial package that you submitted to them in order to get the trial mod and you submit a slightly different income and you submit different debts, that’s when you get rejected. But honestly, what I do once we get that making home affordable offer is we go back to the financial package that we submitted and we documented the penny that everything is exactly as we said.
Ryan Rockwood: It’s very hard to keep it straight that many months later.
Mike Rockwood: Yeah, but I mean that’s why you have to keep good documentation, but the key is if you – what we do when we do that for clients to get a trial mod to become a permanent mod, we have very, very high success like 95% or more, very rarely do we fail, right.
Ryan Rockwood: All right. And then, I think we answer the question is, sure.
Mike Rockwood: Yeah.
Ryan Rockwood: Is it better to get 10% of paperwork for bill? Yeah, of course. If I sent my – start my application in the imminent default department during 30 to 60 days late – I’m sorry, let me read that again. If I start my application in the imminent default department which is 30 to 60 days late, are they likely to offer me as good modification as they would if it was over 60 days late? What do you think?
Mike Rockwood: No, that’s a good – that shows a lot of insight Bill. In fact, – the truth is you won’t.
Ryan Rockwood: But he says start of.
Mike Rockwood: Yeah.
Ryan Rockwood: It doesn’t matter when you start.
Mike Rockwood: You got to get out of the grip so that imminent default department, it’s the homeowners curse.
Ryan Rockwood: Imminent default – perpetual pay.
Mike Rockwood: Yeah.
Ryan Rockwood: Payment purgatory.
Mike Rockwood: Yeah. No. Their job is to keep you just keep getting money from you and did not – any resolution.
Ryan Rockwood: Sliver of hope – sliver of hope department.
Mike Rockwood: Yes. You got to lose those guys.
Ryan Rockwood: So anyway, go late – if you’re going to go late, go late boldly and I think the question though is should he – if you just not going to keep paying, we all know that 60 or 90 days late is going to be minimum okay, so do that. A lot of people they say well, is this better than this. Later is always better. So time is on your side. Now, what isn’t on your side is any sort of lifestyle happiness sort of thing because you’re going to be freaking out all the time like are they going to foreclose or what. So, if I get everyone [Inaudible – 0:31:36] someone gets big into this, what if this, what if that, what it is and all I can recommend to them is that I think not in this case. Bill is probably decisive take charge kind of guy. However, a lot of people, they’re just what about this and what about this and all I can recommend then in that case ‘cause I know that these people are kind of caught up in this perpetual sort of trying to find the best case scenario is go with the one that hurts less and see. You know what I mean? Go and see how 60 to 90 days late works for you and I’m just going to stay here in the sec so try to take me over.
Mike Rockwood: Okay, got it. So the point that Ryan is making is action is always preferred over inaction because so much of this is out of your control and so much of this can change even when you get offers like this week, we had two clients we got reasonably good modification offers who decided to turn him down into press for even better deals just because they were really committed to either getting a better deal or losing the house and so they played hard ball. So the point is go boldly and get action. Don’t equivocate and second guess so much of it is out of your control anyways.
Ryan Rockwood: And you could –
Mike Rockwood: Ryan, how do I [Inaudible – 0:33:03]
Ryan Rockwood: Good job. However longer later, six months later if you’re unhappy guess what you can do. Go later. So you know what I mean it’s like it’s all in your control even though they like to convince you that it’s – the situation is a 100% reversed.
Mike Rockwood: Okay Rob asks I’m unemployed now, can I still qualify for a loan modification? Rob that’s completely irrelevant. Your unemployment compensation if you have some is just used as your income so the debt to income ratio and your cash flow –
Ryan Rockwood: Well two issues. Employment doesn’t matter, but monthly cash flow does.
Mike Rockwood: Yeah, income does matter.
Ryan Rockwood: Even it’s unemployment.
Mike Rockwood: Yeah.
Ryan Rockwood: That’s income.
Mike Rockwood: Okay, so that’s a better way to say it. The fact that you’re unemployed doesn’t matter, you got to have some income. You got to –
Ryan Rockwood: Here’s the wacky thing. If you have a million dollars in the bank, you’ll still is not probably going to work right. Is that still the case?
Mike Rockwood: Say that again.
Ryan Rockwood: If you don’t have income, but you have savings, that still not going to apply.
Mike Rockwood: Yeah.
Ryan Rockwood: It’s weird.
Mike Rockwood: Yeah. No. It’s weird as that sounds, it’s true. You have to go to great lengths to package your wealth.
Ryan Rockwood: To pay yourself.
Mike Rockwood: To show that you pay yourself. It’s not at all easy.
Ryan Rockwood: All right Mark has a question writing it. Is it possible to get a loan modification without being late on your mortgage and I could tell you that it is theoretically possible but –
Mike Rockwood: I’ve seen those mathematical models.
Ryan Rockwood: But we’re in around of definite theoretics here. Few and far between. Now, if you’re underwater, it says your property is about $75,000 underwater, let’s just assume that this is – I have to guess that Mark is from California at $75,000 under water is nothing, right. So maybe his home is $500,000, $700,000 whatever so no biggie. He doesn’t care more than theoretically. Anyway, can you do it? For sure, but only if you qualify for President Obama’s making homes affordable plan. You’ll get no other modification unless you qualify for that one even that one extremely challenging –
Mike Rockwood: It takes a long time.
