Obamas Loan Modifications programs: Any good?

Ryan Rockwood: Welcome to the call, my name is Ryan Rockwood. I’m here with my dad who is also the author and creator of the 60-Minute Loan Modification book. And if you’re joining us online, welcome. We’re still relatively new at this. And that’s why we’re still wearing these goofy headsets, but bear with us because we’re able to put out a lot of good content usually and answer a lot of questions.

Today is about your questions. And also today, before I get – we’re just going to jump right into the questions. But if you’re new, basically we kind of went through what you probably went through as well and our income took a dump and we found ourselves in a precarious position that we never thought we would be in, right? Anyway, loan modifications ended up being a big part of the solution for us. And it was also insanely hard to get. And some ways it’s gotten easier, in some ways it’s gotten harder since then. Anyway, since then we’ve been helping people do it and hopefully we can help you too.

Now, today, I do want to make a quick announcement before we start. We do have a new promotion. We’re going to be testing. If you are on the call tonight and you would like, you are welcome to try our kit purchase, absolutely free for 30 days. And so we’ll ship it out, just send us an e-mail at questions@60minuteloanmodification.com. That’s only for tonight though. And just say the subject line I want to take you up on your offer. And what we’ll do is we’ll ship out that. You have to give me your address, obviously, give me your information and we’ll get that out to you tomorrow and you have 30 days to just review it.

So, anyway, a lot of what we do, you’ll see like a theme is trying to help people activate as oppose to procrastinate, okay. So, we want to make sure that we’re doing everything we can to try to encourage you to say “Hey, tonight is the night.” Go ahead and move forward in some way.

Mike Rockwood: And after all that’s why we call our product the 60-Minute Loan Modification Workbook because it was designed to be able to get you through that process in just 60 minutes and get you to be able to take action. We’re all about helping people and helping people take action, not sit around. This whole foreclosure thing that we’re all going through, this big wave of foreclosure, really can work out to your benefit. You can be in a better position and our 60-Minute Loan Modification product can help you.

I also want to tip you off to the fact that because an awful lot of – well they say some people are as mainly as many as 75% of the loan mod companies out there are in fact scams. Some of them, they just blatantly take your money and do absolutely no action at all. But we have introduced a product called the Loan Modification Audit by which we audit and monitor your current loan modification company. And it’s crazy. There are different ways that you can serve people in this business. But a lot of people have found a great deal of satisfaction in having us audit their loan mod company. Because honestly, they just don’t know what to ask. They don’t know which questions to ask. They don’t know how to not get in the way of their loan mod company, yet they want to know what’s the status, how is their loan mod progressing. So, we have that service.

And then we’re also about to launch our product to help you do your own forensic loan audit that is where you look at your loan process and determine whether or not your lender or the broker, or the appraiser, or your realtor, or an inspector, or anybody in the process violated RESPA or TILA laws and whether or not those violations can help you get a good loan mod or a good workout solution whether it’s a short pay or a deed in lieu, or some kind of settlement. So, we have a lot of products and a lot of services. And we should also mention that we’re just always available just for e-mail, chats, or just for phone chats. And if you go to our website, you can actually schedule a time to talk with me. That’s at 60minuteloanmodification.com/talkwithmike. I got that one right.

Ryan Rockwood: I think so.

Mike Rockwood: Yes.

Ryan Rockwood: Yes so anyway, we’re here to help and hopefully that’s exactly what we’ll do, just dumping you with content tonight. The idea is we want to just overwhelm you with value and the good thing will be, you will be amazed and so, so happy. And the side effect will be you will send us money and drove, just start writing checks.

Mike Rockwood: Without requiring any product in return.

Ryan Rockwood: Yes.

Mike Rockwood: So, just send checks. I wonder if that sound is going to be irritating.

Ryan Rockwood: Okay, we want to take questions so far. Tell us if you hate that. Tell us if you hate that going. It might really blow out the audio. Okay.

Mike Rockwood: Shall we get on to questions?

Ryan Rockwood: Yes. Let’s do it, yes.

Mike Rockwood: Are you ready? Should I jump into these that came in previously and you kind of filter the ones that are coming in online.

Ryan Rockwood: Okay, do it.

Mike Rockwood: All right, I’m just going to crash through these. Our intention is to get to at least 25 questions and you watch at least two or three of them really be just like your question because there are so many commonalities to all of our plights.

Number one, “How do I calculate if I will qualify for Making Homes Affordable Modification? Is there a precise formula?” Well indeed, there is. In fact, the President’s Making Homes Affordable Program is very, very clear on the qualifications and let me run right through them. Now, we call the president’s program the Making Homes Affordable Program A-paper in terms of loan modifications. Because if you can qualify, it is absolutely the best modification you will get. The entire program, the Making Homes Affordable Program and the modification part of it, the HAMP, Homes Affordable Modification Program, has become the model and the guideline that every institution is using for loan modifications. And it’s real clear as to whether or not, you will qualify. First of all, the loan you are talking about must be your first mortgage. It must be on your primary residence. It must have been granted earlier than January 1st of this year. You must …

Ryan Rockwood: Less than a certain amount of money?

