Overcome loan modifications denials

Ryan Rockwood: All right. Hello, everyone and thank you so much for joining us. Today is the 60-Minute Loan Modification Insider Secrets Teleconference Series. We’re here to beat the bank. We’re here to save your home and help you escape bad debt, hopefully, forever. That’s what we’re trying to do anyway. My name is Ryan Rockwood and as usual I’m here with my business partner, my father, Mike Rockwood.

Mike Rockwood: Hello, everybody. Good evening.

Ryan Rockwood: Before we get started, a couple of quick announcements. We’re, again, doing a live stream of tonight’s call, knock on wood. And you can see us online at 60minuteloanmodification.com/october8. Yes, we’re going to have to knock on wood on that one. I think that you’re going to have to go back to October 6 to get the show. It’ll actually be today’s show but just jump in there, put October 6 and then…

Mike Rockwood: Well that’s funny.

Ryan Rockwood: Yes. Oh well.

Mike Rockwood: How does that happen?

Ryan Rockwood: Something’s wrong with our web page. You know, actually October 6, they’ll actually have to click through – click the image there if you want to see it. It will be last week’s video. And then you’ll actually have to, like, double click it and click through it or click through the show page. And then when that page loads, we’ll see if it goes live. Up in the upper right-hand corner there’s a Go To The Show page and you can go directly to it right there, all right.

Mike Rockwood: Go To Show page, yes.

Ryan Rockwood: Yes, basically we didn’t get that link that right, I guess. I’ll have to…

Mike Rockwood: Sorry about that everybody. We’re getting it together though little by little.

Ryan Rockwood: Announcement number two, if you are a new client, we do this every Thursday. This call is where we take the gloves off. We really try to tell it like it is. And also, we try not to get too scared if people have specific and complicated problems. We’ll just jump on there and do our best to try to solve those problems. The reason being that although everyone feels that their problems are unique and so on, in a lot of cases it turns out that most everyone can tweak at just a little bit to benefit.

Mike Rockwood: Yes. That’s why the calls really are so popular is because – I mean there’s probably 25 problems that we all have and being on these calls it’s very, very popular because you can very often hear a problem that’s very close to what you’re looking for. So, there aren’t really that many variations, right. We can do an artificial intelligence kind of thing.

Ryan Rockwood: The thing is it seems as if to everyone that their problem is totally unique just it will have a little twist or something that won’t be resolved in listening to previous things. So, anyway, the good thing is if you can just address that little tweak. You can get to your solution a lot faster. And that’s pretty cool.

Mike Rockwood: But for your reference everybody, I do one-on-one calls for an extremely low rate. It costs you like $49 when we talk for 20 minutes and you can learn more about that on our website at 60minuteloanmodification.com/talkwithmike. An awful lot of people are booking those. I usually have my entire afternoon booked up with those calls. It really is helpful. Even if you’re doing completely the Do-It-Yourself Loan Modification, you might want to add on a 20-minute talk with me just prior to calling the lender or if you run into a problem, et cetera, et cetera.

And then also, this Done For Your product that we’ve been talking with you about now for a few weeks is crazy popular. Almost everybody’s opting for it. It’s an additional $147. And even if they don’t opt for it initially, most of you are deciding to take us up on it after we have our initial 20-minute call. Because I mean it’s just killer. It is a great value. And we do – we’re doing several a day. And what we do is we just end up being with you on the phone until you are ready. We talk to your whole strategy about how you’re going to approach your loan modification, how loan modification fits into your whole foreclosure workout plan or your whole real estate workout plan, and then talk specifically about your loan mods, specifically about your budget. We actually create the budget while we’re on the phone together and interacting on e-mail. And then Ryan helps us craft your hardship letter. And then we send that to you. So, you’re ready at the end of that call to dial your lender. So, that’s the latest on our products. You want me to go ahead and jump into it today’s training [phonetic]?

Ryan Rockwood: Yes. Today’s topic is Getting Past No. And I don’t really know – when I saw this topic I thought maybe we should be doing this because if people could get to know, it would be a dramatic from what – it doesn’t seem like a whole lot of people are getting to know and they’re so bummed up. It seems like the real problem is getting lift off.

Mike Rockwood: Yes. That’s a good point, but I really kind of dug the topic. And the way I prepared, when I was asked to prepare, this Tracey asked me this would be our topic, could I prepare for it? I kind of did a quick brain scan of all my colleagues around the country and try to come up with the top three to five reasons why people are getting “No” on loan mods.

And hey, we should just say for those of you who are new on the call is that every call we always spend about 10 or 15 minutes upfront talking on a specific topic with regards to loan modification or foreclosure and then go right into questions. You can e-mail your questions to us at questions@60minuteloanmodification.com. And then we’ll also go to live callers today and I think we are better prepared. I’m sorry we’ve been having trouble with that the last couple of calls. But that’s the layout of this conference call. We’re here to help you and we’ll do a short teaching here up front about Getting Past No and then we’ll go to calls. And the questions don’t need or we’ll go to questions.

Questions don’t need to be related just to the topic that I’m teaching about. Okay, so let’s get Past No. In asking around the country, they try to prioritize the top – actually we came up with four reasons why people are getting told “No” on their loan modifications. The first one is, as you might think, has to do with preparation, either not being prepared or preparing poorly. So, it’s a piss, poor preparation issue.

And what happens very often is we’ll get involved with you folks shortly after you got rejected because you did as the government told you or you did as one of those fine non-profits told you and you just picked up the phone and started talking to your lender. And when they said, “Well, let’s go through your situation, what’s your hardship, why do you need assistance, and let’s talk about your budget, you said some wrong things because you weren’t prepared and so you didn’t know the implications of telling them this is my income, and this is how much I spend, and this is how many credit cards I have, and this is the balance, and this is the amount I pay, and this is how much, apparently, we have left at the end of the month.

So, going in unprepared, piss poor preparation is the number one reason why people are getting to “No”. Also, not just not being prepared. Not being prepared is the first one. And that usually means that you just heard that you should just contact the lender and certainly you already do business with them. They’re your friends and everything, they’ll help you. Well, most of the time they’ll help you right out of the loan modification. So, then the other problem with preparation is preparing improperly. And what’s so comical about that is that now that we’ve been into this for 15 months of pretty intense loan modifications, the rules have gotten more and more clear and the expectations have gotten more standardized. So, it’s completely irresponsible to apply for a loan modification if you don’t qualify because it’s so easy to figure out if you qualify.

