File Name: March 24 CCC
Ryan Rockwood: Welcome to the Clear Credit Mastermind Group Monthly Teleconference. We’re here to beat the bank, protect our assets, and clean up our credit for life. Thanks for joining us today. We have a great call. We’re going to talk about a lot of exciting stuff. First off, we want to talk about the local news. Obviously loan modifications are in the news in such a big way, in such a positive way that it got us really excited ‘cause we’ve kind of been laboring behind the scenes for well over a year now.
Mike Rockwood: Well Ryan, the big event that’s coming down the pipe is Wednesday’s announcement from the White House.
Ryan Rockwood: Right. But not just that I mean in every single newspaper you’ll see, in every foreclosure article, every economic forecast you’re seeing loan modification being use.
Mike Rockwood: Right.
Ryan Rockwood: Whereas before that was kind of I don’t look I look at it as some kind of like hypothetical possibility to help homeowners. But it really seems to turn into reality here for a 1,000 of homeowners.
Mike Rockwood: Well, I think the thing that’s going to change now with this announcement is that our loan modifications are going to go from being superficial and [Inaudible – 00:01:02] because we had a real high rate of loan modifications that have actually failed and the borrowers are right back into default after as few as 3 months. Like I mean it’s like 40 to 50%?
Ryan Rockwood: I know I heard that.
Mike Rockwood: Yeah, so I think what’s going to happen now is that the pressure from the White House is fine and you know all the local pressure’s finally getting big enough to where the banks are going to be force to do better modifications. And that’s what we’ve always been all about is negotiating hard after you get that first offer. ‘Cause so often the first offers are just so simple that you really have to negotiate hard to get a better, to get a reasonable, a good modification. So I think that’s what big change is going to be on after Wednesday’s announcement as we’re going to see the banks start to reduce principal a little more often and also we’re getting off a lot of modifications where you really need a 2 and 3% rate for 5 years and man we’d had a hard getting those. You know you get 4%s pretty easily but I think the 2 and 3% are going to be easier because I think everybody’s realizing that there aren’t enough bailout funds to really fix this problem. We need to kick it down the road a few years and let the entire economy recover before we really see how bad it is. So, I think that’s what’s going to happen as we’re going to get more serious about workouts, short sales, more serious about loan modifications. So I think it’s going to be pretty exciting time.
Ryan Rockwood: Let me back up a little bit. My name is Ryan Rockwood. I’m here today with my father author and expert Mike Rockwood author of 60-Minute Loan Modification. And we are business partners here and we live in Southern California. We’ve been helping people all across the country do loan mods, short sales, all kinds of things. And right now we’re focusing on loan mods as perhaps what you think Mike, probably the best option available to most homeowners?
Mike Rockwood: Well, it’s certainly the cheapest and the easiest. I mean it outguns refinance like crazy and of course short sales like crazy really for 3 reasons. You get to keep your house is the first one. Second one is you don’t screw up your credit although an awful lot of people that are doing loan mods have to miss a payment or 2 so it does hurt your FICO score but it doesn’t -
Ryan Rockwood: But the loan mod itself doesn’t.
Mike Rockwood: Right. And then lastly they’ve really become the cheapest, fastest and easiest, lease complicated way to really straightened out a lot of these mortgages. ‘Cause a lot of us just have gotten into and remain after even after the mod remains in a tough real estate situation where we own assets that are underwater. You know they’re upside down. But at least it makes it tolerable for a few years until we all figure out what we’re going to do about this market devaluation.
Ryan Rockwood: The other thing that is attractive about loan modifications that I don’t think a lot of people, the [Inaudible – 00:04:00] out there will say, “Well that’s not going to solve your problems in front of you.” The thing about that, the loan mod though is, it may be [Inaudible – 00:04:06] but that’s fine because if you short sale your home, you sound like you have another option in a couple of years. If you do a loan mod with your home and you make it through a tough task or what have you, you may decide to short sale or you may decide to sell or whatever. But it’s a less of your first step.
Mike Rockwood: Right. And you have to live somewhere. So I mean a lot of folks will say to me, “You know Mike, I think I should just go ahead and short sell it.” “Okay, so you’re going to move out of a $2900 a month house payment into a $2300 a month rent payment.” And it just doesn’t make sense to me. You really should try aggressively for a loan mod. And one thing that had happened this week with 2 customers that, I really want to emphasize to everybody or remind everybody is that there’s no reason not to try for a loan mod. Some of the lenders are more aggressively granting loan mods than others. But there’s really no reason not to try. It’s inexpensive, it takes 30 days and really it takes only 1 hour to prepare the application. And if -
Ryan Rockwood: Yeah, well I guess a lot of people think, “Oh well, it’s going to cost me,” I mean there’s a lot of companies out there charging 3,000, 5,000 and then they think this is a bigger deal. But we don’t advocate that, we suggest that people basically do their own loan modification with some basically educational assistance from us. Now, what are you thinking behind that? Do you want to go over that just briefly?
Mike Rockwood: Yeah, I think that’s pretty critical. It’s like believing that you need to hire a Philadelphia law firm to help you prepare your taxes. I mean you can prepare your taxes yourself. You can modify your loan yourself. Most people chose to have somebody who does that day in and day out for $100 or my guy charge me $250.
Ryan Rockwood: You’re talking about taxes?
Mike Rockwood: Yes, for your taxes. So I mean it’s kind of comparable. And it’s kind of comparable in magnitude too in terms of the paperwork you have to get together. So yeah I think that’s far and away-
Ryan Rockwood: So you need some education but maybe not-
Mike Rockwood: And you need insider information ‘cause I mean think of all the insider tips that we put in the workbook and that we put on the CDs. And that we put on the CDs where folks can listen to me talk to the banks about loan modifications. Man that stuff just makes it so much easier, so much faster and you don’t make any mistakes. Remember the first loan modification that I did last September with Indymac was a joke. I mean I went back and calculated that I think I actually spent 60 hours on it. And I just submitted another one this week and I literally spent 30 minutes on it. That’s on my own property.
Ryan Rockwood: So that’s a different loan entirely so we don’t confuse people.
Mike Rockwood: Yeah.
Ryan Rockwood: You’re still doing loan mods on-
Mike Rockwood: On my own property.
Ryan Rockwood: -from many of your mortgages.
Mike Rockwood: ‘Cause I got these 5 properties and that’s 10 mortgages. Well it’s actually 9 mortgages. So now this week I submitted the last, so I will have modified every one of those 9 mortgages in 7 months.
Ryan Rockwood: So we’ve got some major announcements in the news, loan mod, loan mod, loan mod. President Obama, I’m not sure if he’s actually said the word “loan modification yet?”
Mike Rockwood: Right.
Ryan Rockwood: But he’s certainly talking about a Housing Rescue Bill. In fact, we’re looking at a separate and distinct housing rescue package being put together by his Treasury Secretary I believe. And that was announced last week but with very few details. The market tank as a result of perhaps the very few details but it sounds extremely aggressive. Now, the other big thing is that this Wednesday, the President is going to announce his Housing Rescue Bill. And that has dramatically move up a couple, at least a couple of weeks, maybe months. They wanted to release it later but there was a lot of pressure on them to get something out. And in response, some of the biggest banks in the world really have come together and they said, “Okay, we’re going to put a moratorium on foreclosures until we find out what the President has to say and if we can basically work with it.” What do you see in that? Do you see that as just political maneuvering on the part of the banks? Are they getting all these money from the government or do you think they really tried to clean up their act or whatever?
Mike Rockwood: Well, yeah. I don’t think that’s does anything. I mean remember the Governor of California Schwarzenegger also had a moratorium on foreclosures for about 2 months. And I mean it really doesn’t do anything for anybody. It just interrupts the cycle. What it did is kind of screwed up the stats so that we saw a leveling off of the rate of increase of the numbers of foreclosures in California in December and January but who’s kidding, you’re not fooling anybody. It’s just because they were illegal for a couple of months. So I mean they’re going to go right back up in February and March.
Ryan Rockwood: The situation itself is turning around you think?
Mike Rockwood: Yeah, it’s not like the decline in values, not like the decline in prices have gone anywhere and unemployment is going up. So I mean this is just, housing is just the first shoe to drop. The economy has got – employment shoe is dropping, the credit debt shoe is about to drop so we’ve got a lot of lumps ahead of us and so the CCM group I think is particularly timely to be able to get together and talk about street fighting strategies for these tough times. ‘Cause we’re going to face some real tough times here and the people who are proactive are going to be able to make it through real nicely.