Mike Rockwood: Yes. Now it starts to get a little bit trickier. Your front end debt-to-income ratio, and I’ll take a little bit time to explain that, must be more than 31%. That includes the payment on this mortgage: Principal, interest, tax, insurance, and homeowner’s association dues. Add those all together, divide that number by your gross household income. If that number is higher than 31%, then you qualify.

Now, lenders are compensated $1,000 to $3,000 to work with you to try to get your loan down to 31% of your gross household income, that front-end DTI. And they do that using three tools. The first one is a reduction in your interest rate. The second one is going to interest only. And the third one is extending that loan for as much as 40 years. And they use the process that they refer to as a waterfall or a cascading calculation. So, that they only take each of those tools as far as they need to go. In other words, if they can hit 31% by taking your interest rate down to only 3%, they’ll stop right there.

If they have to go down to zero and go to interest only for like three to five years, they’ll do that. If they have to go even further and extend the amortization of your loan out to 40 years or if they have to get to 32 years and it’s enough to get your payment down, then they’ll do that. So, you’re never exactly sure what kind of an offer you’re going to get but it is the best program. So, that’s how you figure it out and all the other guidelines are just like all the other loan modifications. Obviously, you have to have adequate income and you have to have cash flow at the end of the month on your monthly budget that is near zero.

Now, Ryan and I always used to say that it can be as negative as a thousand dollars and it shouldn’t be more positive than $500. But in the last couple of weeks, we’ve gotten intense pressure and we probably are on the phone with lenders probably on average about three or four times a day each of us. So, over the last couple of weeks we can tell you there has been a renewed interest in getting people in their prequalification phase to the point where their budget is zero. So, that’s our advice to you. Okay. That was question number one.

Number two. “Will lenders agree to modify my loan even though we still have a lot of equity?” The answer to that is an emphatic yes. There are two things that really surprise people. It doesn’t matter how much your home is worth and it doesn’t matter what your FICO score is. Forget about those in loan modifications. As strange as that seems, you don’t have to be upside down. You can have a lot of equity in your home and still qualify for a loan mod, Obama Loan Modification, even.

You know what? I forgot to mention other qualification or other guideline is that you have to have a hardship. I guess I just assumed everybody knew that. You have to have a hardship in order to qualify for a loan modification. Hardship is pretty broadly defined as an increase in your expenses or a decrease in your income. So, think about it. Probably about 80% of us qualify on the hardship.

Ryan Rockwood: As you could see we’re joined by a quarter of another Rockwood right there.

Mike Rockwood: Hello, Louie.

Ryan Rockwood: Well, if you’re online you could see. Okay, and the other thing that I want to say when I heard you talking was that if you’re new, don’t be put off by the idea of hardship. Okay. Hardship sounds so serious. If you don’t have cancer, don’t fret. You probably still have a hardship. Okay. So, let’s move on to the next question.

Mike Rockwood: This is question number three. Can you go ahead and take one Rock?

Ryan Rockwood: Yes.

Mike Rockwood: We got this one here from this.

Ryan Rockwood: Okay. Okay we’re looking at – oh, this is an intense one. I don’t know if we’re going to be able to answer that one. Let me see here. We’ll go to – we can answer but not without a little work.

Mike Rockwood: I’ll take this one. Ready?

Ryan Rockwood: You know what? Yes, I have one. No, go ahead.

Mike Rockwood: Oh, we got a problem through this, right? Okay. “I’m afraid the loan mod will just be a temporary solution. But it’s tempting to get the monthly relief. This place is,” I’m assuming this guy is saying this is worth about – is his home, “is worth about $100,000 less than we owe on it.” And so his question is, he thinks that the loan modification would just be a temporary solution. It sounds more of a statement. So, he is correct and loan modifications, by and large, this whole round of loan modifications, I hope everybody is aware, are just temporary solutions. After all, a reduction in your payment does not deal with the actual problem.

For instance, the home that I own here in Southern California, I owe $100,000 more than it’s worth right now, the home that I live in. Now, that’s a problem. And the fact that the lenders, Indymac and National City, have made it an acceptable month to month, made it acceptable and I can afford to live here, doesn’t really deal long term with the problem.

So, yes John, you are correct. However it is tempting to get this relief, number one. And number two, it’s pretty painless. It’s pretty easy and it’s extremely inexpensive. In fact, if you guys have checked out our website, our kit, which if you ask me is the way to do your loan modification because it really is that simple. You should do it yourself. It is a $147. And Ryan just announced to you that in fact, we’ll ship it to you and you just send us the money after 30 days if you’re pleased with it. Because I’m telling you everybody’s going to be pleased with it. Everybody has always been pleased with it.

