QUALIFIED WRITTEN REQUESTS & LOAN MODIFICATION
Live Teleconference Recording

Audio clip: Adobe Flash Player (version 9 or above) is required to play this audio clip. Download the latest version here. You also need to have JavaScript enabled in your browser.

More info?
Schedule a Private Call with Mike
or
Get The Complete Loan Mod Kit Here

—–Qualified Written Request Teleconference Transcripts——-

Ryan: This is the 60 Minute Loan Modification Insider’s Secrets Teleconference series. We’re here to beat the bank, to save your home and help you escape bad debt forever. My name is Ryan Rockwood, and as usual I’m joined on the call today by my father and business partner, Mike Rockwood.

Mike: Good evening, everybody.

Ryan: Today’s call is about qualified written request, but I have a couple quick announcements first. Number one, before you contact your lender it is always a good idea to have a plan in place. We talk with clients all the time who say things like “My lender is working on a solution” or “My bank says they’re trying to find a program for me”. This might be the case, but usually what really happened was the bank used those phrases as a polite way to get you off the phone. So a much smarter approach is to educate yourself first, then approach the bank with an end goal in mind.

Usually what we’re talking about here is a monthly payment amount that is a goal, okay? That is realistic and that you can afford to pay. It’s really a sad thing, you know, when someone does get kind of shrugged off. They actually believe them when they say, you know “Call back, we have a new plan in place next month” or “We’ll try to get you into something like that”. You really have to know that this is a behemoth and you’re really going to have to kick and scream a little bit if you want to get heard, period, let alone helped. Okay? Also number two, if your current interest rate is less than 6% fixed right now, there is little to no chance you will get a loan mod even if every terrible thing possible has happened last year. A less than 6% loan currently is considered good enough so your bank probably won’t even be bothered. So you should look at other options such as short selling. Okay? I hate to start off the call bursting everyone’s bubble but there’s no point in…

Mike: Alright, but let me challenge you on this one Ryan.

Ryan: Yeah.

Mike: Because why do we always have to be telling people the truth? This morning I heard an ad for a law firm, a big national law firm, you know, touting the fact that they’re really going to get you a principal reduction on your loan modification. And I thought “Oh man, what a bunch of hooey.” And then now, you’re speaking the truth about, realistically we have very poor luck when we take on a fixed rate of 6% or less. We just don’t have a good hit rate. So we pass that information along to you. But you kind of feel like “Oh man, why do we have to be the reality seekers?”. You know what I mean?

Ryan: I do feel like we’re in the role of a bummer in a way.

Mike: Yeah, yeah. We’re not fun.

Ryan: We do have to figure out a way to get paid for being a bummer, I’ve got to say, because we’re really not getting paid. Here’s the thing. If you sign up for the law service, they charge $5,000. It’s a legal retainer. It’s their money, they can take it right up front okay? When we do a loan mod, we charge a fair, when we personally do some of the loan mods we charge a fair $3,000 and most of that, if not all of that fee, is 100% guaranteed based on the outcome. So the bottom result is that–anyway you can see obviously why a law firm would be driven to sign people up and we’re not.

Mike: And the key for us is we don’t take the assignment if you’re hoping for a principal reduction or that’s what success is for you. Or if you have a 5.875 fixed rate, 30 year fixed rate loan. We just turned one of those down this morning. We just won’t take it on because we can’t guarantee it. We can’t afford to go after it when there’s little likelihood that it’ll succeed. But at any right, I know that that is our role. That’s what we have to do so let’s just keep doing it.

Ryan: That is your contribution. Okay, onto today’s call. Today’s call is about the qualified written request. What are they and how do we use them. Today’s call we have a special handout available for everyone. It’s at our website 60minuteloanmodification.com/downloads/qwr.doc

Mike: As in qualified written request.

Ryan: So again that’s 60minuteloanmodification.com/downloads/qwr.doc. So jump online and grab that. I assume most people have our web address. That’s probably how they found us.

Mike: But you know what Ryan? This is a Tuesday call. We’ve got a lot of people around the country who are listening to us for the first time because they heard me. I’ve done five radio spots since last Thursday’s call.

Ryan: Well let me give a quick so I don’t forget to give the background here. Here’s the background of the call. If you’ve been to our website, if you’ve heard my father on the radio, you know some of his story and you know some of the story of loan modifications in general. How it’s so important and how you need basically to get involved. If there’s any way you could possibly benefit from this, it’s your tax dollars at work, etc. So anyway, long story short, Mike spent a ton of time, probably 6 months total, failing to do a loan mod on his own. You know, the way the banks told him. “Just call us and we’ll help you through it” kind of thing. And getting denied, denied, denied, denied, denied. And so basically finally ended up cracking the code but not until after a lot of work and some pretty unorthodox thinking. In light of all of that, we encouraged him “You’ve got to put this together. Some kind of book, some kind of product or maybe we could help people”. Before no one had thought of doing loan mods yet. This is like back in the day right?