Ryan Rockwood: Okay, Bank of America. Wells Fargo, Citi Group, I believe Indymac or whatever’s left of it still, Fannie Mae and Freddie Mac.
Mike Rockwood: Yeah Fannie and Freddie.
Ryan Rockwood: Yeah, these are all people that have signed – these are some of the biggest banks that have signed on and said, “Okay, we are going to agree like a voluntary moratorium.”
Mike Rockwood: Yeah.
Ryan Rockwood: What do you think our listeners on the call – I mean obviously all of us have mortgages (laughs). Mine was Wells Fargo I’ll bet some of the biggest banks in the world. So is it good news, is anything going to change or is the clock still going down. For example, we all know that there is like 90-day or 120 days from the time you stop paying that you can get foreclose on. Well, what if you’re only on Day 1 or Day 30? Is the clock still counting during this moratorium? I mean that doesn’t help anyone, does it?
Mike Rockwood: You know who it helps? It helps the people who have an NTS right now. Who know that their houses-
Ryan Rockwood: What’s an NTS?
Mike Rockwood: Notice of Trustee Sale.
Ryan Rockwood: All right.
Mike Rockwood: So if you’re late in the foreclosure process as a lot of our customers actually are. They will not lose their house during this period of time. However, because they have already exhausted a lot of their workout options with the banks, come 3 weeks from now or I think it was Chase, I think it’s going go to 5 weeks. But come the end of that period, they really don’t have any more options. So,
Ryan Rockwood: And if they double their options, right?
Mike Rockwood: So really it’s really just political and-
Ryan Rockwood: Okay.
Mike Rockwood: But I mean that’s fine.
Ryan Rockwood: Yeah.
Mike Rockwood: We’ll take every bone that we can get.
Ryan Rockwood: Well I mean I guess for someone that’s looking and getting kick out of their house or what have you 5 weeks will certainly -
Mike Rockwood: Yeah.
Ryan Rockwood: I’ll certainly 5 weeks, I would.
Mike Rockwood: Yup.
Ryan Rockwood: Okay, so we’re looking to Phoenix this Wednesday. Big news, big announcement from President Obama, we have a lot of – we have high hopes for that, although it’s important not to get our hopes up too high. You were talking earlier with me about the basic math.
Mike Rockwood: Yeah.
Ryan Rockwood: Of the whole thing. What do you think is the best case scenario? I mean would it be possible, the problem is that people are mostly upside down, they need a dramatic principal reduction and interest rate reduction. I mean is it really even possible to imagine that the government would basically be forgiving all these debts?
Mike Rockwood: Well see, and I think some people are now – it’s not politically so incorrect to start saying some of those things because really when you start running the math. I mean you know the numbers Ryan on the short sales that we’re doing and on the loan modifications that we’re doing, here in Southern California the average lost to the lenders is $75,000. Now that’s average. So you just start multiplying that times the 10 million homes that are currently in foreclosure that 20% of the homes in the entire nation that are in fact upside down that is that they owe more on them than they are worth? And the problem clearly goes way beyond 100 billion or even a $1 trillion, its many trillions of dollars, its several trillions of dollars in “problem that we’ve got in the housing sector.” So, people are now starting to say things like, “Well many our goal doesn’t really need to be to keep everybody in their home.” You wouldn’t have heard that 6 months ago. You know what I mean? That people are starting to say the unspeakable and you watch as soon as this money starts to run out, maybe at the end of the summer, the money starts to run out and now it becomes politically correct to start facing the fact that an awful lot of people who don’t have enough income to support any kind of mortgage on their homes are in these homes. So we’re facing a real big crisis and so I’m saying my own math says that we probably only have 6 to 12 more months of this loan modification frenzy before we have to change it significantly.
Ryan Rockwood: Okay so for a lot of people listening on the call, I will assume that the main question is do I want to go forward with a loan modification? Obviously we have some resources that people can get, we have books, some audio CDs, and some services basically we’ll work with you. We have some people offer these services out there though. And they’ll probably be thinking, “Do I go forward with this or do I not?” What does it mean for the people listening right now when you say that they probably won’t have this option a year from now? Does it mean that I guess I mean to ask let’s say they took action now versus they didn’t take action now, are they going to be better off in a year having got that loan mod depending on what’s going to happen? What is going to happen in the year if that’s in fact going to happen now?
Mike Rockwood: That’s the thing that we always have to remind our clients is that this is for now. And if you want a 2 to $800 reduction or whatever, reduction in your monthly now, then come and get it because the banks are literally begging you to ask for it because they’re getting so beat up by the politicians. So that’s step 1, there is nothing to say that you can’t ask for another modification 3, 5, 6, 8 months from now. And that when principal modifications become more palatable in a year or so, you get right in line for one of those but honestly I’ve become, I’ve become so passionate about it because I see the difference that it makes in people’s lives. Because you know people modify their loan and saved let’s $800 a month like I did on that very first mortgage. Well, it kind of changes your attitude and you start to feel empowered again and you feel like will dug on it.
Ryan Rockwood: Yeah.
Mike Rockwood: You know I can make it true and I can see it just changing people’s attitude and changing people’s minds so they start thinking, “Well dug on it, how can an extra $500 a month? Then how can I reduce my credit card debt or at least my payments by 2 or $300 a month? How can I pay off my car loan?” It just kind of snowballs into kind of a financial revolution -
Ryan Rockwood: It’s like a psychological thing almost like an empowerment.
Mike Rockwood: Yeah, it’s where people say, “No, no I’m not just going to sit in my lazy boy and watch this thing happen to me ‘cause most people are going to just let it happen but you don’t have to. I’m sure there’s people on this call that are just going to think, “Oh that’s nice and never do it.
Ryan Rockwood: And we’ve all thought that sort of thing whether it’s applying to college or applying for a new job is always easy as not to do things.
Mike Rockwood: Right.
Ryan Rockwood: And that is so important they idea of just changing the mindset from the victim mentality.
Mike Rockwood: Yeah.
Ryan Rockwood: I think there’s a lot of attitude out there that would like people to people to feel really rotten about the fact that they need a loan modification.
Mike Rockwood: Yes.
Ryan Rockwood: I don’t know am I imagining that?
Mike Rockwood: No, remember in the book where I say- (laughs) ‘cause I get so passionate about that I feel like it almost your patriotic duty to stand up and say what help, what assistance you need. Because I mean these are our funds that are being redistributed through the banking system to all of us to deflate this housing bubble. And dug on it I mean the country and our community and us as individuals need to deflate this bubble. So I sort of feel like if you have a hardship, if you are having trouble making your mortgage payment, it’s almost unpatriotic not to get the modification. Because the president has and congress has given the money to the banks, now go out and help them redistribute it.
Ryan Rockwood: I think people typically feel like they’re being a good citizen if they just continue to pay, pay, pay, pay, pay, pay…
Mike Rockwood: Yup. If I just keep doing what I’ve been doing everything will work out. Well, things have change. Things have dramatically change and like I say in the book, like my friend Mark told me last summer, “Wake the heck up and grow up. Things have change.”
Ryan Rockwood: Yeah.
Mike Rockwood: Hey we better get into these topics. Perhaps we’re going to miss Rusty ‘cause he’s not logging in. Have we got Rusty with us? Rusty are your with us? No I think something must have happened.
Ryan Rockwood: Okay, well let’s just go on with that. We’ll give them a brief overview of that at the end of the call. But I know the main thing that we want to go into now is talking about loan modifications in general. We want to hit on some major points and some experiences that you’ve had this week in doing loan mods with people.
Mike Rockwood: Yeah.
Ryan Rockwood: And on your own loan mod. To break it up here, I just want to – let’s just open up the lines, we’ve got a caller Jeremy and I want to make sure to get his question because we have some technical goof ups at the beginning and I’ll just unmute the call right now. I don’t know if he has a question but bear with me.
Jeremy: Hello?
Ryan Rockwood: Hey Jeremy, are you there?
Jeremy: Yeah, I’m here.
Ryan Rockwood: Hey Jeremy. Just want to make sure we got you. You have to wait too long to ask a question. Do you have any questions that we can address for you?
Jeremy: Yeah actually I have 2 questions.
Ryan Rockwood: Fire away. We’ll do the best we can.