So yes, a loan modification is a temporary solution. It puts off foreclosure for several months. It allows you a lower monthly payment so that you can stay in the home for some period of time. There’s a lot of our clients just really want a delay. They want to stay where they’re at for school reasons or for whatever reasons, for proximity to work or just because they love the home. They want to stay put that they know long term they can’t. So, a modification is a great short term solution.

Ryan Rockwood: All right.

Mike Rockwood: Will my lender ignore the fact that my income is way lower than when I applied? My stated income, the say (was well sort of exaggerated). How can I avoid that? The good news is, Nancy, your lender won’t even bring it up. I don’t know how many loan mods we have actually done but it’s certainly, well, it’s more than a couple of 100 and less than 500. And just in the mastermind groups that I belong to nationwide, I’m telling you this is like a non-issue. But I understand your trepidation. You kind of want to leave us sleeping dog lie or a lying dog sleep or you don’t want to lie to a sleeping dog that knows old tricks, something like that.

Anyway, your lender will, in fact, ignore the fact that your income on your stated was much different than it is today. Absolutely 100% can guarantee it. I can’t 100% absolutely guarantee that they won’t someday pursue you for that but it will have nothing to do with your loan modification.

Ryan Rockwood: Okay, I got a question here online. I have a mortgage with Saxon. Someone has suggested that they do a loan mod audit. And this person is interested. Should I do that? Is it a good value and how much should I charge? And that is from Terry. That’s a hard one, right? Because Terry, we used to be really, really down on …

Mike Rockwood: Forensic audit.

Ryan Rockwood: Forensic audit, yes. But, a couple of things happen. It seems like people start to get more realistic expectations of them like you’re not going to get your house for free, in other words. Also, it seems like the banks on some loan modification are just not being reasonable. I mean surprise, surprise. And more and more we’re looking into the possibility of throwing as much at them as we can. And so a forensic loan audit, it goes along those lines. Now, you should have the – you’ve to have a couple of things straight. Number one, you’re not going to get the home free. Have realistic expectations. You’re not going to get your home for free, okay.

Could it be great leverage in a loan modification? Absolutely. Could it possibly lead to a principal reduction? It could. So, I guess I would have to know more about you and your financial situation. If you are two weeks from trustee sale and you have nowhere to go and you could borrow this $2,200 to this audit, and so on I would say absolutely not. Do not do it. But if you perhaps haven’t paid your home in four or five months, you got some money, you’re stashing that money away, and you’re looking at a strategy, well I doubt a month mortgage is going to be less than $2,200. So, it really is a small risk. In the future we will have some offerings like that here at 60-Minute, all right.

Mike Rockwood: Hey, Ryan, could I say that what we’re developing is a recommendation to gradually escalate the level of anxiety that you interject into your workout solution.

Ryan Rockwood: Well, that’s a good point. You might try the loan mod first, right?

Mike Rockwood: Yes.

Ryan Rockwood: You might try – yes.

Mike Rockwood: That’s what we’re thinking. Is loan mod first? Shall we say an arm’s length, a pleasant one, and then you escalate it to explaining that you understand, sort of like we know what you did last summer. We have identified through reading popularly available literature in a qualified written response. You can write to your lender that we know or we suspect or we’re nervous about these particular violations. And then we take the escalation process hotter and hotter and more intense, and more direct, and more legal as the process goes on.

But our belief is that indeed these issues, these RESPA and TILA violations can now be more and more, as we go forward, are going to be important in getting loan modifications and even getting into legal loan modifications where it may just take your lawyer to get their lawyers to modify your mortgage. But I really like what you say, Ryan, in terms of have realistic expectations that could help you and give you leverage in your modification or deed in lieu, or short payoff negotiation. But it’s very likely is not going to result that getting your house for free.

Ryan Rockwood: Okay, Mel [phonetic] says forget the bell. It is driving him crazy.

Mike Rockwood: All right.

Ryan Rockwood: Also online, “Will an Obama loan mod work for $500,000 loan?”

Mike Rockwood: Yes.

Ryan Rockwood: Yes.

Mike Rockwood: It depends on what part of the country, right? It has to be non-jumbo.

Ryan Rockwood: Oh, really?

Mike Rockwood: Yes. At 729,000 in many states, the key is that it has to be conforming. So, it depends on where you are.

Ryan Rockwood: Okay.

Mike Rockwood: And when I say conforming, we mean conforming to Fannie Mae and Freddie Mac. Okay, “How much time do I have once I get a notice of default? I’m in San Jose.” In California and in most non-judicial foreclosure states, you have 90 days from the date that the notice of default was filed. And after those 90 days, during a 90 day period, you are encouraged to work out a solution with your lender. If after those 90 days, in fact, there’s been no solution, they will schedule the trustee sale which will take place no sooner than 21 days after that.