So, our basic kit, you got to all admit to all of you who have the kit and have read it, I hope there aren’t – some of you who are listening that haven’t read the kit, read through the book yet, it’s really easy to predict whether or not you’re going to qualify for a loan modification. So, when our client, you guys, pick up the phone and talk to their lender, you don’t get to “No”. And if you do, you correct them about their information because you know you do qualify.

The second most important or the primary reason why people are getting to “No” is because of income issues. And the primary problem there is with self employed. W2 people are easy, so easy to document, not a lot of wiggle room. The problem comes in for self-employed people and for unemployed people and for people who are using unique methods to document their income like contribution letters, et cetera. And honestly, the issues there really have to do with fully understanding what the underwriter is going to require. Because the underwriter, the person who scrutinizes whether or not your loan modification is appropriate, really just wants you to stick your neck out and give them documentation on your income.

So, to send in just a statement, just a knuckle note written about what your income is, is completely unacceptable. And in our kit, we coach you and in our conference calls, we coach you on how to well document your income. So, there aren’t any questions. You know that your lender is trying to modify your mortgage. They want the $1,000 from Uncle Sam or $3,000, number one. Number two, they’re motivated to make your modification because they want to keep or get your loan back into the column that is assets that are performing. Right now if you’re late on your mortgage, you’re an asset that’s not performing and that’s not good for that divisional vice president. Not good for the director of collections, okay. So, they’re all about modifying your mortgage fast.

And you all know that the president and his people have really tried to light a fire under the lenders in the last 60 days or so and have given them the target of at least half a million, at least pending or trial modifications before the end of the year. And so that means they need to about double the amount. And so that’s why we have seen the lenders going to really quickly into these trial modifications, what use d to be called repayment plans. That’s a result of them trying to up the numbers that are in trial because of political pressure.

Ryan Rockwood: Hey, I do want to mention that if anyone is listening on this call and wants the link to the video page and can’t get through, just send me an e-mail at questions@60minuteloanmodification.com. I’ll read it right now but it’s pretty annoying. It goes Ustream as in umbrella, ustream.tv/channel/60-minute-l-m-teleconference. Oh, I got to get some short – we got to get some shorter link. That’s horrible. But anyway, you can also e-mail me and shoot that back at questions@60minuteloanmodification.com.

Mike Rockwood: All right, the third point. Would you, Ryan, make sure that during the teleconference, you tell people about the website for finding out if their loan is Fanny Mae or Freddie Mac?

Ryan Rockwood: Yes, sure.

Mike Rockwood: Because we’ve been stumbling on that after the last couple of weeks. Okay, now, the third reason that you folks are getting into “No” from loan modification, getting rejected by your lenders for a loan modification is because it’s a rental property. And a couple of the lenders, Saxon and IndyMac, have gone public saying that they’re, for a time being, not even going to consider modifications on rental properties. And that’s, I guess, their right. However, it’s really just to give them a little bit of workload relief. And let’s hope to heck it doesn’t catch on with other lenders because it’s very annoying, number one. And number two causes a whole lot of extra work for us because we don’t actually get them to modify those loans until we almost go into charge off or go into foreclosure or trustee sale.

So, here’s the truth about the rental property “No”. The truth is in fact they will consider your loan modification request. However, you have to take it right to the limit. And so if you’re not willing to do that, better think of another strategy. In other words, if you’re not willing to pull the plug, stop making payments and get right up to the end of the default, end of the foreclosure period, then you’re probably not going to get the modification on rental property from Saxon or from IndyMac. Those are the guys that are kind of playing hard ball.

But believe me, because of my experience, I know and I’m talking about experience this week fresh from the war; these lenders do came at the last minute. They find ways to modify your mortgage even if it’s a rental property at the last minute. So, don’t let that “No” stop you. That one just calls for raw nerve. You have to just take them to the mat.

The next reason, and the last reason why clients are getting rejected for loan modifications, is because they are not late. Certainly, on a rental property, if you are not late with almost any lender, they will tell you, “No”. Which of these two letters do you not understand? N-O, no modification. So, either decide to accept that or go late. You really have to think it through. And in the basic kit in our book, in our 60-Minute Loan Modification workbook, there’s a great chapter on FICO score. And honestly, FICO score has really been a boogeyman that has scared all of us into submission for decades. And now that some of us have been pushed right into the quicksand, we realize it’s not very deep. And the boogeyman, in fact, is the paper tiger can’t really hurt us very bad. It looks kind of ugly but really up close, not very scary at all. You still get up in the morning. Your loved ones still love you. You still go to work. You still don’t have enough money at the end of the month. Life is pretty much the same. You just can’t buy a house. But guess what? Anybody who is buying on a house right now isn’t real bright anyways, so heck with them.

Ryan Rockwood: Well, I mean let’s see that. Let’s be honest with ourselves. We’re not looking for houses right now. Our goals are much more immediate and modest and basic, right? We need to start from a stronger foundation.

Mike Rockwood: And it’s not time to be investing in real estate. Let’s face it. We’re still having down wards.

Ryan Rockwood: What if you’re really rich?

Mike Rockwood: Yes, but even then why would you now foreclosure your rate still up? They say FHA might even sale or require a bailout from the federal government. The auto business is still sick, our healthcare industry is sick, our banking industry is on life support, our unemployment rate is climbing. There’s just no reason to be optimistic. You got to buckle your seatbelt and get real. This is going to be prolonged and we have to get real. So who’d be buying real estate? It’s going to get worst. Let’s buy in a year or so, two years, whenever.

But listen, this whole thing about going late is something you just have to face. You got to suck it up. You got to face it. You got to think about it. And you either have to accept it. In fact I counseled Bonny [phonetic] over in Nevada on this just yesterday. And Bonny [phonetic] probably never has missed a mortgage. Maybe never missed any kind of payment in her life and she just said that’s just not any good way to act. And God bless her if that is the way she feels and if that’s her reality in the paradigm that she lives in, then far be it from me to tell her to violate that.