Jeremy: Okay one is I’ve been looking at my debt to income ratios and everything like. I know that they’re trying to fit in like they would do some kind of a workout where it’s supposed to fit under 43% or whatever it is. But in terms of – I’m just trying to think like -
Ryan Rockwood: If your question is, is your debt to income ratio too high? Is that your concern?
Jeremy: Yeah is it too high? Yeah exactly!
Ryan Rockwood: What do you think it is?
Jeremy: Well it’s probably like 60%.
Ryan Rockwood: 60 okay, and what’s your second question?
Jeremy: And then the second question is, if you’ve dealt with Aurora loan servicing and what’s the best way to work with them? ‘Cause I know they won’t even consider a loan modification unless you do a repayment plan first.
Ryan Rockwood: Okay, let me turn that over to my Dad and partner here Mike, Jeremy is in California, sounds like he’s got a debt to income ratio of about 60% and I know in the book you’ve talked about this extensively and the kind of the mantra was the old debt to income ratio thing is dead.
Mike Rockwood: Yeah.
Ryan Rockwood: Do you think you can pull this off at 60%?
Mike Rockwood: Yeah. Let’s just jump right over to the personal budget and the DTI. Rocky instead of trying to fill-in for Rusty on credit repair issues, how about if just don’t even do that and we’ll do that on our next CCM call?
Ryan Rockwood: Okay.
Mike Rockwood: And we’ll see if can reschedule Rusty. So let’s just do loan mod topics then, okay?
Ryan Rockwood: Okay.
Mike Rockwood: Let’s jump right to the personal budget then and DTI because so many people – it’s a quicksand. You know there are about 4 areas in that whole DTI, HTI area where people get confused. Here’s my response to Jeremy’s question. I don’t think I’ve ever had a loan modification approved with a DTI of higher than 80. And that is post modification. When we submitted it, it was like 83 and with the modification it went down to about 76. The bank was Wells Fargo and they said, “Gosh we just have to find a way to get your DTI under 80 because our – this investor will not consider it.” And you know what? I’ve never heard of any others that high. So the key is, the difference between DTI and HTI, so many got confused with HTI because when the guidelines first came from FTI fee, they used that particular Housing to Income ratio and that was always 31 to 38%.
Ryan Rockwood: Right.
Mike Rockwood: So in that calculation, you just use that particular mortgage that you are negotiating – Inaudible – 00:22:14] as your debt and divided it by your gross household income. But the DTI figured that people are using or that most lenders are using today is out to 65%, almost 100% at the time, and really anything under 80% is getting approve if you have a really nice clean hardship and particularly if you have an adjustable rate mortgage.
Jeremy: Okay and then actually what’s also a little confusing is in terms of calculating the debt to income ratio.
Mike Rockwood: Yeah.
Jeremy: Am I calculating based on what my current interest rate is or am I calculating it based on what my desired interest rate is?
Mike Rockwood: Yeah both. What they’re going to look at is the modified amount. So what I recommend is that you calculate it based on what you’re paying now and if you know you’re in that danger zone which is in the high 70s, you know over 80% but if you’re just in the 60s, before you even get modified I wouldn’t even think about DTI. You’re in good shape. But then you got to think about cash flow. ‘Cause the second thing they’ll do on your budget is they’ll go through it in red line all the things that they considered discretionary. So you take all your debt and segregate that. And then look at all your cost of living expenses that are going to eat up the rest of your, that 40% of the rest of your monthly income. And they don’t know if you spent $200 on groceries or $700 on groceries. But if you have a married couple and you spend more than 400 then they’re going to discount it. And if you put your life insurance payment in there, they’re going to redline in. They’ll take it right off. If you put your contribution to church or to a charity or your savings for vacation or something, they’ll just redline that. And so,
Jeremy: What about life insurance?
Mike Rockwood: Life insurance yeah, that kills me they won’t allow life insurance. They consider that discretionary. So what you want to be sure you do is you go ahead and redline those things before you submit it. And you have to submit a budget that you’re struggling to make. In other words, they don’t want to see that you have plenty of money every month and you really don’t have a cash flow crisis.
Ryan Rockwood: But it’s tough because you have to have enough money.
Mike Rockwood: Yes.
Ryan Rockwood: To qualify for the repayment or else they’re -
Mike Rockwood: But see that comes into your DTI.
Jeremy: And then in the event. Okay, actually I do consulting work and so I had a major hit in terms of income for awhile and then my income has just pick back up.
Mike Rockwood: Good.
Jeremy: So my guess it’s rolling February so if I did an average between January and February with the year to date PNL.
Mike Rockwood: Yup.
Jeremy: That’s probably going to be fine but I’m just wondering any strategies in terms of when you had – also I’m being self-employed. I don’t have a -
Mike Rockwood: Yeah, that’s easy for you. Now about what are you going to use for showing 2008 income? You’re looking at 1099 or what do you use?
Jeremy: 2008 income that was my worst year ever.
Mike Rockwood: Good, then did you. I don’t mean good, I meant-
Jeremy: Yeah I understand.
Mike Rockwood: Well it’s good for a loan mod.
Jeremy: Amen (laughs).
Mike Rockwood: But how are you going to document it when they ask you for the documentation. Are you going to send taxes in or a PNL or what are you going to send, 1099?
Jeremy: I don’t know. I haven’t cleared that out.
Mike Rockwood: That’s why it’s kind of nice to be applying right now ‘cause you don’t have to send your taxes and you can just send a PNL and a 1099 and just – do you get a 1099 or how do you get paid?
Jeremy: Yeah, well I have a few 1099s, but one of the companies where the bulk of my income was coming from, I haven’t got a 1099 from them yet.
Mike Rockwood: Sure, sure.
Jeremy: So I don’t know how to –
Ryan Rockwood: So taxes are probably going to be the biggest thing.
Mike Rockwood: Yeah, but see what’s so handy about that is that you can just show your 2008 income “as best you can” and then you just want to make sure that the numbers line up. That you have a DTI that is in the 60 range, that’s perfect. And that you have monthly budget that is what I call stress. In other words, at the end of the month you really don’t have any money.
Jeremy: So DTI, so 60% based on – actually it’s an option not to make them, so it’s calculating the DTI based on the higher payment, not the [Inaudible – 00:26:56] payment?
Mike Rockwood: Yeah.
Jeremy: Is that what I should be doing?
Mike Rockwood: Yeah that’s fine. Are you kidding? You’re going to get a modification in a minute. You’re biggest challenge is to get a killer modification not just get a modification.
Jeremy: Yeah the only thing is Aurora Loan Servicing, I was with Green Point right and then they sold off,
Mike Rockwood: Yeah.
Jeremy: They sold other old pay stuff to Aurora or a lot of it. And they’re like – their investor guidelines seemed to be one like one of the worse (laughs).
Mike Rockwood: Yeah. Although I had that good luck with Aurora and in fact I was trying to work with them today. I couldn’t believe that I couldn’t get through to them today. I don’t know what their deal is today.
Jeremy: I mean just in terms of what I was looking on like loansave.org and some of those bulletin boards.
Mike Rockwood: Got you.
Jeremy: Like I heard nothing but horror stories.
Mike Rockwood: Well keep in mind though that they resold them to a number of places so you don’t know for sure that you’re – I mean their servicing for people all over the world.
Jeremy: So the way to find out, I may go to directly to [Inaudible – 00:27:54]
Mike Rockwood: No, I don’t think you’d have any luck with that but there’s a few like GMAC, Litton, Aurora who really, really – just their MO is tough, tough. You know what I mean? They’re not like Wells Fargo, Countywide, Bank of America where they talk politically correct. You know what I mean? Even their voice recordings are politically correct. We look forward to helping you. They respond to every call, they follow-up and make sure you got all the answers. So yeah, Aurora is you know they have an attitude and so does Litton and so does GMAC.
Ryan Rockwood: And the other thing is I doubt too many people are motivated to jump online and tell about their fantastic experience with Aurora.
Mike Rockwood: Yeah.
Ryan Rockwood: You know you probably are going to hear horror stories.
Mike Rockwood: That’s true.
Ryan Rockwood: Yeah and its part of Lyman Brothers I think, are there going to be any significance in that?
Mike Rockwood: No, its Lyman Brother’s Bank it’s not the one of the other but part of Lyman Brothers that didn’t go away.
Ryan Rockwood: Okay.
Mike Rockwood: So Aurora is okay.