So, you have 90 days, then 21 days. Boy, you got to really watch the clock though. You don’t want to mess around with the notice of trustee sale. Because once they get you in that short window, boy, they got you on a hot seat. Because if they refuse to postpone, which they normally do right up into the end, they will refuse to postpone then they’ve got you so tied up in knots that you’re losing sleep, you’re fighting with your spouse, you can’t concentrate at work. So, the key is once you get that notice of default, you’re in foreclosure, so take it seriously. Be proactive.

Ryan Rockwood: All right, if you are listening please, and you’re on the chat – don’t worry about me – anyway, if you’re on the chat, it’s really funny but it’s really hard for me to read it at the same time. I think we need like a moderator for it. So, don’t ask questions on there. Just have fun, talk to each other, do your thing. Talk amongst yourself, and I’ll go through the very end. And if there are questions, I’ll try to follow it up with our next call.

But I got another one here. This is from Helene. If you’re not leading your mortgage and your rate is going increase shortly, would you recommend a loan mod [indiscernible] program, the loan is with B of A. Oh, loan mod refinance program. What are the chances they will make at a fixed rate. That’s what she’s looking for.

Mike Rockwood: Yes, there’s a very good chance of the refi program will be a fixed rate. In fact, it’s almost guaranteed. Now, the refi program though I sure would recommend – is this Helene [phonetic]?

Ryan Rockwood: There are two Helenes.

Mike Rockwood: Ryan, there are literally thousands of them. The other day we have two [indiscernible] clients. Okay so Helene – oh, man. What was the question again, Rock?

Ryan Rockwood: Refinances, you know …

Mike Rockwood: Oh, yes, refinances. Check out the cost though Helene. I mean, you got to …

Ryan Rockwood: How much and what do you mean?

Ryan Rockwood: You got to go after a loan mod first. And if that doesn’t work out for you, you get over to the refi. That’s expensive.

Ryan Rockwood: Really? They can’t charge you. [Indiscernible] must be wrapped into it, right?

Mike Rockwood: Oh yes, yes. But it’s really expensive. It’s like three to six or thousand or more to refi. Yes, that’s the whole scam.

Ryan Rockwood: Even through this? I thought that one …

Mike Rockwood: Yes, even to the president’s program. So, the president’s program allows you better leverage in terms of dealing with being upside down and may allow you to forbear some of your lost equity if you really want to do that. But honestly, I don’t think much of refi programs at this point. You should be able to, for free, get the same kind of relief. So, I really advice you to push that one to the max before you jump over to refi.

All right, here’s one Rock. “Will a loan modification hurt my credit?” No. In fact it may be the only salvation for your credit score. If you’re wobbling, you can’t make your payments, you’re missing a credit card payment here. You’re missing a mortgage payment there. And you know, I mean, missing. I mean, just like once. Once ever quarter or something, you get those dings on your credit. You got to get that straightened out. You can’t be missing payments and survive in the FICO-driven world.

So, in fact a loan modification can be the way to solve your credit score problems. Loan modifications are not reported to the credit bureaus. You may, very likely, will have to go late on your mortgage at least once and probably more than that in order to get a good modification. That’s just the way it is. But from the time you stop being late in modification.

Ryan Rockwood: Unless you are in the parameters to qualify for that Obama thing, right?

Mike Rockwood: Yes, but Ryan, even if you’re qualify for the President Obama’s Making Homes Affordable – Home Affordable Modification Program, the people who are not late are still waiting for-freaking-ever. They’re waiting a minimum of three months even though they have all these special teams at all the lenders to try to speed you through. It doesn’t happen and you don’t get any actions. So, I’m still telling people just go late. Just go late. Get this thing done. Get some of this money before it runs out.

Ryan Rockwood: It does seem like there is less and less resistance every week.

Mike Rockwood: Yes, I agree.

Ryan Rockwood: If you think it’s just us though, do you think it’s like our own progression?

Mike Rockwood: Yes, maybe.

Ryan Rockwood: Because now it seems like everyone’s like credit score, credit score, you know. As before they were just like loving it, right?

Mike Rockwood: Well, I know, Ryan and I haven’t taken on a loan modification client for the elite express program in at least three months who isn’t willing to go late because we just can’t spend four months and get lousy results and afford to do those modifications. So, that’s one of our prequalification questions is, are you willing and able to go and negotiate tough with the lender? And that means going late. Otherwise, you’re not in a good position to negotiate along.

Ryan Rockwood: Okay, here’s another question.