Mike: (laughs) Yeah, yeah.

Ryan: Like 3 months ago.

Mike: 4 weeks ago….12 whole months ago.

Ryan: And it sounded ridiculous. It did. Doing loan modifications for someone. We’re in real estate so you know mortgages, real estate, all this kind of stuff. That has a normal feel to it. Loan mod was like “What?” We kind of just started up a little business and started helping people out and it grew a little bit from there. So that’s how these calls came about. Basically we got two teleconferences every week. Tuesday is free to everyone and we try to deal with more entry level topics so you won’t get overwhelmed. Thursday is for clients only. Anyone who’s purchased the product can join us and we try to get into some of the loan mod ninja stuff there. Like the hardcore head spinning stuff.

And we try to get some–because if you just jumped right into now and you heard that Thursday call, and this is your first time on, you’re thinking “Can I get a loan mod”? It’s really, you can get overwhelmed and you–

Mike: Yeah. “These guys are crazy”.

Ryan: –”this isn’t even worth it”. Right? But what we try to help people realize is that you actually don’t need to understand how it works and those complicated questions are kind of on a case by case basis. So what we do is we just take the questions, field them, answer them if we can, and try to find out an answer if we can’t. Okay? So that’s kind of the gist of it. Later on in the call we will take callers live. So if you would like to talk, please definitely speak up. Don’t be afraid. Also, be sure that you mute your phone if you’re not speaking when I do that.

Also you can always send in a question to me right now, this very moment by email at questions@60minuteloanmodification.com. Okay, so keep them coming. Shoot in the questions. We’ll deal with everything as they come in if we can. So thanks again for joining us. Basically we’re just going to launch into the topic today. Today’s topic is qualified written requests. The only reason I think any newcomer to the call would have heard about this is–I think it was kind of popular 4 months ago. There was this kind of popular claim that there were some tricks that people–

Mike: Oh, right. You’re referring to the “produce the note” craze of a few months ago.

Ryan: Yeah, where it was like, there were a few people who got their homes free because there was some kind of error. The media made a big deal out of it right? That was the qualified written request. And since then everyone says “Hey I’ve got to ask for my mortgage”.

Mike: Yeah so I can jerk the mortgage company around right?

Ryan: Which is cool. I mean go for it, definitely. But we’re here to tell you that they’re giving away too many houses. So you want that to be your….shoot it out there, let it sit…

Mike. Yeah, ask them.

Ryan: Yeah, but pursue other things at the same time. You know what I mean? And then, so why don’t I just turn it over to you, Dad?

Mike: Okay, so the qualified written request. Before I start running through the prepared comments on that topic I want to really emphasize what Ryan said really is true–that you need to drive this effort. The lender will not drive it. That’s why we believe that it’s best for people to do loan modifications yourself. We believe that a “do it yourself” loan modification is a better modification, because it needs all kinds of English. It needs all kinds of passion. It needs somebody who really cares about it and, and you care about it because it’s your home and your money.

Believe me, the lenders are having a hard enough time pushing loan modifications through their systems on properties that they are going to own very shortly, and they don’t want to. And on clients who have stopped paying, they are in default, they are non-performing assets and they’re going to have to start reporting them as non-reporting assets really soon. They’re having a hard enough time pushing those loan modification applications through the system. So don’t believe it if they tell you that they’re working on trying to find a program that you fit into or something like that. Believe me, they’ll get back to you yes, 6 or 8 weeks from now with an update on what they think. So forget about that. You’ve got to drive this effort.

Now just in order to give you a little bit of flavor for the kind of feeding frenzy that we’re seeing in the loan modification business. I shared this information with those of you who are on our Thursday call, but that’s clients only so some of you on this call didn’t hear these little tidbits. I want to share them with you. One of the negotiators at Chase, while I was on waiting for some information from them the other day got chummy and friendly with me and told me a little bit about some of the things that are going on there these days. And of course, as usual, this quarter they’ve started a new division every quarter for the past 2 years. It seems like a year and a half at least they’ve formed these new companies and new departments and new special teams. But just get a load of this magnitude.

He says that his department, the loan modification department at Chase, that’s WaMu Chase gets 100,000 faxes every day. Can you believe that? They get 40,000 applications each week. They currently have 155,000 in the queue waiting for resolution. Doesn’t that just blow your mind? The enormity–this is one bank.

Ryan: You know what I can say? This week, I was actually surprised on how fast I was able to get through to Countrywide.

Mike: Yeah. Well maybe because everyone for 2 months has been running away from them. Maybe they’re getting a little bit of a break.

Ryan: I don’t know.

Mike: You got right through?

Ryan: Maybe this is an example of another change. It’s all kind of speculation right now. Maybe they’re getting people on the phone. I don’t know what it is. But she was actually able to provide me with a decent answer.

Mike: Okay. Because they had been busted for at least a couple of months. And I just also want to report that Chase forms these special teams. They now have this “Way Forward” department which is the department that is supposed to be adhering to the, oh you know, helping the responsible homeowners who haven’t gone late, haven’t gone into default yet. These are the guys that President Obama really targeted in his “making homes affordable” program.