Ryan Rockwood: –probably six to eight months to get your modification, but if you get denied, it also takes six to eight months to get denied. The good news is that you can go ahead and give it a shot and start now and that way when should you need to convert it and stop paying, you fully feel like, “Okay, I exhausted my resources.” Now, if your credit stinks right now Mark which it probably doesn’t or you wouldn’t even be calling, you wouldn’t be asking this question right. Your credit is probably sterling and that’s why you really have this problem. So I got one for someone, a client of mine I got from forum and –
Mike Rockwood: Because there are some folks for whom their FICO score is more than just an emotional attachment. Some people actually need well sometimes contractors need credit because they need credit cards to do their jobs.
Ryan Rockwood: The guy that we did it for I think that really wasn’t that bad off.
Mike Rockwood: Yeah.
Ryan Rockwood: To say hey [Inaudible – 0:36:29]. He is doing okay. He is doing pretty good.
Mike Rockwood: And then other folks need security clearance so they can have very serious credit problem so there are sometimes when it just plain does make sense but other times for most of us, 9 times out of 10, it’s just kind of an irrational thinking about FICO score and what it really means versus what it really cost.
Ryan Rockwood: Someone that I chat just asks what is the tutorial about income you reference awhile ago?
Mike Rockwood: Yeah. We’ll go ahead and schedule that one in the coming weeks. What we do at the beginning of the sessions, the little tutorials that I give, the 10 minutes of kind of the latest information. One of those is on income and how to figure out – how to get more income quickly and some creative ways to increase your income in order to get your debt to income ratio to qualify for a loan modification. We will schedule that one in the next few weeks. We recycle this about every 12 weeks.
Okay Vivian says we followed the 60-Minute Loan Modification Kit formula and submitted our loan application, but we were at 30% frontend debt to income ratio. Our banks said that they would still consider it for a mod and that we should callback every two weeks. Do you think they will allow us – do you think they will give us a loan modification? No Vivian, I don’t think that they will. I think that you probably were talking to the imminent default department, right? And they’re going to tell you to callback every two weeks and they’ll just keep taking your call and they’ll be sweet as honey to you as long as you keep paying them, but what you need to do if you want that loan modification is to stop paying them and to figure out how to get your frontend debt to income ratio over 31%. Really it’s best if it’s upwards. It’s 33% so you got to torture your income up or income down or your payments up. And when I say torture your payments up, what I mean by that is some people don’t have – don’t fully load their payment and the bank doesn’t care. They don’t go about the process of figuring it out whether or not you put homeowners association in there, private mortgage insurance, principal interest tax and insurance. They just take whatever numbers on their screen which is the payment you’d been making. So torture that number up and torture your income number down and the way you torture your income down which most people don’t want to do but you torture it down by figuring out – by making sure that you figure it correctly. Number one, make sure that you multiply the number of paychecks you got by 24 or 26 or 12 based on the real number of paychecks you get and then divide it by 12. That’s one thing. Number two, make sure that you’re only submitting income for people who are on the mortgage. Sometimes spouses think that because it’s household income, they have to show the income of the other spouse even if they’re not on the mortgage when you do not have to. In those cases, you use as much as the spouse is – the spouse who’s not on the mortgage uses much of their income as you need to qualify. All right.
Ryan Rockwood: All right.
Mike Rockwood: Do you want me to keep going?
Ryan Rockwood: No. I think we’re ready to wrap it up.
Mike Rockwood: Really.
Ryan Rockwood: Yeah.
Mike Rockwood: Time just flies by in sessions.
Ryan Rockwood: Yeah. Hey, let’s tell people about our product.
Mike Rockwood: Okay.
Ryan Rockwood: Bart who – I’ve been chatting with someone named Bart. Bart if you’re in California and you want to talk about that short sale strategy, go ahead and email me at ryan@60minuteloadmodification.com and Copeland, go ahead and email me ryan@60minuteloadmodification.com and I can point you towards some members area where you can look a little bit. We’ve always tried to make it easier to look at past episodes and past shows and it’s not easy, I apologize, but for members we’ll spend a little time and try to find the show for you or something. For everyone else, check on the articles tab up here has most everything. It’s just that, it’s a real pain because this is like you have to go back to everything manually. We have to get like a good navigation set up so that it’s easier for Google, but anyway, buy the product. If you haven’t. It’s right down below and if you click it right now, you get $25 off which is pretty significant because it’s not that expensive and basically, the idea is included in the product I should mention and if you’re member also listen to this because people forget. Here’s what you get. You get a 60 Minute Loan Modification, it’s really a whole kit. It’s a whole system to educate you in getting up to speed on your loan modification workout solution. You get a book that tells you how to do it. You get all the forms you need on disc. You get an actual recording of our calls with the lenders and so you are 100% going to know exactly what to expect. You also will get obviously directions and support on how to build your budget and your hardship letter. These are two of the most important elements of any loan modification package and when you complete them, remember to set a time using our online scheduler to talk with us and in fact, if you’re on this call right now and you’re looking at it, there’s a little button right above us that says schedule and appointment that should work fingers crossed. You can use it to schedule a time and as part of your kit, you get half an hour free with us. So schedule a time and if you can try to get your hardship and your budget done first and 10 minutes prior to our conversation, email your budget and your hardship to us so that we actually can have it in our hot little hands talking to you and telling you this is going to fly, that’s not going to fly, this is going to work, this is not going to work okay. So I apologize about the call tonight and I think –
Mike Rockwood: We’ll get you some chicken soup.
Ryan Rockwood: Vegetarian chicken soup. And anyway, all the [Inaudible – 0:43:05] click on it, buy it, love it and we’ll talk to you on Thursday. If you’re not a member. Come on quick. See if you could join us on Thursday, all right. Thank you so much and we’ll talk to you all soon.
Mike Rockwood: Good night.
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