But on the other hand, I would like to counsel you Bonny [phonetic], like I did yesterday, to think about, whack you up side the head and make you think about what has transpired here, where all the money has gone, and where your loan apparently was profitable enough for Wells Fargo to sell and then to resell, and then to resell, and all of these organizations to make enough money to have a run up in Wall Street is unprecedented and to have Wall Street go global on us and have unprecedented wealth distributed to the top 1/10 of 1% of our population. And now I’m on my soap box. I’m sorry. But let me turn the corner now from primary reasons for people getting into or getting rejected for loan mods. Let me tell you the primary fixes really are three fold – brains, brawn, and nerve. Don’t you love this?

Ryan Rockwood: It’s good.

Mike Rockwood: No. It really is good. The first one is brains. Prepare everybody. Take the time to prepare or else pay me a few and pay Ryan a few dollars and let us prepare with you on the phone. You got to prepare and it’s so easy to do. This is nothing.

Ryan Rockwood: And the more easy the qualification process is on the bank and the more important it is to repair because I called just someone today and you know what? I only had one question, two questions, like three or four questions. As it, baby.

Mike Rockwood: Yes. No, they’re streamlining everything, aren’t they?

Ryan Rockwood: Well, someone might think, why do I need to prepare that, right? The problem is we had to work for hours to get the correct answers and even the ones we have if we’re going to get by on this, get off our teeth on that one and it’s going to be super. I thought we’re going to do it but it’s an hourly. You know what I mean? So, talk about for sure getting refused.

Mike Rockwood: Then you have to be prepared because you’re going into a big negotiation on a big amount of money on an investment that is dear to you. So, you don’t want to be prepared. In a negotiation, you guys all know the one with the data wins and you’re going into this at a distinct disadvantage because the person on the other end of the line has all the power. They hold the power to legally take away your home if you don’t give them money. So, if you entered into negotiation with them, you have to help level the playing field by being completely prepared as completely and exhaustively prepared as you can be, all right? So, that’s the first thing. Be prepared. It’s brains.

Number two is brawn. And by this I mean it just takes an awful lot of strength to persist. Because sometimes, the rentals are good examples where you just have to say I know that your party line is that you won’t modify this. But are you sure you won’t modify this? And then they ask him again next month, and the following month, and the following month, and they take the calls from the collection people, and the key through going, going, going, going like an energizer bunny, that’s brawn. That just takes strength. And you have to do it. You have to persist. I’m telling you if you know the right answer and you persist with your lender, you will get satisfaction. It’s in their best interest to get you – they want to get done with you. They want to spend a little time with you as possible.

So, if they can accept your modification quickly, they love it. And they love it just as much if they can reject your modification quickly because think about it. These cats have like, I mean, at the beginning of the summer it was 10,000 applications every single – what was?

Ryan Rockwood: 10,000.

Mike Rockwood: 10,000 applications every week

Ryan Rockwood: I think it’s everyday.

Mike Rockwood: I think it was too. God, that’s scared. And the one there from Chase told us he had 150,000 in-house at that time. So this is just monster, monster paperwork and rushing. So, as soon as they can tell you, no, they do. As soon as they can tell you, yes, they do. So, lot of times it takes brawn.

Lastly, it takes guts, nerve. And what I mean by that is it takes out of the box kind of thinking and some nerve on your part to do something that maybe you haven’t been comfortable with in the past. You got to face it. You got to get over it. If you want a good loan modification, it’s still the case. Here in October of 2009, like it was in October of 2008, it’s still the case. You want a good loan modification and you want it in less than four months, go late on your mortgage. End of sentence.

So, you have to deal with it. Get over it, or else stop applying. So, many of my clients have been trying to apply for more than four months. They don’t want to go late. And every month it’s the same answer and it will be for the future because they don’t want to tell them no. So, it’s brains, it’s brawn, and it’s nerve to get pass “No”. How come I take so much time? I always think I’m going to take 10 minutes and look at the time already. Let’s get to questions.

Ryan Rockwood: All right. Let’s see here. I would just – oh, cool. Someone else did get to the show eventually. And they’re happy that they can watch some of the past ones.

Mike Rockwood: Good.

Ryan Rockwood: Yes. Yes. Helene, go ahead. Just give it a shot. As we’re getting going, it’s kind of stop and start, something like that. So, forgive the fact that some of them maybe like –some maybe broken up into two 20-minute segments or something like that. But you got the gist of it. For sure, go ahead and check it out. And somehow there was one second or one minute where my account had that money in it before other accounts took it out. It’s not like I was sitting around with a bunch of money and, voila, it was gone, just doing a little Zen breathing there because you’re never going to get it back. And recently we have learned that you shouldn’t really be able to do that. However, there are specific reasons I want to get into it because it’s too specific.

Mike Rockwood: Yes, so the legal term and the legal terminology and the clause in your savings account, checking account is the right to offset. So, it’s an offset and there are certain restrictions the bank can’t take money out of your checking account or savings account if it was money distributed by the social security administration. So, it gets a little dicey for senior citizens. And they also cannot take money out of your checking account or savings account to offset a consumer credit card. And the reason for that is they already charge such exorbitant fees there to offset their losses that congress ruled or congress enacted a law that made that a kind of double dip kind of a thing.

So, the rule is a right of offset. And so we always advise folks when you’re negotiating, like if you’re negotiating with Chase, I really would advice you to not have large savings or checking accounts or certificates of deposits, although I’m not certain that those are vulnerable. But checking your savings accounts are – like Ryan said don’t close the account. Just transfer most of the money somewhere else. You don’t want to close any accounts. It’s just a bad practice and bad for your FICO score. And when it comes to recovery time, after your loan mod or after your short pay off or after any workout option, you want to use those oldest accounts in your recovery work because that gets you the best benefit.

Ryan Rockwood: Okay, do you have a little bit of time after this call at 7:30 to call someone or other clients or do you need to…

Mike Rockwood: No, actually I don’t. I have a 7:30 appointment.

Ryan Rockwood: You do?

Mike Rockwood: Yes. But I do have time tomorrow. Is this kind of an urgent thing or something?

Ryan Rockwood: Yes. Well one of our clients – I don’t know anything but a screen name. He writes in and this is the guy that has – Larry. He’s been duking – Nevada guy. He’s been duking it out with these guys and he’s tried $500 under in terms of his budget, $500 over. They won’t tell him why and so on and so forth. And so we have this package and I thought we talk to him about it but he needs to call them back. Let’s see. This is safe tonight? Why don’t I e-mail and then see if we can do it tomorrow.

Mike Rockwood: Yes. See if we can do it tomorrow afternoon. I’m good tomorrow afternoon.