And so this “Way Forward”–and as we all know it’s been since March 4th that that program was announced and it just seems to have gone onto the heap of bones. Just like all the other government programs that have been started and been ineffective in terms of slowing the rising tide of foreclosures. But Chase has started this “Way Forward” department and they have a care team that is kind of a hit squad. When the negotiators need more information on a file, or there is something wrong with a file, or something incomplete on the file, they hand it to the care team. The care team is kind of their information hit squad. Well now they’ve even started a refinement of that and they’ve started a hit team called the “Imminent Default Team”. These guys are the ones who are working on the borrowers who are very close to defaulting. In other words they’ve gone past their 15 days and they could default here in the next 2 weeks. So this “Imminent Default Team” kind of pounces on those loan mod applications and tries to ram them through.

So it’s kind of a good sign that Chase–at least they understand the problem. But if these programs and these teams are anything like in the past, it’s really going to be a lot of lip service. Really, what really matters is getting a good solid application, a knowledgeable application submitted on time to the right place and then good strong follow-up and good negotiations. So let’s see how a qualified written request fits into the whole picture.

Now the “Real Estate Settlement Procedures Act” is a consumer protection act. Section 6 in it specifies safeguards for us as consumers of loan services. It’s called the “Qualified Written Request.” Section 6 describes it. It establishes a legally mandated communications protocol between us and our lenders. The beauty of this is, you know 50 years ago it would certainly not have been nearly as important because when your home mortgage was held by a local bank you could just go down, mosey on down and review the situation with your banker. But in today’s financial markets, not only is the lender that you initially received that loan from likely to have hundreds of thousands of employees worldwide, but they actually have sold your loan in a number of different ways. They wholesaled it off and it probably became part of some mutual fund investments in a process called securitization. That process has been legal since the Bush administration first took office. Or you know what, it was the end of the Clinton administration. So about the time of the dot com bubble burst. So that’s been legal. These loans are resold, they’re wholesaled. They’re packaged into you know, producing, we would call them derivatives. And they make enough money to attract investors.

That’s a whole other issue because I’ve always kind of wondered “How come this can be so profitable that you can repackage a mortgage and make it profitable enough that an investor would want to go after it?”. You know to me it just boggles my mind. But at any rate it happens, and let’s get back on the topic. The “qualified written request” is so useful now because it gives a reasonable expectation that our requests for clarification or our complaints, or our requests for a modification to the terms of our loan will not go unheeded.

Ryan: But the section 6 or the prop 6 or whatever. Basically I just want people to know in simple terms, there’s a law out there that says that if we send a document to the bank that asks them a question or something like that, that they have to respond within a certain period of time.

Mike: That’s right.

Ryan: You know it kind of sounds, if you think about it. Before all this it sounded to me pretty ridiculous. Like pretty like weird government rules. Some kind of, I would have though it was some kind of weird special interest lobby.

Mike: You mean just bureaucracy? Like why do we need something like this?

Ryan: Just a silly law. When you ask them I don’t think you need a law, I wouldn’t think you would need a law to get a response to a question about your loan. But like you were saying, we’ve gone a long way from being able to walk in anywhere and see anything. Most of us these days, it’s quite true that we have no idea what’s in all that fine print in that loan document.

Mike: Right.

Ryan: And I’m not sure how to deal with that either, because there is no reasonable expectation that we should read through that and understand it I don’t think.

Mike: Right.

Ryan: So anyway, now it’s starting to make a little sense. The kind of consumer protection thing…

Mike: It is a consumer protection. It really, in these trying times is really important and well written. It’s one of those times where you just have to hand it to the government because they’ve done a good job. And it’s HUD, which by and large is an organization that is run pretty well. But let me say more about the “qualified written request”. It gives us reasonable expectations. Here is what they are. They cannot ignore your request. If it is written and you have proof that you submitted it to them, the law requires that the lender responds to these inquiries within 20 days and tell you that they received it if that’s all they can tell you. And within 60 days they need to give you a full explanation and an answer to all your questions. So you should be using “qualified written request” for formal requests for information that cannot be made by phone with a customer service rep at your lender. Let me give you 7 examples.

To learn who actually owns your loan. The company that you’re sending money to, we all have learned is just a servicer. Very, very unlikely that the company you send your mortgage payment to is anything but a servicer. So if you really want to know who owns your loan, you need to send in a “qualified written request”. In fact, they will not tell you over the phone. They’ll instruct you as to how to submit a “qualified written request” to get that information.

Secondly, to apply for a modification to the terms of the loan, like you do in your hardship letter. That is a “qualified written request”. Or to request an explanation of fees, or special charges that you incurred, you should use a “qualified written request”. To request special handling of reports like credit bureau reporting regarding any payments that they are reporting as missed. If you want a formal explanation of how they are reporting a particular instance, or how many, or if you want to argue with them that they should not be reporting it as missed for whatever reason, you do that in a “qualified written request”. If you have any escrow related questions that the customer service team can’t answer over the phone, submit it in a “qualified written request”.