Mike Rockwood: All right. “What should I do before I contact my lender?” That is a great question and most people fall prey to the siren song that the lenders are singing, “Come to me. Come to me. Don’t…”

Ryan Rockwood: I have the most awesome – I have to ask if one of our clients, if I can use this recording and put on our website. It says, he called in and he said, hey, I guess I don’t need you guys because – now I’m not saying that we’re so fantastic or anything like that. I’m just saying that it’s just really funny. It’s like the bank said I didn’t need help with my loan mod, I could just call them and they sent me a loan modification. And in fact it’s more money like I was saying before. So, I’m happy. It’s really funny.

Mike Rockwood: It’s so funny. Yes, right. You don’t need any help, and right, we’re here to help. We were here to help you when we got you this loan. It’s sort of like the Wizard of Oz. Pay no attention to that man behind the curtain with his hand in your pocket. So, yes, I mean you have to deal directly with your lender but you should not do that until you are really street smart. And being street smart means preparing. And here are the things you need to prepare to talk to your lender.

First, and please trust me on this, you should transfer out of any very liquid savings account [indiscernible], any assets that you have on deposit with that lender that they can exercise their right to offset. In other words they can go into that savings account and take your monthly payment or more. So, transfer it out. Don’t close accounts. It’s never smart to close an account.

But first thing you want to do is transfer money. If you have money on deposit with Chase, let’s say you have $2,500 in a savings deposit, get out of there. Put it in your mattress. I don’t’ care but just don’t have it available to WaMu, Chase. If it’s at Wells Fargo and you’re going to negotiate with Wells Fargo, move it somewhere else. So, you got that one. Secondly, prepare your hardship and prepare your budget. You need to be really clear on what your hardship is and make sure that it’s a slam dunk, no questions asked, qualifiable hardship.

Number three, prepare your budget. Your budget has to be bullet proof. And when I say bullet proof, that means your income has to hit the target. Your debt-to-income ratio has to hit the target and your cash flow from all of your cost of living has to hit the target. So, this is not something you want to just stumble and bumble into. In fact I can’t tell you the number of clients that we get who have just talked to their lender and learned that they didn’t qualify. And then they’re all nervous about. Well, I told them this. And now you’re telling me now I shouldn’t have but I should have told them that.

So, yes, there are all kinds of errors that you can make when you first talk to them. Sometimes clients say the word bankruptcy and that’s not smart when you’re talking to the loss mitigation people. So, those are the things you have to do to prepare. And I always recommend to people that they go to my website and ask for an order, the free CD that is the 60-Minute Loan Modification Secrets. The reason I recommend that is because, number one, it’s kind of entertaining, kind of comical. But a lot of people tell me they find it, it’s pretty enlightening to hear of the stumbling and bumbling that I did and they learned from my mistakes. And they’re that smarter than when they contact the lender.

So, here’s the whole idea. You want to contact your lender when you are ready and so that you can level the playing field a little bit with them because you’re negotiating from the start. And you might as well come into the negotiations fully armed with this much information as you possibly can have. So do that before you contact your lender.

The next question, “My lender refuses to pre-qualify me on the phone as you recommend.” Tim asks for suggestions. “Is there anyway that I can get them to agree to it?” And the answer is yes. Many lenders in the last, oh say, two months, three months have stopped doing phone prequalifications and that’s too bad for us because actually, it’s in our benefit to be able to talk to them upfront and get a lot of information from them about our qualifications, have some give and take. You always learn a lot. So, I love prequalifications.

But I am having success in getting people to pre qualify me even though a lot of the banks have gotten away from it now. And the reason they’ve gotten away from it is just time. They’re just under too much pressure to process these loan modifications. So, a lot of them are short circuiting things, cutting corners, and just saying, “No, we won’t accept it. Send it in writing.”

But honestly, I have pretty good luck just talking with the loss mitigation people and asking them to give me feedback or you don’t call it a prequalification. Just talk to them and say, “Listen well, can you just listen to me for a minute and comment on my situation?” And then next thing you know they’re saying, “Well, how much debt do you have?” And then you tell them how much. You can lead it into a prequalification discussion.

And honestly very often, they’ll actually fire up the system and do a prequalification for me and I still learn a lot by it. So, try to trick them in to prequalifying you. And I don’t know actually if you demanded it, if they would comply. But you might try that as well. It’s sure a good, good process.

Ryan Rockwood: Okay, and I do want to say that we got a caller, e-mailer named Joe, who sent us like an awesome budget hardship letter critique, everything. And it may have just been a coincidence. He may not actually, you know, may just be …

Mike Rockwood: And he get at this time.

Ryan Rockwood: But if you are listening, Joe, we’re going to – let’s see, I’ll e-mail you after this and we can set up like half an hour to actually go through it all because …

Mike Rockwood: Is he ready to submit?

Ryan Rockwood: It looks like it. He’s really, really got some good stuff going there.