Ryan Rockwood: Okay. This is a little bit too complicated for to involve everyone.

Mike Rockwood: Yes, sorry everybody. But let me take, Ryan, I already got these three questions. Let me run through them.

Ryan Rockwood: Okay. Go ahead.

Mike Rockwood: I love this one. You’re going to love this. You got to listen. Tom in Las Vegas says, “Is there any latest insider info on ways to alter my DTI? My problem is I’m at 30% all debts included and that’s frustrating because I don’t qualify for a loan modification.”

Well, I think that’s interesting because just today you and I were talking about the fact that some people are actually taking on debt to increase their debt-to-income ratio in order to qualify for a loan modification. Isn’t that just bizarre that they’re actually going out and buying a car or going out and taking a secured loan on some property or something increasing their debts? So, think about that Tom. I mean it can be simple. I mean, you do really push down your debt. I know Tom’s situation so I know some background on this one.

I know Tom you’re sitting, financially, and you’re sitting in a good position. But it’s a shame you do have that lousy mortgage and your lender would love to alter it. So, it’s kind of a win-win if you can get it altered. So, yes, you can drive your debt-to-income ratio up higher by buying a boat, buying a car, borrowing from a neighbor or friend just so you can document it, okay? Eddie – do you want me to keep going?

Ryan Rockwood: What if you borrowed something from a family member like a tangible product, a tangible good like a house, a beach house, a car that you had – because the terms don’t matter. You never have to make a payment until you’re dead for example.

Mike Rockwood: Yes, it has to be a debt though, Ryan. It has to be a recorded debt and not a monthly payment.

Ryan Rockwood: Yes, exactly. So, let’s say your friend – let’s say someone owns something.

Mike Rockwood: They give it to you.

Ryan Rockwood: Yes.

Mike Rockwood: They give you a car.

Ryan Rockwood: They don’t even have to take possession of it theoretically. They could have a boat house. They could have $100,000 boat.

Mike Rockwood: No, it’s absolutely perfectly legal. You’ll have to – you wouldn’t have to show a Bill of Sale, of course, because you never get that kind of underwriting scrutiny but you would have to show some proof that there is a contractual requirement to pay. So, you just drop a contract.

Ryan Rockwood: And maybe it’s 10 years payment free to do that, so it won’t affect your budget.

Mike Rockwood: No, because you want your monthly budget. You see it’s not the debt. It’s the monthly payment.

Ryan Rockwood: So, it is. Okay.

Mike Rockwood: Yes. So, like if I gave you my truck, you could agree to pay me $300 a month and that would increase your debt-to-income ratio. We would just have to have – make sure we had it documented.

Ryan Rockwood: Or $1,000 a month.

Mike Rockwood: Yes, having paid off.

Ryan Rockwood: Yes, that is very easy and believable for five years or something like that..

Mike Rockwood: So, there are ways. Here, let me take another one because I like this one too. Mina, in Riverside California asks, “I feel I need to extinguish.” She’s starting to use the Obama lingo. “Extinguish my second mortgage in order to be able to stay here. How do I start and what is the process?”

Great question. Very timely question. And I got to tell you that without a doubt, I can say that Ryan and I were working on a – you know Ryan’s Credit Card Cure booklet. Well, in recent months, it’s been working to expand it and get involved nationally with people who are working debt settlement and that’s exciting. But what’s really whacky exciting is the whole idea of HELOC, Home Equity Line of Credit Settlement and second mortgage settlement.

And so Ryan and I, without a doubt, will have an information product, a do-it-yourself product describing that process out and introduced to the market by the end of the year. We’re really investing a lot in it and I’m really excited about the method that we’ve come up with. We’ve really tried to learn from best practices from people around the country. And now it’s starting to happen with enough frequency that we’re starting to understand just what it takes to settle on a HELOC in this environment, what kind of documentation it takes, what a good negotiating strategy is, how your FICO score and the sheriff sale, et cetera, all those things get into the picture.

So in other words, Mina, keep in touch. This is very important. What people are settling for today is between 10% and 20% and almost everybody’s up closer to 20%. And the first line negotiator at most lenders has the authority to take the loan down to 65%. Their supervisor has the authority to take it down to 45%. And that’s where you run into trouble. So, like let’s say you take a $195,000 second mortgage like I have on my home here in Torrance. If I was to call up that lender and say, “Listen, you and I both know this house is not worth enough to cover your equity.” In other words, you are screwed and so am I because I over paid for this thing.

So, how about you accept 10%? You accept $19,000 for this thing. They tell me to go pound sand and the person that I’m talking to on the phone could authorize them to accept $128,000. I just did that in my head. So, that person, if I could write a check for $128,000 I could do that tomorrow. If I said absolutely not won’t even think about it and requested to talk to a supervisor and argue with them for a couple of months, they would get down to $40,000 which would be 45% which would be $90,000 and I know I could get there.

But these days, if people are willing to take it right through sheriff sale or right to charge off, if they’re really willing to go ahead in short sale or let them charge off that second loan, in other words go more than six months late. They charge it off and then after another three months, they sell it to a collection agency. You very likely can settle for 20 cents on the dollar. Okay, so that’s kind of the state-of-the-art is 20%. And I think that’s headed down towards 10%. I bet a year from now will be routinely extinguishing to use your term second mortgages for 10%. So, it’s a really salient topic. It’s going to become the centerpiece of the whole foreclosure workout business in the next five years because that is going to become the issue. Okay.

Ryan Rockwood: Okay, I’ve got a fantastic question or situation here from Devlin who writes in by e-mail. Okay. His friend has a WaMu loan. Was told by WaMu they needed to miss a few payments before they would be eligible for a loan mod. Now, a bit surprising there. They missed a few payments as instructed and they worked out a three-month trial that would become permanent if they made the three payments on time. Nothing unusual about that. They thought everything with hunky-dory until someone showed up with a Notice of Foreclosure. So, they said they got everything right but there are no guarantees. So, anyway, wondering if that’s some kind of scam.

Mike Rockwood: No, it’s not uncommon.

Ryan Rockwood: Yes.

Mike Rockwood: Devlin, they just never went – they never followed through with a loan mod application.

Ryan Rockwood: Well, I’m not sure if that’s the case.