And of course you know your escrow account is impound for your taxes and for your insurance. Most loans have escrow accounts and impounds. Most consumers find it pretty handy, and of course the banks love it because then they’re sure that your insurance and your taxes get paid. Alright. Then you should also use “qualified written request” to file a complaint and also to inquire why your modification is taking so long.

Ryan: What?

Mike: Did you hear what I just said? I’m suggesting a new use for the “qualified written request”. I suggest, and I’m going to start this myself. And I’ve got to say it isn’t my idea. It was submitted on one of the forums that I belong to last week. Submitted a suggestion that we all start using “qualified written request” to ask “Why in the world is my modification taking so long?” And I’m going to start using it about two weeks into the modification application process. Let me tell you how you should format your “qualified written request” and then we’ll get on to some of your specific questions.

And remember, your questions can be on any topic regarding loan modifications. It doesn’t have to be on “QWR”. Alright, here’s what you do. You should submit this format. You should put your name and it should be in the name of everybody on the loan. Husband and wife, or if two non-married individuals are on the loan. Everybody on the loan should make the request. Secondly, put the property address. That is the address that is collateral for the loan. Third, put the date and then your question. Here is some advice.

Really be specific. I like to use numbers, and it’s really good if you can, use the term like “I suspect violations”. I always use “I suspect violations” if at all appropriate. Like “I suspect violations of the RESPA or of TILA in the processing of certain fees associated with my loan modification. Can you please give me a specific breakdown of all those fees and an explanation of why they were incurred?” That would be a great question. Then you sign it if at all possible. So if you’re sending it by US Mail, or certified mail, or FedEx or whatever like that, you can sign it and get everybody on the loan to sign it. I always send them certified mail if it’s absolutely critical. Otherwise, honestly I just send them by fax and it seems to work just fine. Or you can of course send it by USPS postal service. Then I would just pay that extra buck for the delivery receipt notice. Alright. So that’s the format. Use them at will, don’t abuse them. There’s just no point. Honestly they are an important part of the loan modification process. We’re already using them in the loan modification. Like I said, the hardship letter, your request for the loan modification itself. We always recommend that at the end when you do get your mod offer, you send in a “QWR” immediately asking for 3 things.

Number one is additional concessions. Number two is a list of all the fees that will be incurred in this modification, and an explanation. Number three is we always ask, and I recommend you do, always ask that they not report all of your lates. Let’s say you went late four times during this modification. I always ask them to take two of those back because of their processing delays. And you know what, it happened. I just started doing it recently and I did get agreement. It seems to not be that big of a deal for you to ask them to reduce the numbers of reported lates. Alright? So that was one of the recommendations that Rusty made a couple of weeks ago when he was on a conference call with all of you and we started trying it, and it worked.

Ryan: So with something like that you just recommended three different items okay? Is it okay to put them all on one request?

Mike: Yes, absolutely. That’s once “qualified written request” with three questions.

Ryan: So what do you do? Do you number them or something like that?

Mike: Yep. Yep.

Ryan: Because I could just see getting one back. You know the other thing is that we have seen some really lame answers to “qualified written requests”. What do you think about that? People think “Oh I’m going to get an answer”, but in so many cases something will come back, “We don’t believe we need to provide you with that information”.

Mike: Yes, now that is lame. Honestly I’m kind of surprised that, the way the lenders seem to take this pretty seriously. But you do occasionally get these lame-o answers, and then all I do is I immediately follow it up. “Not good enough. Not good enough.” Go right back to them. “Not good enough. The answer you provided was incomplete and inconclusive.” etc., etc. All you can do is start it over again.

Ryan: Okay. So that’s “qualified written request” in a nutshell. If you’re brand new to the call–we provided that as just a tidbit, kind of an idea of some of the ins and the outs of the loan modification process. Nothing you need to memorize or write down or get started right away. By far you know, the basic information about your finances and so on is the first thing to gather. Not any certain “qualified written request” info. So let’s see, one sec. I’ve got a question.

Mike: Hey Ryan, let me take this first will you?

Ryan: Okay. Go ahead.

Mike: Here is a question about stating that it is a “qualified written request”. Jim says, “Do we need to state that this is a qualified written request and from that is from RESPA section 6?” My answer to that is that in fact I’m not sure that you need to. I always do. I always end the “qualified written request” with that statement. “I understand that this is a qualified written request and my expectation is that you’ll respond to this within 20 days, and certainly with a complete response within 60 days as outlined in RESPA section 6.” That’s just the way I do it. I’m not sure that you have to but that’s my recommendation.