Ryan Rockwood: So let me leave you Jeremy with my e-mail for any follow-up questions for you specifically how to show these things. I know if you have one of our products we have like spreadsheets and all that kind of stuff you can auto populate but you can always shoot Mike a simple question too and we’ll try to help you out when we can.
Mike Rockwood: Right.
Ryan Rockwood: He’s Mike@60minuteloanmodification.com.
Jeremy: 60minute-
Ryan Rockwood: loanmodification.com
Jeremy: loanmodification.com
Ryan Rockwood: Yeah, the goal of the program is to change it from like a 3-month application process which most people do to like 60 minutes. Basically we say that once you get all the documents in place, we can help crank this out in 60 minutes and that’s when it gets to be kind of worth your time.
Mike Rockwood: Yeah.
Ryan Rockwood: I mean obviously it takes the bank about a month to get back you to you but you can really get the application done in 60 minutes. And for someone like you with a Neg Am and working for yourself, you just got a lot of -
Mike Rockwood: Yeah.
Ryan Rockwood: You’ve got a lot of great opportunities that you’re going to have no problem. I don’t think documenting this stuff and getting yourself a good loan.
Jeremy: I mean what I’d like to get is just like 4% on Neg Am.
Mike Rockwood: Are you kidding? You’ll get that in a heartbeat. You’ll have to get that for – ask forth for the entire length of the loan or maybe even ask them to change it into a 40 year loan at 4%. They’ll jump all over yet. They’re first offer to you will be a 5 years at 4% and then creeping back up like a 1 ½ every year back up to Fannie Mae or Freddie Mac. And then what you do is definitely do not accept their first offer ever because it is their first offer. They can do better. So ask them if they’d give it – offer you 5 years then you ask them 10.
Ryan Rockwood: Do you have our book Jeremy?
Mike Rockwood: Yeah in my book I got about 10 recommendations for additional concessions.
Ryan Rockwood: Basically there’s like a little chart there, a chapter in there on what people are asking for and getting and stuff like that ‘cause it’s kind of like when you’re going for a job application and you don’t really know how much you should ask for (laughs).
Mike Rockwood: Yeah.
Ryan Rockwood: You know another big question that Jeremy out there-
Jeremy: Another thing is they found NOD on February 2nd, so I don’t have a ton of time.
Ryan Rockwood: Yeah.
Mike Rockwood: You got quite a bit of time.
Ryan Rockwood: February 2nd, so you’ve got 90 days basically you still got another – yeah you still have at least 100 days tell you the truth.
Mike Rockwood: And you know what? You’re in a better negotiating position ‘cause they know that the property is coming closer and closer to being theirs and really they just really don’t need any more property.
Ryan Rockwood: Yeah, you’ve got an NOD, you’re in Santa Barbara, you’ve got consulting work, you work for yourself, you got a Neg Am loan and your business is now doing better. So I think this is like – this is a prime candidate.
Mike Rockwood: Yeah, stars are lining up for you there.
Ryan Rockwood: Yeah, it’s going to be a good year with your new loan mod (laughs).
Mike Rockwood: (Laughs)
Ryan Rockwood: But something I remember Jeremy mentioned a minute earlier Dad was that they’re doing this thing to him where they don’t want to talk about a loan mod until he repays.
Mike Rockwood: Yeah.
Ryan Rockwood: Okay, so let’s talk about that because specifically we had a lot of clients totally ripped off. And in fact, one client borrowed all these money from their parents like 30,000 paid it at the bank, and they’re told they didn’t qualify for a loan mod. So that’s like the leanest thing on earth. So what can he do?
Mike Rockwood: Well yes, but I did get a lot of push back when we had that one of our last calls and a couple of guys responded and want a correction about that ‘cause it is common for the bank to ask you to get to at least 90 days, only 90 days behind. And time after time I’ve had lenders tell me, “Okay, now we got to get you on the repayment first. As soon as you make 3 of the 4 payments then we will begin the processing of your mod application and that’s all well in good if those payments are reasonable. And of course they’ll ask you to make unreasonable payments. Sometimes they’ll ask you to make 25% of the arrears in addition to your monthly payment. And if you just argue your way out of that, they in fact will offer you a more reasonable payment plan. So it will be something less than your monthly payment for 4 months. And you know what? I’m not sure you can argue your way out on that one because they can of do have the right to expect that you’re going to show that at least you’re going to take steps to make a monthly payment.
Ryan Rockwood: I mean that pretty suffices.
Mike Rockwood: [Inaudible – 00:33:40] additional time though.
Ryan Rockwood: Yeah but I mean what if Jeremy is $25,000 in the hole? I mean can he renegotiate it so that they just add the $25,000 on the end of the loan? Is that correct?
Mike Rockwood: Yeah.
Ryan Rockwood: And his current?
Mike Rockwood: They’ll offer you a repayment plan Jeremy of let’s say your $15,000 in arrears. They’ll say, “Okay for the next 4 months,” and your normal payment would have been $2900. I think you can convince them to let you pay the modified payment of $1900 or $2300 or whatever you think it’s going to be for 4 months. And if you just keep asking and keep asking and escalated to a supervisor I think they’ll agree to that. ‘Cause they are driven to get some cash flow coming in on this asset.
Jeremy: Got it.
Mike Rockwood: They got to get out of that category.
Jeremy: Okay. But definitely elevated to a supervisor or a higher-
Mike Rockwood: Yeah. You do that just real diplomatically. In fact I do it on our phone tap CD. I do it with an Indymac agent. And you just do it diplomatically and pleasantly. You just say, “Listen, you know what? Thanks for your help but I’m just not getting the answer I need. Please let me talk to your supervisor?” And then they’ll tell you all the supervisors are tied up. They’ll call you back. And then they won’t and you have to call up in. But eventually they will because it’s your right to have access to management.
Jeremy: Got it, okay. What about if there’s violation, potential violations on your original loan mod?
Mike Rockwood: On your part or theirs?
Jeremy: On their part.
Mike Rockwood: On their part there are almost probably 75% chance that there were and on your part it’s about the same. So the whole TILA and RESPA violation thing I think is overblown because -
Ryan Rockwood: What Jeremy probably is responding to if you’ve heard like advertisement for forensic loan audit?
Mike Rockwood: Yeah. Those guys – there are TILA and RESPA violations on 7 out of 10 applications. It just happen I mean we were all doing way too many, too fast, cutting too many corners and so it just happens. But if you – I always man, you really don’t want to piss off Citi Bank or Bank of America or Wells Fargo, I mean these people are inviting you to modify your loan so I wouldn’t even – you don’t need to bring that up.
Ryan Rockwood: I wouldn’t go there.
Mike Rockwood: No.
Ryan Rockwood: Well the thing is that if we – the minute we do see a positive outcome from one of those, we’ll let all of our clients know. But we have never seen any other-
Mike Rockwood: No, Ryan-
Ryan Rockwood: We know that’s just a scam from lawyers and attorney’s office-
Mike Rockwood: It’s a come on to get more billable hours-
Ryan Rockwood: -taking advantage of people.
Mike Rockwood: -at their law firm.
Ryan Rockwood: Yeah.
Mike Rockwood: It honestly is because you don’t need it at this point unless you get really into a dead end on your loan mod.
Ryan Rockwood: I mean ‘cause-
Jeremy: Submit by the last resort kind of thing.
Mike Rockwood: Yeah.
Jeremy: Not my attention to pursue any litigation.
Mike Rockwood: Right. You don’t pull out your blade when the street fight starts. You know what I mean? You pull out your blade when (laughs) things get tough.
Ryan Rockwood: (Laughs)
Jeremy: Got it.
Ryan Rockwood: But I mean honestly they don’t. I just – the idea and I would love to be prove wrong in this. But the idea that a bank would ever say, “Oh gosh we have done this thing -
Mike Rockwood: Yeah.
Ryan Rockwood: -possibly inappropriate. We want to allow you – give you a super loan.” Forget it. You know what I mean? The foreclosure is really the ultimate solution. Everything is – if it comes to it, it’s all a wash. The house goes back. You’re out of the deal. So it’s not as if all the legal remedies aren’t in place.
Mike Rockwood: Right.
Ryan Rockwood: They can be – no one’s going to, yeah. So, I would love to – if anyone on the call has any experience with forensic loan audits please shoot me -
Mike Rockwood: Successful loans, yeah.