Mike Rockwood: No, this sounds just like other cases we’ve had, Ryan, where the client thinks because they’ve been given this verbal and every month when they make their payments, they no longer get any calls from collections. They think they’re on a loan mod. And they never went ahead …

Ryan Rockwood: Well, they think they’re in a trial period.

Mike Rockwood: I know but I bet they never went and substantiated all the stuff. Well, they left at it verbal.

Ryan Rockwood: Okay. So, there could have been that my theory on it is that just because they’re willing to work out a loan modification, it does not mean anyway that it will stop foreclosure proceedings. It may mean that they won’t auction the house, right? But you’d be a fool if you didn’t take the Notice of Default and everything like that right up to the brink. So, that shed the person decide against your loan modification offer that you’ve eventually offer. Boom, next month your house is sold.

Mike Rockwood: Check this out though, Ryan. The e-mail says someone showed up at their house. Nobody’s going to show up with a Notice of Default. That was a Notice of Trustee Sale. You got to think it was.

Ryan Rockwood: Well, that’s true. No one shows out without a Notice of Default.

Mike Rockwood: Yes, Devlin, so check this out. If they got a Notice of Default, it should have come in the mail certified.

Ryan Rockwood: That has to come.

Mike Rockwood: Yes. I’ve never seen a Notice of Default delivered by a courier or by – what do you call the guys, servers.

Ryan Rockwood: You know, don’t we see something from a lawyer though in one state that was kind of official looking that could be…

Mike Rockwood: It was the Notice to Accelerate.

Ryan Rockwood: Something like or a Notice of Default.

Mike Rockwood: And it was brought by a person?

Ryan Rockwood: Could have been. I mean I could see that being the case. Anyway, to be honest, I wouldn’t sweat it too much. I would just get on the phone. You got to get on – only thing you can do is get on the phone with WaMu, figure out what’s up. And I don’t think there’s any reason that you shouldn’t be able to just stop this with simply calling them because – but I do have to say that they’re calling them like stated income loan modifications now are scams in some way. Because here is the deal, here’s the deal, we’re going to take – we know perfectly well we’re not going to approve your loan mod. And we know perfectly well.

Mike Rockwood: But right now we’ve got no money.

Ryan Rockwood: Yes, right. We know perfectly well you’re not sending us any money. So, how about if we do this? We give you a modestly lower payment. You pay for six months, then we turn you down.

Mike Rockwood: Yes. No, you’re right. These guys really have us by the short ones. Let’s admit we’re all screwed. But we’re all just trying to make the best out of what we’re doing. The truth is you’re absolutely right, Ryan, all these trial things are just so much blah, blah…the reality is though an awful lot of the trials like more than 90% of them that I’ve experienced so far have actually turned in to real modifications. So, I got to say I don’t think there is an intent to defraud us. But they are moving so quickly on some of these trials that you got to suspect, yes that they’re just interested in getting some money flowing. But if the information that your friend provided, Devlin, was substantial, then they should be just fine. And send them our way if they need our help to help them put together the package. But they just need to get in front of that lender and get arguing again. But really clarify with them that that wasn’t a Notice of Trustee Sale because if it was, we have to really move quickly.

Ryan Rockwood: Do you think that someone can buy a Talk With Mike without buying the kit?

Mike Rockwood: Oh, absolutely. No people do. The other day, I talked to somebody who’s thinking about buying the kit and wants to talk to me about what they’re doing now.

Ryan Rockwood: Okay.

Mike Rockwood: Yes.

Ryan Rockwood: That would be a good option for someone like that.

Mike Rockwood: Oh, yes. Have your friends contact me, Devlin, if they want to just spend 20 minutes talking on the phone about this situation. I’d love to do it.

Ryan Rockwood: Okay. We’ve got a question from Holly in Hawaii. Could freelancers make their monthly budgets for our last nine months gross income with no taxes yet subtracted? When we go get it checked for 62 bucks, six weeks later maybe $2,500? Number two, is it better to take my last time as gross and divide it by 9 or 12? Maybe she means or 12 months gross, nine months gross divided by 9 or 12. Do you know why should we divide it by 12?

Mike Rockwood: Yes, well, Holly I think the beautiful thing about it is you have the option. You need more income or less. So, you couldn’t do it anyway you want. I worked with a client yesterday who estimated the yearend on vacation rentals that she owns. And that’s a complete guess because they’re in Florida and the fourth quarter in Florida is really not the best. It’s a spring vacation rental area. She has three rentals there. But hers is the best estimate that can be made on it. So, she took her year-to-date income divide it by 9, and then multiplied it times 12. So, the beauty of it is you’re the one who knows best. So, you can do it whichever way you need to do it. And you’ll be able to convince your lender that that’s the best way to do it.

Ryan Rockwood: Here are a couple of options, okay. I get your freelancer. I’ve done a freelancer. That blows.

Mike Rockwood: Not a freewheeler. She said freelancer.

Ryan Rockwood: But I see here she’s trying to get a way with not subtracting her taxes and that’s not going to fly.

Mike Rockwood: No, that won’t fly.

Ryan Rockwood: So, you got to suck this up. Perhaps you had a really good year last year. In that case, go with last year because you’re going to need to be making up the money. If not and you’re just riding the low streets here, the easiest way is going to be the last three months. So right now, it’s time to paddle your invoices and lump them all and bill everyone immediately. You know what I’m saying? Anything you can bill right now or whatever do because you can argue three months. But that’s really going to be your only option I think. And you are going to have to figure out a minimum of, what, 10% taxes?

Mike Rockwood: Yes, they get really sketchy if you try to convince them you’re going to pay less than 10%. They’ll ask you to prove it. So, what we do is we take gross times, most people pay between 5% and 15% taxes by the time they do all their deductions, all right? All your exemptions and deductions and you really end up paying between 5% and 15%, most people. So, if you get less than 10%, they’ll probably ask you to prove that you’re on track to pay that little and then you’ll have to show them last year’s taxes. And some people can show less than that. We have the client earlier today who when we went back and check it was actually at 6%.

Ryan Rockwood: Yes. She e-mailed, followed up, and said she hasn’t missed any payments. And so in regards to that, you have a better chance now of getting these things started than ever. However, you’re going to have to estimate a minimum of six months if you want to continue your unblemished credit streak, okay. So, let’s jump online.

Mike Rockwood: Let me take this one. You’ll love this one.

Ryan Rockwood: Go ahead.