Mike: In our basic kit, “Loan Modification: Do it yourself” kit, “60 Minute Loan Modification” kit, there is a workbook that has appendices. More than one appendix at the end of it. It has appendix-itis? You can take them out. It’s perforated. So you can do an appendix-ectomy. Okay, so you have a written document and then we also provide what we call a black belt CD that has all the forms in active spreadsheets and word documents, so you can cut and paste and use them. You don’t have to recreate them. So that’s handy for faxes and for forms. Every form that you need is on the black belt CD. Alright?

Ryan: Alright, let me jump to a question here. Hold on. Okay Tom asks, “A friend of mine works for a loan mod company. Says that most loan mod offers come by mail and you seldom get a chance to talk to your negotiator. Is that your experience, and in a case where that happens, any suggestions on getting the personal negotiation going?” Thank you very much Tom. The thing that I would say is, I guess when we first started this it seemed like we had a lot more contact with the negotiator.

Mike: Well that’s for sure. They had time to talk back then.

Ryan: It’s like “It’s me again”. You know? And now I don’t, here’s the thing. They’ve gotten better. It has its ups and downs, but what the question is assuming is that the loan modification was not good enough. Because there’s certainly no reason to talk to anyone if the loan modification is adequate. Okay? So that’s what a lot of people like talking to folks like us and comparing things. A lot of people, we get an email like “Here’s my loan modification offer, here’s what I was at and here’s what I got. Should I go for it? Should I push more?” You know, that kind of thing. So you can, the tough thing is you don’t know really what the expectations are. In any case, suggestions on getting the personal negotiation going. Let’s assume that it is a bad loan modification or just not that great. Do you have any suggestions for how he might do that?

Mike: Well, first of all, in 7 out of 10 cases, we get to talk to the negotiator before we get the modification offer just because we are very aggressive on our follow-up. We recommend a daily follow-up regimen that is a fax, and it seems like in those final weeks we’re calling them every couple of days as well. So we do break through and get contact with the negotiator just because we’re all over it. So 7 out of 10 cases, that’s just my guess, we already are talking with the guy or the gal. In those cases which we don’t, generally those modification offers are signed by an individual. They come from an individual negotiator. And even if they don’t, when you call back in on it the person that ultimately will talk to you about it after you have the modification offer is just the negotiator. So I haven’t ever had any trouble getting through to the negotiator. You can just keep asking if you’re talking to a loss mitigation officer and just say, “Are you the negotiator assigned to this file?” and if they’re not just keep telling them you need to speak to that person. You need to get through to that person. You certainly have a right to, and I’ve never had trouble getting through to that. I’ve never, not that I haven’t had trouble, it’s always hard work, but I’ve always been able to. And you really do need to because they are the ones in charge with getting it out of their office and over to underwriting.

So they’re the ones. But see, so many of the outfits like Chase have these other teams that they hand things to. So here’s Jane, your negotiator and she realizes you might just have qualified for a new program that just came down the pike yesterday and they were briefed on it in their morning meeting. So Jane calls the “Care Team” and says “Care Team, hey I was just about to send this modification offer out and I realize it may have something to do with that new program that the supervisors explained to us this morning. Will you take it and evaluate it and get back to me?”

So then it goes off and they might call you, and they might get clarification on a point or two, and then you do have another person. So you have a “Care Team” hit squad and then you may get contacted by the “Imminent Default Team” as well. How would you like that? “I’m calling you from the Imminent Default Team”, and you say “Shoot, I didn’t realize my default was imminent. Is that my demise is imminent or my default?” It’s the “Imminent Default Team”. “Well you’re right, my default is imminent and if you don’t tell me what I want to hear on this call, my default is going to be you know, the next time the payment is due.” Yeah, it’s going to be certain. Alright, so Tom I haven’t encountered that much of a problem. I think you just have to roll up your sleeves. You know, towards the end of these modifications, there is a little flurry of activity. A little extra work you have to put in just to be sure you nail a good one.

Ryan: Okay, so anyway I’ve got another question. And remember questions can go to questions@60minuteloanmodification.com. Okay, “I have about 20K in arrears on my mortgage. Can I just send in a “qualified written request” to have this re-amortized or even forgiven, or will I have to put this in a hardship letter?” Well that’s kind of an interesting question.

Mike: Yep. You bet it is.

Ryan: Like why not just do that right off the bat? You go through this whole thing, the dance, and you could look at all these documents or you could just do it. What do you think?

Mike: It’s not a bad strategy. Here’s the reason why. I’ve been involved in an awful lot of cases where the folks are late in the foreclosure process and things really get messy then. They throw out all the rules. I mean they might call you a week before the trustee sale and say something like “Listen, if we were to modify this loan to this blah, blah, blah, blah, would you take it and we could just. If you paid up this and blah, blah, blah.” So you throw out all rules and as you get out of line, which I call getting out of line is not paying your bills. So get out of line and the rules go away. But in the same case here, that’s basically what you’re doing. If you went and you’re not late on your mortgage and you sent them a note, a “qualified written request” and asked them that, they would refer you to their loss mitigation department who would start you down the loan modification route. Our argument always has been that you don’t want to be just at their mercy in that. You want to be in control. You want to control how this thing works out, and it’s very easy to get in control. In fact, we always say it just takes 60 minutes to prepare to call your lender. So don’t just call the lender, just contact the lender. But the methodology you’re talking about using, especially if you don’t mind going late on your mortgage, is just a fine one.