Ryan Rockwood: Yes successful ones or negative ones, please shoot me an e-mail ryan@60loanmodification.com ‘cause we’re always – we’re here in ads and a lot of those are also – from what we’ve been told lead generation services for other different companies basically wanting to cut – basically gets a couple of 1,000 from you, do a loan audit, sell your contract in.
Mike Rockwood: Ryan, do you want to – maybe we just wrap on the whole budget topic? ‘Cause we really did kind of cover it now. So maybe could I just do a quick overview of the budget topic and we can move on to hardship letter?
Ryan Rockwood: Yeah, sure. All right Jeremy. Hey, thanks so much Jeremy.
Jeremy: No problem. Thank you, guys.
Ryan Rockwood: Yeah I hope we’ve answered some of you questions and help you out. Always shoot us an e-mail and look forward to talking to you in the future and we are going to continue with the call and hopefully the – I think the questions that you asked actually pretty broad, so it’ll help everyone. We’ll go on to answer a bunch more questions here. Take care.
Jeremy: Great.
Mike Rockwood: With regards to the personal budget, we really covered all the topics but I wanted to be sure everybody heard about it. It is the most important document. The hardship letter is no longer the most important document. The personal budget is. And those are the guidelines – it takes a little while to sink in but you have to be able to demonstrate a debt to income ratio less than 79%.
Ryan Rockwood: I think many people would think the hardship letter is going to be the big issue. ‘Cause people that we talked to think, “Oh, I had lost of income.” But that’s not a real hardship. It’s something I get a lot. You know what I mean?
Mike Rockwood: No, that’s true.
Ryan Rockwood: Because they feel bad, they feel like, -
Mike Rockwood: Nobody died.
Ryan Rockwood: Nobody died. I’m not on the street, whatever. But the truth is that if you’re having trouble paying your mortgage, that’s a hardship.
Mike Rockwood: Right.
Ryan Rockwood: It’s basically a checkbox is not like – it is not any sort of -
Mike Rockwood: It’s not subjective.
Ryan Rockwood: Yeah.
Mike Rockwood: It’s objective man.
Ryan Rockwood: So anyway,
Mike Rockwood: Yeah.
Ryan Rockwood: That’s not a big deal. So I just wanted to make that point because a lot of people spend so much time thinking about their hardship letter. If you’re in our programs obviously we’ll just send you some hardship letters that we’ve had successfully-
Mike Rockwood: Well let me render a couple of things on the hardship letter. But before I leave the budget I just want to summarize. So you got to have a good – you got to know that your DTI is reasonable and by the way we do have an automated calculator up on the website now at 60minuteloanmodification.com. That’s kind of an easy way. It’s in the workbook and written form but it’s kind of fun and easy to just go to the site and in 60 seconds you can plug in your parameters, describe your kind of loan and then hit the calculator button and it gives you an indication of whether you’re likely or in other words unlikely, likely possible or highly likely – I think it calls on almost certain that you’ll get approve. And the personal budget items that goes in there are the Debt to Income Ratio, and then your discretionary cash flow, so that personal budget I guess I just – my point is that that’s the really important document.
Ryan Rockwood: Well, yeah I don’t know. I don’t have a personal budget myself. I mean roughly in my head I do but the idea of putting down a budget on paper and sending it on someone, I’d rather I don’t know chew on broken glass personally.
Mike Rockwood: (Laughs)
Ryan Rockwood: How-
Mike Rockwood: No, but this has not to be an indication of how you manage your money or how you budget every month. This needs to be an indication that you have enough cash to pay what they consider the cost of living as well as cover your debt. So,
Ryan Rockwood: Okay so someone’s calling to say okay I need to do a budget. What do they do? I mean I know if they buy one of our products they get a spreadsheet, it specifically says how much do you pay for this and you just fill out spreadsheet.
Mike Rockwood: Yeah.
Ryan Rockwood: But what else can you do? Do you just, do you go to your bank? ‘Cause I know the banks will give you some sort of guidelines there about what they want to see?
Mike Rockwood: Yeah. See that’s what’s tricky. I never advice people to call – first of all you have to call your bank right away when you’re going to do any kind workout but you never want to call the bank until you have done the budget and written your hardship letter and withdrawn funds from not bank of course. So there are things you need to do. But they should only take a day to do.
Ryan Rockwood: Well you know maybe we could do is maybe we could put our spreadsheet up for a limited time just for the callers on this call, the budget spreadsheet?
Mike Rockwood: That’s good, yeah.
Ryan Rockwood: And they could download it?
Mike Rockwood: Yeah.
Ryan Rockwood: So what we’ll is, you know obviously the full working version, you know the live excel spreadsheet is with all of our products. But what I’ll do is we’ll put it up at 60minuteloanmodification.com/budget.pdf. And that will allow you to – we’ll just have that up for a day or 2. So jump on – and I won’t have that up probably for another like 10 minutes so give me a second on that.
Mike Rockwood: Yeah, but Ryan don’t you want to put it up as an Excel as an active spreadsheet? If you put it up as .pdf then they can’t.
Ryan Rockwood: Yeah, you know but that’s part of our -
Mike Rockwood: You can’t do it?
Ryan Rockwood: I don’t have the live version here. I just have the pdf.
Mike Rockwood: Right. Well they can put it on Excel.
Ryan Rockwood: Yeah. And obviously -
Mike Rockwood: Recreate one.
Ryan Rockwood: -it comes with the product, the live version but yeah, this all we have is a pdf here, the [Inaudible – 00:43:27] has the disk with the live version on it.
Mike Rockwood: Okay, shall we jump back to the hardship letter?
Ryan Rockwood: Okay, let’s do it.
Mike Rockwood: Okay now hardship letter is important for one thing only. When you’re application hits the customer service department. Before it even gets to the lost mitigation department, a clerk who probably is no older than 20 years old and probably has had no more than 3 hours of training will crack open the envelope and go to your hardship letter and read it and take out their checklist and see if you mentioned any of the hardships that are on the checklist and if you do and you tell them reasonably that you have that hardship then she checks it off and nobody ever cares again. So the samples that I have in the workbook, the 60-Minute Loan Modification Workbook, honestly they are 150 to 230 words long, they’re always handwritten and they accomplish, they answer 5 questions.
Ryan Rockwood: Personally, I go for like the 4 pager handwritten ones. You can’t read but -
Mike Rockwood: Yeah, but honestly, they just don’t care. I mean here’s my point. You need to connect with them by handwriting it and by being personal. But you need to go into when the illness began and how bad the sores were and how -
Ryan Rockwood: (Laughs)
Mike Rockwood: (Laughs) you know what I mean? So it really needs to be brief.
Ryan Rockwood: And it doesn’t have to be horribly original either.
Mike Rockwood: Yes. Good point.
Ryan Rockwood: Early on when we started doing this, we would help our clients out and obviously we’d kind of interviewed them and take some time and write this college level paper on their hardship. And I don’t know it never came back graded with -
Mike Rockwood: They were never with gold stars yeah.
Ryan Rockwood: They just got accepted. So that’s the other thing. You just have to figure out where in the traditional hardships does your hardship lie? Call it one of the traditional ones. And what are traditional ones there? You want to go through those questions?
Mike Rockwood: Yeah, yup.
Ryan Rockwood: If you’re not ready I can just keep talking. But-
Mike Rockwood: I’ll get them. I’ll get them here. But there’s the ones that you would expect, divorce or separation of course, lost of income, reduction in income and that’s the one that kills me is I haven’t talk to anybody in this whole loan modification thing we’ve been doing for 8 months now that hasn’t had a reduction in income. I mean everybody is affected by it – half the population has had a reduction income, death of spouse or co-borrower or death of a family member that cause financial stress, illness or military service. Those are the 6 that are I mean routinely accepted. So if at all possible use one of those words to describe your hardship. Now there really are several tips that I give you about your hardship letter that I think are really critical. One of them is always handwrite it because you’re trying to make a personal connection. Next one is don’t spent time calculating the specifics of your modification, interest rate or length of time or how to handle all the arrears, etc. What I recommend is that you just really clearly ask for a payment.
Ryan Rockwood: You’re saying with the hardship letter?
Mike Rockwood: In the hardship letter. You state very clearly this is the amount of money that I know I can make without a doubt on time every month for the foreseeable future. And then let them figure out how to -
Ryan Rockwood: Now the advantage of that it’s a lot easier. You don’t have to figure out the percentage.