Mike Rockwood: All right. How about this one, Ryan? “Why do I have to miss a payment to get a modification? My lender says that’s not true.” It’s not true at all. Keep sending us money. You know, it’s in their best interest to tell you that. Don’t be naïve.

Ryan Rockwood: You know, recently, they have been playing hard ball. I am disappointed to say that we’ve been having to have clients send the money.

Mike Rockwood: Yes, and down payments as well.

Ryan Rockwood: Yes, I had someone pay like $10,000 this week, make up two payments. On the other hand, I got to tell myself they have made those payments in seven months, so it’s horrible. It sounds horrible. But the risk reward thing is really great because if you think about it, they’re going to make those payments – and if the bank – the bank doesn’t have to come through on their side, okay. They can just kind of go out to the [indiscernible] land.

Mike Rockwood: Yes, take the money and run. Yes.

Ryan Rockwood: But if they do, I guarantee we’ll be able to suck those two months back out of them on the delay taxes [phonetic] along the way, okay.

Mike Rockwood: Yes. And Ryan, another good point to make to everybody about what you’re talking about there is that, whether or not you send them additional cash really has to do with your long-term strategy. If you fully intend to keep that house, then what do you care if you make up a payment or two? It’s a payment on your house after all and it’s going to be tacked on to your loan anyways no matter what your settlement is. Believe me you’re not getting out of any of these payments. You could get out of penalties and fees.

But you know, so what do you really care? If, however, you’re not sure, in other words if you’re really not interested or not able or don’t see a way and don’t have a strategy for keeping the house long term, then you really want to think twice before you send them any money whatsoever.

Ryan Rockwood: Yes. If it is six months into the process, you have stopped paying a long time ago. You don’t have any money perhaps. You know what I mean? It’s not like you’ve been banking it like some people have. If it’s your last 10 grand, here’s the thing. No one wants to give up the house, right? But if it’s your last 10 grand, it’s kind of that – what do they say – come to Jesus moment.

Mike Rockwood: Well let’s see, food or shelter?

Ryan Rockwood: Yes. It’s like well.

Mike Rockwood: In Southern Cal, I take the food. But I guess in Minnesota you take the shelter.

Ryan Rockwood: The thing is that …

Mike Rockwood: And you can eat one of your [indiscernible].

Ryan Rockwood: Well, you go shoot something. But so then, anyway, the point being – you got to figure out – because the person, it’s the last $10,000. I mean it might sound stupid if that’s not your situation but believe me, they’re in that situation. They’re thinking of themselves. Well, you know, I get another paycheck in a couple of weeks. And if I get the loan mod, I can afford to stay in the house and this and this. You know if I get this and this and this. And it’s like if you need the whole pyramid, waterfall thing to work, any little thing, any little variable is going to throw you off. And in my opinion, it’s better to get out on your own terms. Walk with that 10 grand. If the pain has to happen, wouldn’t you rather have a foreclosure than a foreclosure not $10,000? You know what I mean?

Mike Rockwood: Hey, Ryan, what you referred to there is – I remember we use to refer to it as multiplying a bunch of numbers less than zero or multiplying a bunch of numbers by a number less than zero. Every time you multiply it, it’s getting smaller, so the chances of that one happening are 80%, and that chances of that one happening are 40%, and the next one is 75%. And so the likelihood of all this happening is very, very small. Hey, wait a minute now. Did we finish one about – oh yes.

The answer is unequivocal. My answer is unequivocal. You have to miss a payment to get a loan modification, a decent one in decent times. That means, if you want a modification, a reasonable one that actually can do you some good because apparently 50% of modifications are still ending up in foreclosure. Because the mods aren’t good enough, they just don’t put the homeowners on strong solid enough footings. So, drive for a good one. And the only way to get a good one is to be late. I still got like five from the e-mails.

Ryan Rockwood: Go ahead.

Mike Rockwood: “I’m currently attempting to sell short. Should I be doing a loan modification instead?” Absolutely. Sometimes, people who realize, fully realize that in fact they have to leave their home eventually because they’re way upside down. They just jump right away into selling it short when in fact a loan modification could get their monthly payment down near what it will cost them to rent in the neighborhood. So, that’s what I always use as a guideline.

Let’s say you can rent nearby for $1,200 and your loan payment is $2,300. Well, I always counsel people. Think about it that way. If you can modify it down to anything below $1,600 or $1,500 then just stay put. Why not? You already are there. It’s easier. And most people really like that way of thinking.

And vice versa, if you are in the middle of the loan modification and you want to begin the short sale process, don’t think that you have to throw out the baby with the bath water. You can begin the short sale process for many weeks, have it ongoing. Before you even notify the bank, what the heck, you can have it ongoing for three months before you even need to notify the bank that you want to truncate your loan mod application and in fact, sell it short. So, those two very often are run concurrently.