Ryan: Well I mean, but the answer to the question is really–ultimately I believe she’s going to have to–they have a set procedure for approving a loan mod.

Mike: They’ll try to fit her into it.

Ryan: Regardless of how you initiate the process, be it a phone call or “qualified written request”, I think in the end unfortunately you’ll have to do the hardship letter, do the documentation, do all that kind of stuff.

Mike: But isn’t it funny Ryan how many loan mods we do where, you know what I mean, you don’t submit 3 months of checking accounts, you don’t submit last year’s taxes. It’s a deal done like on a napkin at the 11th hour. So it depends on your tolerance for messiness.

Ryan: Well I don’t know. I can’t say exactly that those are loan mods. Those are almost like foreclosure triages it seems like.

Mike: They result in a repayment plan and a modification.

Ryan: Yeah, but no one in this case wants to let it get to that spot. The thing that you’re talking about I think is like the trustee sale is next week and that’s awesome that we can work it out, but a lot of times we can’t.

Mike: You always have to be ready.

Ryan: Yeah, you have to be ready to pay the price. So, and it’s a heavy one. Okay, questions@60minuteloanmodification.com. Let me jump online here and see if we can get come questions answered.

Mike: Hey Ryan, before we do that let’s make sure that we’re not overlooking part of that question which had to do with all the arrears lumped on to the loan. That is a routine way of handling the arrears in a loan modification. The most typical is if you are a payment or 2 behind, for you simply to be asked to make an initial down payment and to reinstate the loan or to get the loan current. They may put you on a repayment program that requires a down payment and 3 payments before they start the modification. But generally speaking, it’s pretty easy to negotiate that all the arrears will be added to and amortized over the life of the new modified loan. It’s not a new loan, it’s a modified loan. Okay?

Ryan: Alright. One sec.

Caller: Hi, my name is Mark. I have a question.

Ryan: Hi, Mark.

Caller: Question I have, first of all thank you very much for these phone calls. I wanted to find out, it sounds like there are a lot of documents hitting the lenders between you know, faxes and God knows what else, and that they’re behind schedule. Also my understanding is that they’re required to respond within a certain time period on the “qualified written request”. They’re so behind; I would imagine that on a regular basis they can’t respond. What happens if I’ve fallen behind on my payments and I notice a default has been filed and you’re playing the waiting game? Doesn’t that mean that they could just move forward with the foreclosure if all the timing doesn’t line up just perfectly?

Ryan: Okay great question. And Mark, what state are you in?

Caller: I’m in Irvine.

Ryan: Okay. Mark from Irvine, he’s calling in and he’s saying, You know, the qualified written request, you shoot that in and you get something back I think in 60 days. But the truth is that might not happen with the 100’s of thousands of letters their getting right now. So in the meantime can the bank move forward with a foreclosure? The answer, so it does seem like the stars have to align. A couple different things, Mark. For one thing, you don’t want to have the “qualified written request” be your hope for something that’s going to stop a semi-imminent foreclosure or even pause it. I’d be real careful about using that as that tool, hoping it could ever be that.

To answer your question, you’re right. Sometimes you will get a letter back I think just saying–haven’t we got back letters just saying “We’re working on it. We haven’t been able to get it yet. It’s taking longer than we thought.” You know, so they can essentially extend that 60 days to anything that they term reasonable. Now the problem here is enforcement, okay? Yeah they need to respond within 60 days, and let’s say you don’t feel like they have. All the shucksters out there will tell you, well you know then you can sue them and you can get your house for free. But the thing is that you have to sue them to get your house for free. What that means is hiring a lawyer and filing a lawsuit, providing enough documentation that the lawsuit can move forward–

Mike: And guess what Ryan? The court will find that the damages don’t quite equal your house. The damages equal you know $175, here you go.

Ryan: And your attorney fees are there. And that’s the bummer. It’s real hard, the lawyer based loan thing. In fact we did that for some time. We worked with a lawyer on our team and we recently dropped it because of non-interest. Because ultimately we would kind of talk everyone out of it. We weren’t getting better results. But anyway, the answer to your question–so people get all excited about this and I get, we get several kind of well meaning phone calls from people who call us all the time and want to go ahead and proceed. They say “How do I sue?” They fundamentally do not understand the process, but ultimately could you sue for–because ultimately you could sue someone.

You could file a suit for a couple hundred bucks with some document you got off LegalZoom or something like that. But the thought that you have the slightest prayer in something like that. In fact you file suit, I don’t know how you even get them to stop the foreclosure if you did that. I think the bank just barrels on. We’ve seen that in many cases. If the bank can’t find the loan documents, if the bank can’t find–lost everything you submitted, they’ll roll with it. It’s a cumbersome, clunky, behemoth you know? The elephant in the room, and it’s going to do what it wants.