Mike Rockwood: Well it’s easier and also you don’t want to put them in a box. They only have certain options. Their investors have given them certain options of ways that they can handle the various loans that they’ve got. So, just tell them the money that – I say you tell them, I need a $1,000 a month relief or you tell then I’m into a $1400 a month payment. I know I can make that and of course they’ll never offer that you but they’ll get close to it. But they’re really are 5 questions that the hardship letter answers. The first one is what changes or events have occurred since your loan originated that cause you to have difficulty making your monthly payments? And that’s the key one. So you want to real clearly, I lost my job or my hours were cut back or my husband and I separated.
Number 2, how did this impair your ability to make your mortgage payments? So then obviously you got a link what happened to how it hurt your ability to make your payments. And then number 3, when did the events occur? And you got to be really clear on that. And then number 4 and 5 are a little bit of a trap. Number 4 is, do you anticipate improvement in your financial situation? If you say, yes, I just got a job and my income’s back up. They will offer you forbearance or a deferment or a repayment plan to get back on track. If you say no, I expect I will never get a job like that again. They say, “You know what? We might as well proceed with foreclosure with this person because they don’t even believe that they’re going to be back.” So it’s a little bit of a trap. The best answer that I love to get from clients is when they tell me, “Mike, my doctor says I should be able to go back to work in 3 to 6 months.” Or they say, “Mike, I’m interviewing every day and I expect soon to be able to get a part-time job in my field then I hope to build that up to a full-time job within a year.” So I always think that 6 months to a year from now that you’re going to start out of this problem, that’s a good way to say it. And then number 5, how much do you need in monthly budget relief? So those are the 5 questions. And again, state real clearly. Now I always advice people to use this formula to figure out how much to ask for if they’re not sure because it is important to ask for realistic modifications. You also want to be aggressive but you don’t want to ask for things that they just can’t do. I always take the amount that is owed and I multiply it times .055, that’s 5 1/2%? And the reason I do that is because 4% is a loan mod amount interest rate is handed out pretty routinely and if you take a 1 ½ to cover your taxes and your insurance, then that’s probably a pretty reasonable amount to expect. So you take that .055 times the amount that you owe and then divide that amount by 12 so you’ll see your monthly payment. That’s a good one to ask for if that satisfies you, if that’s good enough. If it’s not, ask for what you have to have. You’re more likely though to get a short term fix if you ask for more than that. But that might be just fine for you too.
Ryan Rockwood: Okay, well we just use some math so we probably lost half the callers.
Mike Rockwood: (Laughs)
Ryan Rockwood: (Laughs) So we’re talking about the hardship, the personal budget was a – what other thing you wanted to hit in regards to the documents?
Mike Rockwood: No that’s – I think that’s good to cover those 2 areas tonight.
Ryan Rockwood: Let’s then jump into our experiences this week.
Mike Rockwood: Okay.
Ryan Rockwood: I do want to mention to all the callers that the budget document is up. It’s at 60minuteloanmodification.com/budget.pdf. Okay so jump on there, download that if you haven’t already for sure get our free CDs like 5 bucks shipping and handling and it’ll give you the full story and all kind of good stuffs. All right, Mike what have you been seeing this week? What have you done this week and good and bad?
Mike Rockwood: Yeah, okay. So every day I do on phone I’m working with probably at least 4 clients every day. So I’m really in the loan mod business every day. One thing that I emphasize to a client this week that I thought he actually mentioned that to everybody on the call is what I called being on the bleeding edge. The rules for loan modifications are being written on the fly very, very much so. In other words, you don’t see many principal reductions but shame on you if you don’t ask for them because you see some -
Ryan Rockwood: And you’ve gotten some.
Mike Rockwood: I’ve (laughs) got because I asked for it. I don’t believe I got that one.
Ryan Rockwood: Yeah.
Mike Rockwood: On my own second mortgage on an investment property. And most people would say that just can’t happen.
Ryan Rockwood: ‘Cause it’s not like something we’ve only heard about I mean -
Mike Rockwood: Right, it actually happened for me but my point is that get out on the bleeding edge because what is not even – not common place now maybe in 3 months, in other words, we may be able to see a lot of principal reductions in the next 3 months. We may be seeing 2 and 3% loan mods, so let’s get out on the bleeding edge and get the very best mods we can, not even on the leading edge. We want to be on the bleeding edge and the only way you get there is by understanding how to negotiate after you get your modification offer. And I always, always counsel folks and it’s real clear in the workbook the forms that I’ve got there and the faxes and you can hear us do it on the CDs is immediately upon getting that mod offer you, at you, send back a qualified written request that is in writing, never verbally. You send back a request for a complete itemization of all the fees that you will be charge for this modification.
Ryan Rockwood: Why don’t you comment on that ‘cause that’s something that we basically recently have been hearing more about, right?
Mike Rockwood: Well yeah, the thing about the fees that’s kind of disturbing is that they had been kind of hiding the fees in the arrears and in interest. And then the more we started asking for itemizations, the more we realized, hey some of these folks are getting, what do I care, there’s $400 fees and sometimes $700 fees that the lenders back off on real quickly as soon as you point them out.
Ryan Rockwood: I should back up there ‘cause a lot of listeners are going to be confused. What Mike’s talking about there is basically we’re modifying people’s loans and part of the modification is usually to take a big chunk of arrears and put it on the end of the loan. And along with that we have been discovering that they have been keen to add along a lot of junk fees (laughs) into that settlement at the end there. So that’s just something we’re keeping an eye on right now. We’ve had some success in negotiating away some of those fees and we just want our clients to watch out for that because you don’t want win on one hand and lose on the other.
Mike Rockwood: Yeah. And that has been some the investigation into why some of these mortgages aren’t going – some of the loan mods aren’t going better. In other words, lasting longer, taking longer, and a lot of it has to do with the fact with all the arrears and all the penalties and some of these fees sometimes the actual payment doesn’t end up being all that much different. So,
Ryan Rockwood: No, sometimes it’s worse.
Mike Rockwood: Yeah, so-
Ryan Rockwood: I mean that’s the typical loan mod that people get offer from their banks first.
Mike Rockwood: Yeah.
Ryan Rockwood: Hey, guess what? You can pay more.
Mike Rockwood: But at least you can keep paying on that.
Ryan Rockwood: Yeah.
Mike Rockwood: Upside down house that you got. So, yeah, so that’s the point I want to make this week is that I’m really encourage people to be really aggressive even when it seems like a loan mod, a typical loan mod of 4% deal isn’t good enough for you, you still should be going after a 1% deal. Go after at 2% deal. And you just have to know how to do that after you’ve gotten your offer, just keep going back with qualified written request demanding explanations as to why you can’t qualify for one of these extraordinarily good programs that you hear about and you read about, okay?
Ryan Rockwood: All right. And then anther just quick news announcement. We’ve got J.P. Morgan Chase this week announced they opened to actual 4 Homeownership Centers in California. Did you know about that?
Mike Rockwood: Yes.
Ryan Rockwood: Okay, so good. So basically these are local Homeownership Centers you can walk in. The idea is you can sit down, discuss, face-to-face. There’s one in Glendale, one in Santa Ana, one in Ranch Cucamonga, one in Downy. So obviously for most of the country there’s going to be completely unhelpful. What do you make of that?
Mike Rockwood: Well, honestly I think these are so important. That first Indymac meeting that I went to that public gathering? It just breaks the ice to have 8 persons from Chase on the phone with you calling their headquarters; honestly they can become your advocate. It’s like you just shouldn’t miss the opportunity to see a human face-to-face and tell them your story and try to get some assistance. And if listen and listen and listen they’ll give you insider tips like crazy.
Ryan Rockwood: The other thing what will you learn the hard way? I’m realizing a lot of people hadn’t read the book yet. You can’t just go to them and say, “Hey, I’m having a problem. Will you please help me out?”
Mike Rockwood: Right.
Ryan Rockwood: Well, you did that kind of your first time waited in line and they said, “No.”
Mike Rockwood: Yeah.
Ryan Rockwood: Isn’t that right?
Mike Rockwood: Yeah.
Ryan Rockwood: You get real earnest about it and they just said, “No.”
Mike Rockwood: No that one I started over 3 times.
Ryan Rockwood: So it’s important to do this education before you go to a center like that.
Mike Rockwood: Yeah. You want to go in fully knowledgeable about what the outcomes could be and then get as much assistance as you can to make it happen for you.