Mike Rockwood: Paul from Minneapolis said, listen up everybody, you’ll love this. Paul in Minneapolis says, “What do I do with the renters in my Anoka, Minnesota duplex now that we are losing it in sheriff sale next month?”

Here’s a beautiful answer. Get a load of this you guys. Now this is unfamiliar to Californians. But many states and I don’t know how many but it’s in my book. Many states have a Right of Redemption. And I know for fact that in Minnesota it’s six full months. So get a load of this, Paul, and get prepared for this because this is a beautiful thing. I hope you have good relations with your renters because you should sit down with them and talk about this opportunity. You, in fact, do not lose the right to request or to require that they pay your rent for six more months.

So, I know Paul’s rent and there is well over a thousand dollars a month. So Paul, you have another six months in your case, actually, another $9,000 coming to you as a settlement on this whole thing which is not too hurtful. So, you keep the renters in place. Explain to them that during your right of redemption period, the lender has no right to take possession of the house. And they’ll be just fine and you’ll be just fine and everything should work out just fine.

The downside is and a lot of our friends and other states are finding this out is that the renters kind of get wise to you. And if you haven’t got great relationship with them, they think, “Oh, wait a minute. You’re not paying. I should keep paying?” And they end up scooping the six months. So, it might be smart to get with them and try to strike a deal.

Hey, listen, here’s the situation. Let me reduce your rent by a few hundred dollars. And I know that in Minnesota this will actually work. I mean, reduce your rent by a couple of hundred bucks and you keep paying me on time. Tell him it’s an on-time payment reduction. He’ll be pleased and you’ll be pleased. Isn’t that cool?

Ryan Rockwood: I’m sorry.

Mike Rockwood: You don’t think that’s so great? You weren’t listening.

Ryan Rockwood: It’s worthwhile. It is. You know, some people are having some trouble getting log on to this chat. And so I wanted to respond to that just briefly as far as I know, Tom, here’s what you got to do. Okay. Go down to the little window down there. Again, go down to the window where you’ll write a question. Write the word past [phonetic] and hit send. And it should prompt you to either log in or sign up and create an account. And unfortunately, this isn’t our system. So, we do need you to create an account on this site but it will work week to week.

And so from then, you go through the normal process of signing up for something and you should be able to log in. But he makes a good point that there is only one person that’s actually able to talk with us via this chat.

Mike Rockwood: What do you mean one person at a time?

Ryan Rockwood: These other people watching, but only one person has figured out how to log in so that they can actually chat, you know.

Mike Rockwood: Okay. Well, we got to get to the heart of that because that’s a nice feature. And the feature Ryan is talking about is to be doing a live chat. You know what I mean? So that you can, instead of bothering with the e-mail system, you can write on Ustream, type in your question, and we see it on the screen, and Ryan can be preparing his answer to you while I’m talking.

Ryan Rockwood: Okay. Let’s check our line here and see if someone’s in the car or something that can’t ask the question. One sec and bear with us folks. Hello, does anyone have a question?

Jim: Yes I have a quick question from me.

Ryan Rockwood: Yes, go ahead.

Jim: Thank you. I’m about 2.5 months late with Bank of America and they sent me an acceleration letter if two payments are not paid by October 15th. I told the modification department of that and they said that they’re still working on the modification but they would not interfere with the other department. And they set to make the payments if I can. What would you suggest? This is a Florida property.

Ryan Rockwood: Okay. In order for me to understand this, should I assume that there has been known Notice of Default, correct?

Jim: Correct. Others are in the acceleration letter.

Ryan Rockwood: Yes. Okay. And is this your home that you live in?

Jim: Yes.

Ryan Rockwood: But you had – did you know anything else? Okay. Thank you so much. What’s your first name?

Jim: Jim.

Ryan Rockwood: Jim. Okay, I’m going to unmute you and repeat the question. Okay. So we got Jim. He’s in Florida; received the note to accelerate which someone e-mailed me today very common. And what that says, is this basically a letter saying we’re going to get crazy on you and we’re really serious. We’re thinking about being really serious if you don’t start paying.

Mike Rockwood: We’re thinking about getting tough here.

Ryan Rockwood: Yes and you know, so that play [Indiscernible] all crap. They’re going to get serious. Yes, okay. Jim, this gets into your level of comfort with risk, okay. It is your own house which is free here because if you’re like us, your wife will kick your ass if you screw up and lose that home. But primarily, we are extremely comfortable living on the edge of a foreclosure.

Now keep this in mind, Jim, keep your money in the bank. You’re not paying that bill whatever, do not spend it. Because worst case scenario, everything else fails, money always works. You know, 10 days before the trustee sale, no one ever refuse $32,000 from reinstating [phonetic] the loan or something like that. So, for us it’s very, very comfortable to do that and we probably had with clients, dozens of properties rising on the edge like that. One of them we just rode for 18 months, the property here in our area, 18 months riding like that.

And here’s the thing. No one, like with the call earlier, no one’s going to – they would really be retarded to give up the power that they have to move forward. Now in our experience, they’re very, very happy to postpone the Trustee Sale even if they take some six months to review your file. Okay. They’ll very happily, usually, do that. So, my opinion would be that – it’s an opinion. I wouldn’t want – I certainly wouldn’t want to throw any money at them.

However, other people are more comfortable riding that edge there that edge, so that the bank can’t issue that notice of default. Let’s say you just started paying now. If you started paying now, you will remain 60 days behind for, like, ever. You know what I mean? They could never foreclose on you or initiate foreclosure proceeding. It’s a good place to be. So the trade of is this. How much do you care about your credit? How much do you care about your money?

Mike Rockwood: And about your home? What ultimately is your strategy, your strategy is to keep – if your strategy is not to keep the home, then the answer is easy.

Ryan Rockwood: Well, no one has a strategy not to keep the home, do they?

Mike Rockwood: Well yes, oh sure. You know, I mean, if you’re crazy upside down like Jamie, you were talking today, I mean ultimately she knows that a year from now she shouldn’t have this home unless she gets a big principal reduction. You know what I mean? So, her loan modification application is a little bit of a – it’s just really a delay. She’s going to take the modification, stay there until she can be there, short sell it, get a principal reduction or just give it back to the bank.