Mike: But here’s one insight I would give you Mark. The bank wants not to interrupt the foreclosure process primarily because like in Irvine, in California here it’s a lengthy ordeal for them. You know its non-judicial foreclosure and from the time they notify you. Now you say you’ve got a notice of default, it’s been three full months before they can schedule a time to take away your home. So they don’t want to interrupt it, but you’ve got to know that many folks are not getting a notice of default after 90 days. Many people are going as long as 6 months before getting a notice of default.

Then those that get notices of default, very often are not getting notices of trustee sales after 90 days which is their legal right, just because the banks are so swamped. If there is any action whatsoever on your file, you get delays and you can just continually request delays because you’re trying to sell the house or because you’re trying to modify the loan. Etc. Etc. Banks these days are awfully willing to continue to delay and work with you to postpone foreclosure, but boy do you have to be certain of what you’re doing.

Ryan: You don’t want to go in there and request that extension for the first time the week before or even a month before the deadline. You want to have every month you talk to them, ask for that extension. You know what I mean? You certainly have to have a solid history of things. I’ve had many cases where I’ve called the bank. I said “Hey, this person called me last minute, but this home I can totally sell. If you just give me 30 days on it, we will just sell the home and pay you off completely” and whatever. The juggernaut rolls on. In most cases, in that scenario. The only thing we can do last minute to stop it is like a bankruptcy or something like that.

Mike: So here’s the deal too. If you call in the last weeks before the trustee’s sale and say “Listen we think we have some hot prospects to buy this house. Couldn’t you give us a little more time?” They may or may not. But what they will do is if you submit a bonafide offer from a qualified buyer, they definitely will put it on hold while they evaluate it because it always takes them a lot longer than a couple of weeks to evaluate your short-sale proposal.

Ryan: And that’s kind of branching out into something else that my dad and I talk about and that is, you know, loan mods are great but they’re not the only game in town. You can’t rely on the. You can’t force your situation into a loan mod. And absolutely, should everyone try a loan mod? Sure. Definitely. But that’s not all it’s going to take in today’s climate to save your home. To get yourself back on track. To take advantage of this stuff you have to be zigging and zagging and also planning for a short-sale and even the stuff you don’t want to plan for. You know what I mean? You have to talk to that bankruptcy attorney. We really recommend a multi-pronged approach–

Mike: We absolutely do.

Ryan: –the whole time. That’s hard to wrap your mind around because you want the solution.

Mike: But the thing that we always counsel people on is “What is your objective?” If people say, “My objective is singular. I want to keep this house.” Then we have four foreclosure fighting tools that we can use. If they say “I want out from underneath this debt”, then we really have three. You know, there’s the short-sale, there’s the deed-in-lieu, and there’s just walking away from the darn house. But we also have four that enable you to keep your home and they include bankruptcy and loan modification and paying up and catching up and refinancing. So you have to have a whole arsenal of weapons in this battle if you want to win. Loan modification far and away is the fastest, cheapest, and easiest way to fix your screwed up mortgages. But you’re going to have to have a cold assessment of the situation. It might not be the one that works for you because of your income, because of whatever.

Ryan: Yeah, and you can’t. In most cases we can force a loan mod, to tell you the truth. However we can’t force that to be the answer to your situation. Right? If you, there are people who call and say “Can I get a loan mod?” We say “Of course you can get a loan mod. We’ll fight for you.” We absolutely torture these things so they’ll work. But if you still can’t afford at the end of the day to pay the $2,400 a month mortgage, that isn’t the solution for you. Not to say you shouldn’t do it. Don’t get me wrong. You know what I mean? They’re different things. If you do it, you’ve just bought 6 months. You’ve wrapped everything back into the mortgage. You pay it for a couple of months before you default again, so they have to start the whole process of NOD and trustee sale over again. You’ve essentially just bought yourself…Let’s say you did it yourself and you paid $300 for a book like ours or something…

Mike: $300? Are you announcing a price increase?

Ryan: (laughs) Well whatever. Just as an example. You’ve just bought yourself for a small amount of time, serious, serious time. If you figured your mortgage is worth I don’t know $3,000 a month to you, another 6 months is worth $20,000. So if you could pick up a part time job that would get you $20,000 in those months….

Mike: What Ryan is describing is a strategy that some of our clients are using that we have started calling “hide and seek”. What you do is you occasionally pop out from behind the rock and pay your mortgage.

Ryan: I didn’t know that was what we were calling it.

Mike: Yeah, and then you run, run away again. So it’s called “hide and seek”. You occasionally catch up. And it’s laughable how long some of these people have strung out these terrible, terrible mortgages.

Ryan: To those other people though, there’s not much we can say. A lot of people get the notice of default in exactly 90 days. You know trustee’s sale, 90 days later. I don’t understand. No one understands I think why. Some of our clients, I think one hasn’t paid in 15 months and I just checked and there’s no foreclosure date.