Ryan Rockwood: Okay. Another little announcement here for our callers, I’ve just put up another great resource. We have an article headed for foreclosure it’s called. Here’s what to expect. This is an amazing article that just been published and I’m making it available to everyone here on the call. It’s at 60minuteloanmodification.com/foreclosure.pdf. Now foreclosure is spelled foreclosure.pdf and this an article I think we found from the L.A. Times that’s just fantastic, kind of a blow-by-blow, day-by-day what’s going to happen repayment plan Day 1, Day 2, Day 3 very straightforward. Something we recommend everyone reads and I know a lot of people are saying, “Well I’m not going to foreclosure.” Well that’s fine. But you still do need to know the process. It just helps in your negotiation.
Okay, I’ve got a couple of clients’ questions here. Are you ready to take the feel?
Mike Rockwood: Yup.
Ryan Rockwood: All right. Question number 1 coming in from our website, if you aren’t aware, you can also go on to the teleconference website and put in a question there. I had my loan modified last year and just accepted whatever offer was made at that time. This person says, “My loan was 10.5 that mod was 8, now I realized I should have tried for better terms and I feel like I was taken for a ride. The company now is not entertaining my proposal for further modification saying that if I cannot do it, I cannot do it so soon after.” So the question here is, can I now say that at the time of the first modification I did not know that I had to accept whatever terms were offered?
Mike Rockwood: Yeah, that’s just wrong information and I have a practice that I think is good advice for life as well as for loan mods and that is if you don’t like the answer that you’re getting ask someone else (laughs).
Ryan Rockwood: Yeah.
Mike Rockwood: And honestly, it’s as simple as that. I would just dial back and ask the question again and if you get that same answer then just say, “You know, would you mind if I talk to you supervisor?” I mean of course, he’d mind so don’t say that.
Ryan Rockwood: Yeah.
Mike Rockwood: Say I really need to hear that from a supervisor ‘cause that’s just flat out wrong information.
Ryan Rockwood: Well I mean we have heard some – now here she says, I’m assuming it’s a she I guess. This person says they did it last year. Now we don’t really know if that means 2 months ago.
Mike Rockwood: I see. That could be. Yeah.
Ryan Rockwood: You know what I’m saying? If it’s a year, we know that that’s wrong.
Mike Rockwood: Yeah.
Ryan Rockwood: What about 3 months or something like that?
Mike Rockwood: I don’t know that it’s true but the lenders say that they won’t consider them if they’re less than 9 months old. If modifications are less than 9 months old or new loans left in 9 months. But I would -
Ryan Rockwood: Have we had any recent -
Mike Rockwood: No.
Ryan Rockwood: Have we had any actual experience with that?
Mike Rockwood: No I haven’t fix or modified any that were less than that. So I don’t know that that’s not -
Ryan Rockwood: Have you tried?
Mike Rockwood: No.
Ryan Rockwood: No. We just haven’t been in the situation because it’s still new.
Mike Rockwood: Right.
Ryan Rockwood: We’re still on the cutting edge of things here.
Mike Rockwood: Right.
Ryan Rockwood: So, talk to us again in may be-
Mike Rockwood: 6 months (laughs).
Ryan Rockwood: -6 months yeah. And we’ll know for you. But what our strategy would be in this situation is I don’t know what are you suggesting? Would you suggest she prepare the whole packet and just send the sucker in?
Mike Rockwood: Yeah, and you know what? These days, almost all the banks, at least the ones that are modifying hundreds and hundreds of loans are prequalifying. So I would call in for a prequalification knowing full well that this information that they just gave there and just saying, “Listen, I’m ready for – I need modification and-
Ryan Rockwood: With that interest rate?
Mike Rockwood: Honestly, it’s just inconceivable to me that they won’t get a modification.
Ryan Rockwood: Yeah, now it’s important not to call in though, when we say call in, it’s important that doesn’t mean just get on the phone and hope for the best. You got to read the book. What chapter is that that we talked about getting ready for the interview?
Mike Rockwood: That is in Chapter 6.
Ryan Rockwood: Okay.
Mike Rockwood: Right where we talked about -
Ryan Rockwood: So the point is at least get yourself educated. You have to know why they’re – it’s not exactly and it’s not rocket science but its-
Mike Rockwood: Well no but you got to have the street smarts right?
Ryan Rockwood: Yeah, it’s not exactly so obvious what you’re going -
Mike Rockwood: Okay the 3 things that I recommend that everybody does before they make that call is I recommend people listen to my free CD because you get more comfortable with it when you hear somebody who has done it a number of times and hear you know what I mean what they say and so it’s free.
Ryan Rockwood: It gets so emotional too.
Mike Rockwood: Yeah.
Ryan Rockwood: Because you just -
Mike Rockwood: Yeah.
Ryan Rockwood: -not the only one, your story. No matter how remarkable your story is or how bad it is, it can be put in a box pretty easily, your lost of income, lost of job something.
Mike Rockwood: Yeah.
Ryan Rockwood: Sickness or illness -
Mike Rockwood: The first thing you have to do is listen to that CD, it’s free. Secondly, they should withdraw money from that lender. Now if their lender is Wells Fargo and they have $3,000 in a checking account and 2 in a savings account. I’m telling you they should get that money out of there.
Ryan Rockwood: Especially if they have $50,000 or something like that.
Mike Rockwood: (Laughs) yeah but any money should be taken out of those accounts. Don’t close the accounts but take the money out -
Ryan Rockwood: We learned that the hard way.
Mike Rockwood: And then thirdly, they should prepare those 3 documents in Chapter 5. They really have to have their budget prepared, the personal balance sheet prepared and their hardship articulated.
Ryan Rockwood: Okay.
Mike Rockwood: Or written. And so then get on the phone and call for a prequalification and refuse to enter your information online, only say it verbally. The beautiful thing about that is, you can change it next month if you – or next week if you learned that something you said was incorrect, unacceptable like you life insurance payment or something like that. So that’s what I recommend that this person do Rock.
Ryan Rockwood: Okay and we’ve got a whole Chapter on that, on how to prepare for that.
Mike Rockwood: Yup.
Ryan Rockwood: That’s one of the other tips that we put in there. A lot of the banks now are suggesting that you go online and you fill something out and we’re saying that that’s not the best situation because we’d had to start over several times (laughs) and it’s always nice to feel to start over and we have found that it’s easier if you haven’t put stuff in writing, so just one of those tips from the book. Anyway to handle that is just say you don’t have computer access.
Here’s another question coming in from a caller. Can a bank threaten to foreclose while I am in the middle of the loan modification? Want to take care of that one?
Mike Rockwood: Yeah, absolutely. The loan modification doesn’t do anything to the foreclosure process. What our experience is though is that the banks will halt the final sale; you know the culmination of the foreclosure process. And what a lot folks don’t recognize is that the foreclosure is actually pretty well designed to protect the homeowner and you have plenty of time during the foreclosure process to work out a good solution with your bank and so you need not be concerned that the process continues during the loan modification. You just have to be real clear with the bank that they intend not to serve you with a Notice of Trustee Sale or go through with the Trustee’s Sale. Now we had a client just this past week who was only 10 days away from Trustee Sale when they got us involved. And because they went – they bought our Elite Express Kit which actually gets us on the phone with their lender you know like that minute, we were able to clarify with the lender that they are in the process and just about to submit a loan modification application. And the lender agreed to a 30-day suspension of the Notice of Trustee’s Sale but the foreclosure process continues.
Ryan Rockwood: That contract is not a big deal really.
Mike Rockwood: No, it is.
Ryan Rockwood: It’s a bigger deal to the person ‘cause they never gotten through. It sounds terrible but to us it’s just -
Mike Rockwood: No.
Ryan Rockwood: And we’re comfortable, and it also sounds bad I will give you a 30-day extension ‘cause that’s all you’re going to get. And that sounds horrible but we know that you call every 30 days and you’re going to have 30-day extension. That’s just part of the process.
Mike Rockwood: Yeah.
Ryan Rockwood: Okay, here’s another one. What are the average fees payable to the lender for loan modification? Since I’m doing the modification myself, how much do I have to cough up? Now I’m not quite sure what this question is, what are the average fees payable to the lender for modification? Of course, the modification itself doesn’t typically cost anything.
Mike Rockwood: Yup.
Ryan Rockwood: Right. So I guess the question would – I mean maybe this person is considering going with a loan modification company or something.