Ryan Rockwood: I got a good one here from e-mail by the name of P.P. Couple of weeks back I applied for a loan mod for GAMC and as requested, submitted financial analysis package. Today, I received a trial agreement package with a term of three fixed payments from December 9th to February of next year. It also mentioned that they will consider my loan mod only if I agree to the trial offer. As for the documentation I received in the bank, this is considered step two in the loan mod process. Also, it is mentioned, in case loan mod is approved, loan mod terms will be applicable only after the trial period payments are complete. Is this the standard the GAMC process and is it true that I need to accept these trial terms to be considered for a loan modification? What will be good for me in this scenario? Please advice.

Mike Rockwood: All right, what we’re talking about there is they proto typical trial modification.

Ryan Rockwood: Getting more and more common here.

Mike Rockwood: Yes. This has been very common. In fact, they stopped a couple of weeks ago. So, actually you’re very fortunate to have this offer if in fact, it’s a good offer. Here’s the caveat. The payment that they’re offering you is very likely the payment that you will end up with afterwards because it is mathematically the one that they project you’ll qualify for. So, I would go ahead and accept it because you’re very likely, if you can substantiate all the information that you sent them in order to get that one, if you can substantiate all that, that’s going to be your ongoing payment within a $100 or so. So, yes it is standard procedure. Yes, they will not accept or evaluate your for modification other than this one. This is your mod offer. And boy, 99% of these in the last – since July have really been good offers. So, I’ll bet that payment is good.

Ryan Rockwood: Yes. Well, you know what though. I will say it is a little bit unnerving when you get something that says here’s your payment. It’s not guaranteed to be your payment in the future. And if it’s not the payment in the future, you’re going to be liable for all the payment you did make. And we won’t even give you a loan modification. So, this is where it really helps to just have a simple e-mail helpline in where you can go. And you could say, am I kidding. What am I signing up for? It’s normal. That’s normal, okay. There’s no way around it, okay. That’s just how it’s going right now.

Mike Rockwood: Yes, and like you said too on an earlier caller, Ryan, worst case is it delayed your foreclosure by three months.

Ryan Rockwood: Yes, although I should make a – I should really make a little note there and that is that they are technically allowed to resume the foreclosure at the spot that they …

Mike Rockwood: That’s a good point.

Ryan Rockwood: However, that’s just a little caveat. Usually, there’s always something you can do in there to …

Mike Rockwood: Yes. You know, we refer to that so casually. We should remember we’ve got some new callers on the line every Tuesday. So, what we’re talking about in terms of it being easy to delay or stall foreclosures. There are at least seven really common ways to delay foreclosure. And some of them are very, very easy to do. All of them are legal to do. And we describe them in a new book called the Notice of Default handbook. And you can order that from us as soon as Ryan gets around to setting it up on the website. Just send us an e-mail and we’ll tell you how to get a copy of it from us. But those seven procedures are pretty easy to implement and three or four of them are absolutely guaranteed to delay foreclosure. A lot of times, people just need another month or another two months before you get your best workout solution done.

Ryan Rockwood: You know what? And I would also like to say that if you got a copy of that book electronically, you’re going to be one of our reviewers. Let us know which is odd. If you liked it, didn’t like it. Send us back to us so we can put something on the website. Better yet, send us back a photo of yourself and a quote. Better yet, send us a video of yourself. And if you don’t like it just let us know. We can take it. Don’t worry. No one’s written back yet. Maybe [indiscernible] that it.

Mike Rockwood: Maybe you can take it but my name is on it. So, if you didn’t like it, be nice. Okay, should I hire a law – this one is a good one. “Should I hire a law firm to investigate Truth in Lending Act and Real Estate Settlement Procedures Act violations on my loan? Is this a good strategy?” Well, we touched on that a little while ago. And these are consumer protection laws that have been put in place to protect us from lenders, brokers, appraises, inspectors, realtors, all the people that are involved in the settlement of our – and the sale of our – and purchase of our homes.

So, violations of those laws can give us additional leverage in our workout negotiations with lenders. Until very recently, I have been kind of negative on this because I saw attorneys using forensic law audits and naming certain violations as ones they think that they can find and then they’ll fight for you. And they offer the forensic loan audit free of charge, yucky, yuck, because a lot of their loan modification efforts and a lot of their foreclosure efforts were on billable hours. And so you’d very quickly find yourself in a $3,000 to $6,000 loan modification or bankruptcy filing, et cetera.

So, at first I thought forensic loan audit, as a part of the whole workout program was not ethical and was not really needed because lenders were saying, “Come on, come on, we’ll modify with you. Talk to us. Present your case.” But now lenders have gotten more and more resistant, and it’s harder and harder to get up to the front of the line because we’ve gotten standardized on a lot of our procedures. And so it’s hard to get out of line and get up to the front of the line. So, more and more I’m recommending that people do forensic audits or have them done. But they certainly don’t need to cost you thousands of dollars. I have plenty of people around the country who tell me they are doing them for as little as $200 to $300 and that they take as little as a couple of hours for them to do. And I am going to produce a do-it-yourself forensic loan audit kit. And I keep saying it’s going to be out in about two weeks. So, that’s what you need to know.