But I think the only thing I would add, Jim, is with regards to Notice of Default. Keep in mind that a notice of default is not recorded to the credit bureaus. Every month that you miss your mortgage payment, they report you to the credit bureaus and it’s hurting your FICO score. If you care about that, if that does bother you, then you have to start making your payments. If that doesn’t bother you because you’re already 2.5 months late, you’ve already suffered a little bit of FICO reduction, then keep in mind just starting into the foreclosure process doesn’t change one single thing. It doesn’t even get reported. It’s just them starting the process. And then as you progress through it, you have fewer and fewer options because you’re limited by the things you can pull off in that amount of time.

So, I don’t advice seeing a notice of default as anything more than just playing your hand to them, showing them that you’re dead serious about getting a loan mod. Hey now, Jim, the other thing is, are you a good candidate for a loan mod? You should be able to look at your modification and tell real clearly if you’re a great candidate and it’s going to be a significant financial advantage to you. Like today we were working with a client who stands to we think could be our biggest loan mod ever in terms of dollars saved per month. This person, you know, could have a $1,800 per month reduction on their mortgage. We really think they’re qualified for that kind of a modification.

So, take a look at your as you should be able to tell pretty clearly what you’ll qualify for. Most people are getting 4% modifications for short periods of time. So, take the amount you owe times 4%, divided by 12, and that’s the amount of interest that you’re going to have to pay and expect that they probably will allow you to go interest only for at least a year and maybe as long as five years. But add on to that, taxes and insurance, and that’s the payment you’re likely to get. And the reason I go through that math with your right now is if this is a $500, $600, $800 per month savings for you and you’re a good candidate for it, it’s really worth arguing about going to the math.

Ryan Rockwood: Okay, we’ve got another guy, Tom. Just pointed out that we may have misspoke earlier and if so, we should clarify. Minimum credit card payments are included in debt but only the minimum, okay? So, you do have to keep that in mind.

Mike Rockwood: Who misspoke?

Ryan Rockwood: I don’t know. But you know what? The thing is, is that for some reason I have always been very, very aware of my minimum payment. But a lot of these, [Indiscernible] my minimum is – but for some reason a lot of people we talk to, they’re like great bill payers and they always pay a little bit more and it starts out with $500, then it’s $300, $200. You know what I mean? And so you got to get the minimum on it, okay?

Mike Rockwood: Yes, because that’s what the underwriter ultimately will use. And if you don’t use it, then they’ll mess up your calculations. You know what I mean? For figuring out where you’re at, so use the minimum. And if you need to get your free credit report at annualcreditreport.com, get your free one or pay $15 and get one. So, you’re sure that on your application, you’ve covered all your debts.

Ryan Rockwood: Okay, we’ve got – let’s just go a little over if it’s okay with you. People have to drop off the call. That’s okay. But we just got so many questions. I hate to leave people.

Mike Rockwood: I’ve got another good one here that I don’t want to miss.

Ryan Rockwood: Okay. I’ve got – this guy got junked on our package four months ago. But have we updated the hardship letter and cost percentage ratios? If yes, can you update me on this? The hardship letter has not been updated. It’s still working as good as ever. And remember, if you got the package; remember to use your hardship letter.

Mike Rockwood: Review a coupon?

Ryan Rockwood: Yes, send it to me and I will just crank out a tear-jerking masterpiece. Try to do it yourself first. And then the cost ratio. Would anything would have changed over that? Initially there was a misprint in the book about a gross and net DTI or something like that.

Mike Rockwood: Initially, Ryan, on our worksheet we didn’t have a net income. We didn’t show the net income.

Ryan Rockwood: So, that was on the Black Belt CD. In the Excel spreadsheet for, like, step number one or something, there was the gross income line and there was…

Mike Rockwood: No net income line.

Ryan Rockwood: Yes, so it’s as simple as going, inserting a line, net income right there.

Mike Rockwood: But in terms of the ratios, the thing you want to know John is in recent months, we have come to recognize that loan mods are getting approved with people with debt-to-income ratios. We love it when you’re over 38% because that means you qualify for the very best President’s program one, and we cushion you not to get over 70%. We have gotten people qualified over 70%. Actually our highest one ever was 78%. But I get nervous anytime we get up over 70%. So, as a percent of your total household income that you’re going to use, don’t have more than 70% of that money being eaten up by monthly debt payments. Okay. Any other update information you want, just send us e-mails, John.

Ryan Rockwood: Okay, we got another guy. [Indiscernible] he liked the course. In preparing the income expense sheet, you say if I have a lot of investment properties to give them the schedule of real estate owned, doesn’t this just give them more detailed information than they’re asking for. That’s fair. Even if scheduled ease don’t give specific addresses. What about lumping all the investment properties together and giving at line item for total income on investment property, total bank mortgages, total taxes insurance utility payments. And yes, this is a great point. We stopped giving them a schedule of real estate owned. However, if you have it on a stop, it’s extremely helpful to fill that stuff out because it is going to calculate into your DTI, right?

Mike Rockwood: Yes, it’s a handy way to do it for your own calculations.

Ryan Rockwood: But ultimately you do bring it over to your budget as a single line item. And all you do is it’s not even all these lines. It’s just simply income from rental properties, colon, and it’s either…

Mike Rockwood: You touch the advantage if you want to…

Ryan Rockwood: Well, couldn’t just be a minus $30,000 or minus $5,000 a month, you know, all the costs, all the mortgages, all the income on a separate shade, boom.

Mike Rockwood: Of late like the last six months or so, I think all of the lenders have kind of standardized. At least I get no pushback on it when I do the following. I take gross rents times 75% and I enter that as a single line item on the budget as income from rental properties. And I’ve been attaching the schedule of real estate owned. I don’t know why you wouldn’t want to. I mean especially when you have more properties. It just gets to be a pretty handy way to show it. However, I have gone to just concluding two columns. I now only include the principal, interest, tax, and insurance and the gross rent. I don’t bother trying to do anything else with expenses or values, and stuff like that. They don’t care about values. And here’s how they handle expenses. They’ve been accepting 25% or 75% of gross rents as your income from your rental properties. So, the 25% their underwriters generally accept that it cost you that much to manage, maintain and that you’ll have a vacancy once in a while. Okay now, I want to finish up with them those – the other part of the question.

Ryan Rockwood: Different line items, did you want to say that in one part you put…

Mike Rockwood: Oh, yes, and so then I just bring over the total PITI as a one line expense line, and then just say See Attached. And sure try to get away with it if you can but obviously they’re going to see all – I mean they’re going to see all your mortgages on your credit report. And I’ve always, from the beginning, had them say to me well, you know what I mean, you need to show us which rent goes, which property et cetera. So, I don’t know if you can get away with it, get away with it but I want to see the point.