Mike Rockwood: Or maybe they just think that there are some fees.
Ryan Rockwood: Okay, yeah. Well there’s non-appraisal, there’s not a broker fee, there’s not the loan origination fees -
Mike Rockwood: Escrow -
Ryan Rockwood: Yeah, all the stuff that happen when you got the home.
Mike Rockwood: Yeah. So no, this is a very inexpensive changing terms and you shouldn’t expect to pay any fees. Now most, most of our clients end up going late and so you do get a penalty, some penalties and some interest rate, you know charges on that extra interest rate. So there are some additional costs but there should be no fees.
Ryan Rockwood: And so where does that money go? Do they usually tuck that on the back of the loan then?
Mike Rockwood: Yeah.
Ryan Rockwood: Okay so,
Mike Rockwood: Almost universally.
Ryan Rockwood: So typical loan mod, people aren’t going to be coming out with money out of their pocket.
Mike Rockwood: Yeah, nothing.
Ryan Rockwood: Okay. So the question is, since I’m doing the modification myself how much do I have to cough up? The answer is none really I mean you’re going to have to educate yourself and whether that’s having someone do it for you for $5,000 or $2,000 or whatever they’re charging. Or whether that’s reading a book like ours and doing it yourself or something like. Really it’s just the cost of your time and it’s an investment really. It’s going to pay off over the next I guess could be 40 years.
Mike Rockwood: Right.
Ryan Rockwood: I mean you have one of your loans adjusted to a 40 year loan.
Mike Rockwood: Right.
Ryan Rockwood: And it was a 30-year loan.
Mike Rockwood: Yeah.
Ryan Rockwood: So it’s a pretty good ROI on that. All right, now let me just open it up to the callers. We’re just about to wrap up the call. I want to make sure if we’ve got any lingering questions that everyone gets a shot. Hold on one sec here.
Mike Rockwood: Do you think you can get in Rocky? (Laughs)
Ryan Rockwood: I don’t know. Okay everyone’s un-muted. So if you’ve got a question just speak up and we’ll try our best to handle it.
Mike Rockwood: Man.
Ryan Rockwood: Don’t be shy guys. The conference here says that we’ve got about -
Mike Rockwood: Got what?
Ryan Rockwood: Got about 70 callers here.
Mike Rockwood: That’s amazing.
Ryan Rockwood: Let’s see. We’ll just give everyone a couple of minutes. Don’t be shy, just speak up. You just tell us your first name and your question. All right then, what we’ll do is -
Mike Rockwood: Ryan I am so excited about the guess that we were supposed to have on tonight. And I really want to schedule that for our next CCM because the whole notion of having a strategy going into a tough FICO time.
Ryan Rockwood: Why don’t you start over and let everyone know. Let’s make an announcement right now for our guess for our next time.
Mike Rockwood: Let’s do it. Next 15th of next month, Rusty I know will agree. Something must have come up to goof him up ‘cause he was really looking forward to this. But he will be with us next week and what we’re going to be working with him on is further building up our Chapter 9 in our book where we talked about the implications to your FICO score and how to recover quickly. Now Rusty is the President of Crednology which is a very reputable firm in credit management. And he always, he’ll want to go great lengths to describe the difference between credit repair and credit management. But it’s really part of our notion that we need to put in play when you start down the loan modification or the short sale or the foreclosure path. A strategy for how you’re going to minimize the damage and kind of contain it to a certain area and have a strategy for how you’re going to get those, you know, the credit debts down below 30% and how you’re going to put in place all the 7 good credit habits that we have in our book. How you’re going to put those in place for a speedy recovery because if you’re going to take a 100 or a 200 point hit because you have to go late for 3 or 4 or 5 or 6 months. Some of our clients are even late 7 or 8 months, you know, you want to dig out of that. And you want to see that you can get out of it in 6 to 24 months and if you’re really heads up about it you can.
Ryan Rockwood: And that’s actually something that we actually haven’t talk about explicitly is that that’s one of the main obstacles we see that people do in a loan mod that idea that’s been built up over the last 10 years that your FICO score is really reflection on your worth as a human being.
Mike Rockwood: (Laughs) Yeah.
Ryan Rockwood: And so people are – they’re as proud of their FICO score as they are with their kids.
Mike Rockwood: Yeah.
Ryan Rockwood: And it’s just a different mentality shift is that they will suffer for years and years and years to maintain the perfect credit score that no one cares about. And so what we’re going to be talking about to a lot of people is they say, “Well I can’t do a loan modification. I don’t want to improve my life because it would mean that my credit score, in other words, my image of myself would be diminished.”
Mike Rockwood: Yeah.
Ryan Rockwood: And what we’re saying perhaps temporarily.
Mike Rockwood: Yeah.
Ryan Rockwood: Perhaps temporarily. Here’s a strategy to go in make this changes, make your life better and come out of it with a rocking credit score. And so that’s something that we’re going to be addressing in the future on these calls. Let me just go over a few things. I want to remind all our callers that we provided several free resources for you on this call. And they will be up for the next couple of days. One is a budget document and that’s at 60minuteloanmodification.com and that’s 6-0 for 60minuteloanmodification.com/budget.pdf. Also we’ve got a fantastic report on the foreclosure timeline available. That’s at 60minuteloanmodification.com/foreclosure.pdf. I want to thank everyone for joining us on this call especially Jeremy who spoke up.
Mike Rockwood: (Laughs)
Ryan Rockwood: And -
Mike Rockwood: Our only questioner.
Ryan Rockwood: Yeah. And-
Mike Rockwood: An interesting guy.
Ryan Rockwood: Only live one. And I also want to let everyone know that if – these calls aren’t for everyone. I mean pretty much of [Inaudible – 01:12:29] calls but not a lot of people are comfortable asking questions on these calls obviously and a fantastic place that they can go is our forum on our member’s area on our website. That’s 60minuteloanmodification.com/members and I think although that says “/members” I’m going to click on it right now because I’m pretty sure that the public can just come in here and just register and create a little account for yourself and you’re allowed to ask questions and -
Mike Rockwood: Well you know all the CCM guys can get in there.
Ryan Rockwood: Yeah, well all of our customers. I just think if someone hasn’t purchased the product I think they can still go on there though and at the very least you can read the answers to all the questions that other people have had. And we just launched that website but that’s a great resource to you. Yes, I’m seeing right now that it is open registration, so it says register. You just go on sign up, set a little account and you can go on and you’ll have direct access to Mike himself throughout the week. He checks that and updates that. Okay so, what I’d to do now is just go over all the things that we’ve learned on this call. We started out the call just by saying that it’s an exciting time for people with loan modification in loan modification world. It’s exciting because there’s a real, real opportunity out there right now for people to improve their life with the loan modification. And just the fact the President’s having an announcement on it this Wednesday that it’s all in the news that basically the whole country is trying to come together to put together a housing rescue plan. It’s just really exciting time and we hope that it’s going to be really financially beneficial to all of our clients and all of our listeners.
We talked about some of those specific banks that have put a moratorium on foreclosures specifically and how that can affect you. And we’ve also talked about the loan modification process itself. What we’ve been doing this week, what we do day in and day out, some of the actual forms like that hardship letter, the personal budget and some of the things you need to know. We took questions specifically about Debt to Income Ratio, about specific lenders and then we went on to answer questions from you from our callers to the website or questions I should say to the website. Now next call we’ll have – we’ll be talking more about credit management and we’re excited about because the credit hit that people take when they get in any situation is really hard for a lot of people to handle. And so it will really help people overcome their hesitancy I think to take action and apply for loan modification if we have are able to help them make a plan for how they’re going to get that FICO score back up in the future and feel good about themselves.
Mike Rockwood: That’s it.
Ryan Rockwood: All right. Thank you so much for joining us everyone. Let me leave you with Mike’s e-mail address. That’s mike@60minuteloanmodification.com. That’s mike – m-i-k-e @60minuteloanmodification.com. Also, please address any sort of technical question regarding the products or delivery or cost or anything like to our assistant Tracy. That’s tracy@60minuteloanmodification.com. I want to thank everyone for joining us. Just getting on a call on a Sunday night when you could be watching “Who wants to be millionaire?” or something, is fantastic and (laughs)
Mike Rockwood: We’re recording it.
Ryan Rockwood: Yeah so, “Who wants to be a millionaire?” He means. Anyway, thank you so much for joining us. Look forward to having you on next time and until then, all the best.