But I don’t think you should hire a law firm to do it because I think it is simple enough to either do yourself or have a local person who’s specializing in forensic loan audits do that for you. At any rate, never pay more than about 500 bucks for it’s not just worth it. And I think the key is how you’re going to use that data. Don’t think you’re going to use that information to clobber your lender or to bring them to their knees without taking them to court. By you explaining to them that you think that there have been violations of the law in how you’ve been treated during the loan process or afterwards, you’re basically going to notify them that you might be part of a class action suit that you might be part of a citation from a government agency or something as innocuous as that.

So, it doesn’t make them shake in the boots, and most of the claims, they just take as part of doing the business. So, the key is going to be just recognizing that and explaining to them that you’re heads up about these violations. And then like I’m going to do in my do-it-yourself kit, I’m going to identify for you the violations that around the country are getting the attention of lawyers, that class action suits are being filed on, that lenders actually are responding to, and the government agencies have identified as the most biggest.

Ryan Rockwood: Okay, we have Jill, who sent in that great letter, wants to know if we want to get together right after this call. Do you have time or do we need to …

Mike Rockwood: No, we can do it. Let’s do it right after the call.

Ryan Rockwood: Okay Jill, shoot me your phone number. All right. So, anyway I hope – I think we’ve really brought a lot of value today.

Mike Rockwood: Oh, man. Are you kidding? By my count we did 21 questions.

Ryan Rockwood: Well, let’s hit another one. “I’m entering the third month of the three-month Wells Fargo.” This is from a John. Forbearance. Oh wow, how unusual.

Mike Rockwood: Wow, way to go John.

Ryan Rockwood: Anyway, I guess, right. Have you heard anything coming out of Wells Fargo about the folks getting forbearance period. Can I assume this to be basically the same as a regular loan modification trial period and – can I assume that I will be offered a loan modification after three months? Not that I know of.

Mike Rockwood: No. You know, you’ve been reported to the credit bureaus each month, right John. So, your credit has taken it on the chin. And there’s absolutely no assumption. That’s a whole separate issue, so be sure that you’re working that separately that you got a good application and that you’re ready to move on a loan modification. Don’t assume it though because man, they’re busy.

Ryan Rockwood: And I mean, maybe they do that regularly but I would not assume that now. “Can I assume this is a loan modification trial period?” It’s my understanding that during forbearance, you don’t make payments. Is that correct?

Mike Rockwood: That’s correct.

Ryan Rockwood: So, the whole idea even …

Mike Rockwood: That’s the whole forbear part of it.

Ryan Rockwood: Well, yes. Okay. I got to say though that if he gets a loan mod, he’s going to have to go through that trial period again. It’s not like the forbearance is going to qualify him for the trial period. So, best case scenario. Now, you go through another trial period. Now, who really cares how many trial you go through a million trial periods, right? But the thing is, is that you definitely want to keep on top of that. Also, in my mind forbearance means that they don’t repair – report you to the credit bureau. But I guess that …

Mike Rockwood: No, they do.

Ryan Rockwood: Idea is not shared by the banks. All right, let’s wrap it up. All right, well, we are done. We plowed through a ton of questions.

Mike Rockwood: Twenty-two.

Ryan Rockwood: And I really thank everyone for joining us tonight. Tonight’s really pretty much no frills, just a bunch of content dumped on you. If it’s your first time, like don’t be freaked out. All these will make sense to you. You just got to start one, put in front of the other kind of thing and move forward.

If anyone’s new on the call tonight, take us up on our offer, shoot me an e-mail with your address and we’ll do that for most, which is …

Mike Rockwood: Yes. Get the kit free.

Ryan Rockwood: Get the kit free. Try it for 30 days. And if you like it, then you can pay 30 days later. All right, so thank you everyone so much for joining us. You know the thing that I would really appreciate is if everyone could send this page. You just go to your menu bar and copy-paste kind of thing. And you can send it to friends or anything like that. That would be great.

Mike Rockwood: Hey, Ryan, I wanted to mention that too because one of our regular guy who’s always with us says that he forwards our e-mail when he gets him on the day of the – when we announce the topic of the day and invite them. He always forwards that to about six or eight of his cohorts that also join us.

And I just wish all of you would do that if you have brothers and sisters, uncles and aunts, neighbors, friends, coworkers, anybody who you know is struggling during this time with their mortgage payment. Send our information along so that they can join us and get some information and hopefully help us help them. All right, thanks everybody.

Ryan Rockwood: Thanks everybody so much.