Ryan Rockwood: So, you do still do real estate owned.

Mike Rockwood: You know, I do but I do as you say. I use it just as a calculator just like you would on a P&L statement. It’s really your real estate business P&L. And it’s even more handy if a person has more than five or six properties.

Ryan Rockwood: Yes. Well, it gets pretty darn confusing with that many properties. We do have one right now. Okay, I’ve got another gal that writes in and says she’s got – it’s a little bit unclear but this is my interpretation of it. She’s paying on time, really has the hardship. She’s paying out of savings. The savings is coming to an end and she has no income. Is there no way they’re going to do a loan modification? Unfortunately, that is correct. They will not do a loan modification for you.

Now, here’s an idea. One gal this week, we have had success showing unemployment insurance as a source of income. Now, if you’ll work out on savings though you probably don’t have a job that you got unemployed from et cetera. The program for someone in that situation I think, keep every amount of cash you can. I mean this is a very, very difficult situation but a loan mod is not going to be the solution, unfortunately, unless A, you get a job very, very rapidly.

Mike Rockwood: Two, get a renter.

Ryan Rockwood: Okay. Good point.

Mike Rockwood: Three, get a Letter of Contribution from a significant other, from a son, daughter, friend.

Ryan Rockwood: She’s actually going to need the money too, unfortunately.

Mike Rockwood: Okay, now wait a minute, here’s another thought. I did have this exact thing happen and this to me is a travesty that people are spending their savings. See, over the last 25 years, we’ve all been convinced by the system that it’s okay to have this defined contribution retirement plans. So, all of our corporations, because they needed more money to prop up their stock prices and go global, got us all off of fixed pensions.

So now we have these 401Ks, 403Bs, rough IRAs, all these savings account that people are cashing in to pay their mortgage and ending up 65 years old, 72 years old flat broke. So, I got to tell you one story that is a feel-good story about Chase. It was actually a WaMu then became Chase loan where a retiree in exactly your situation Helene, got just an incredibly good negotiator working on a loan mod. And they moved here from the loan modification department to another department that did find an accommodation for her that is giving her at least three additional years to try to figure out what she’s going to do with income for the rest of her life. She’s like 67 years old. And she was like a year away from being totally broke. So Helene, stay in touch with us about this topic because it sounds like you are in deep yogurt.

Ryan Rockwood: Yes, and I mean you have to get, unlike the last couple of years there’s no last minute refinances savings. I mean this is a kind of situation where you really got to look out for yourself because these banks is certainly go to looking out for themselves declaring bankruptcy, going out of business, getting their people these golden parachutes and so on. Believe me, you’re the one paying for that. And I mean it’s literally time to start selling the fixtures when that happens. You know if that home has to go, sell the light switches right down.

Mike Rockwood: Yes. We’ll dismantle it with you.

Ryan Rockwood: Yes. Tom writes an interesting question or an interesting comment. He set for the callers about renters in a duplex. If the renters in a state like California with no redemption offer to give your tenants a lease, collect as much money upfront as possible and return for a lease and fairly low rent and then I assume what he’s saying, let the puppy ride.

Mike Rockwood: Yes, then the property is – the owner of the property is bound by the lease.

Ryan Rockwood: Well, I think whoever would buy would have to buy them out or on it.

Mike Rockwood: You have to buy out the lease. That’s exactly right. So, what Tom is suggesting and…

Ryan Rockwood: That’s very evil and clever.

Mike Rockwood: It is clever but after all, this is the ninja version. It is a Thursday night, right? It is Thursday, right? Okay, so ninjas, Tom is very, very knowledgeable in this area. And he makes the point that if you extended a long-term lease like let’s say one-year lease and then ask them for some upfront payment on it and the lease is at a favorable rate, they’d probably be willing to do that. The home goes into foreclosure. The bank sells it as an REO. Somebody’s got to deal with that lease. So, either the bank buys out the renter or the new owner abides by the lease. It’s a great one.

Ryan Rockwood: I’ll tell you, if I was a renter in that situation, I would be tickle tank

Mike Rockwood: Yes, no kidding.

Ryan Rockwood: I’d be tickle tank. I would just be laughing all the way to the bank with my $500 a month payment per year.

Mike Rockwood: Yes. So, that is true. Yes.

Ryan Rockwood: Now, where can you give yourself a lease?

Mike Rockwood: Tom, pay attention to that. We got to talk about that. Can you give yourself a lease, a short sale guy – no, if you given up the home to foreclosure – like this guy in Minnesota, like Paul.

Ryan Rockwood: You’ve given up the home to foreclosure; rent it to your wife who is not on the lease.

Mike Rockwood: Not on the title.

Ryan Rockwood: Not on the title. Rent it to her for year and she will agree on paper to pay. I sell it $12,000 a month rent.

Mike Rockwood: In that next five years, we are either going to be wealthy or we’re going to be in prison.

Ryan Rockwood: Yes.

Mike Rockwood: I’m already wearing these stripes. We’re both wearing stripes tonight. Hey, we got to get off the phone, I think [phonetic].

Ryan Rockwood: Okay, guys, thank you so much for joining us tonight. We’re going to try to get that chat thing worked out and basically our general technology have to get it. But it was awesome, awesome questions tonight. I think people are really pushing and moving forward and really some cutting edge ideas there from the homeowners too, so that’s a killer. If you need to schedule an additional private session with Mike, you can do so 60minute.com/…

Mike Rockwood: What did you say?

Ryan Rockwood: Sorry. 60minuteloanmodification.com/talkwithmike. Also as a current client if you literally need help getting it done, we do have a Done For You service. The upgraded is $150.

Mike Rockwood: $147

Ryan Rockwood: Okay, for details on that program visit /doneforyou. You know, we should really give – maybe should have members like a lower price to upgrade. You know what I mean? Than someone coming in new. Maybe that doesn’t make any sense.

Mike Rockwood: Where’s the mute button on here.

Ryan Rockwood: With that, I’ll sign off. We do spend most of the today on the phone. And so the quickest way to get a fast response is going to be e-mail, help@60minuteloanmodification.com. Thanks so much guys. Have a great night.

Mike Rockwood: Thanks, everybody.