Mike: But it’s so weird because it’s not a particular zip code, it’s not a particular equity situation, it’s not a particular lender. It’s just weird.

Ryan: I think it’s like blessings from God. And so Mark, in answer to your question. Where you’re at in the NOD process, the foreclosure process, I think you’ve got time. Yes, you’re going to be pressing it up. You do want to budget 90 days for a loan modification, 30 to 90 days. However, get your loan modification in this week. This isn’t something you want to spend 30 days on. You want to get it in this week, and should you do that and follow up, I think you’re going to be well on your way to getting that loan mod. If not getting the loan mod, you’ll know when you need to bail and you’ll know when you need to request another extension or something like that. Oh, we got a nice compliment there, that’s nice.

Mike: About the fact that they can hear you now?

Ryan: Yeah, probably. Richie asks, “I’m waiting for my lender to reply. They said they would get back by July 24th. I’ve already gone through the pre-qual. My tenants have moved out. I do not want to sign a lease until I get the loan mod. How do I pressure them to hurry up? If the loan mod is not good enough, negative cash flow. I am going to short sale.” Okay. Interesting, interesting stuff here. I just want to start off saying it is a darn bummer that your tenants are gone okay? Furthermore when you rent something here in California, you need to sign a lease I assume. Right? But can it be a month to month lease?

Mike: Oh definitely. Yes, but Richard why not sign them? I mean you need to sign a tenant right away, but, and anyway even if you’re going into short-sale, the short-sale might take you 6 or 9 or 12 months. You don’t know that it’s going to go fast.

Ryan: You know what happens? I guess it’s been a little while since I’ve worked a short-sale. What happens with a lease in a short-sale?

Mike: Well, you know it’s at risk. Technically you know, like a management company wouldn’t take a yearly, an annual lease from someone if they knew full well that the home is in foreclosure, or that it’s of course up for short-sale. But that certainly doesn’t mean that you shouldn’t take the lease. Here’s my thinking on that. Because you’re pursing a loan modification, you’re pursing a short-sale. I always recommend that you pursue them in tandem so that you can take the option that is best for you. Very often your buyer, particularly if it’s a short sale, your buyer it’s highly likely is going to be an investor. They may love to have a renter in there.

So don’t presuppose that you’re going to get entangled and you don’t want to have a renter in there. It may be a godsend that there’s a renter in there, or it may be that the bank has to pay three months to buy the tenant out or whatever you negotiate. So I really wouldn’t worry about it, Richard. I would get a tenant in there so that during the short sale, and during the loan modification, even though you might not be paying the mortgage at least you have some income coming in to cover management expenses..

Ryan: You’re going to need money to start that loan mod up. They might ask for a month or two down so you’ve got to get that money coming in. Here’s an idea I would do. I would say, I’d get someone in and say just this, that you know you’ll give them half rent in order if they’ll go for this. Not even that, give them 75% rent if they’ll go for this month to month situation. All things going forward, as soon as you get your loan modification or something, the rent will go up to it’s full amount and they have the option of signing a year lease or getting out.

It’s totally fair and I would love to do that if I was a tenant, you know. You know someone without kids and family obviously. You know what I mean? College kids or something, that’s great. To get money coming in by hook or crook, you’ve got to get someone in that sucker. You know whether it’s a month to month lease or however you do that. That’s up to you. Also, you know tenants do go away. Assuming they’re not over 55, they’re not disabled.

Mike: And you’re not in a rent controlled area.

Ryan: Yeah, and they haven’t been there for….

Mike: Forget everything we just said!

Ryan: There are some times where renters don’t go away, however, 99% of those cases, even those ones we’ve mentioned, are like five year plus. The government respects the fact that they’ve been there longer. It’s a seniority thing.

Mike: Like rent control.

Ryan: It’s like a seniority thing. I don’t know why that makes sense, but virtually for the first couple of years you have nothing to worry about. But if you’re in a rent controlled area and you get into you know year five and they’re disabled and stuff like that, then you’ve got some consideration. But anyway, even in that case it’s, you know in a horrible situation it’s $30,000 to pay someone off and get them to go out. If the bank doesn’t want to play ball with you and they’re going to be stuck with this property, you know more power to your renter if they get $30,000. Tell them to never leave. If you’ve got to stick them with this property, what a delight to be able to leave them with a tenant that will stop them from getting–at least tie it up for another 6 months.

Mike: You know a client in Florida the other day told me this story after we had short sold his home. The renter who he was very good friends with, he really came to like this guy over the time. The home was taken in foreclosure. It was a town home and the renter stayed for 11 months without paying rent before the bank got around to processing the eviction.

Ryan: That’s hilarious.

Mike: Isn’t that bizarre? He lived free for a year. When the guy lost the home he just advised him like that. He said “Listen I’m losing this thing. I don’t recommend you move out immediately, because you know my local realtor tells me the bank is just not moving very quickly on evictions. So just hang in there.” And it was 11 months.

Ryan: That reminds me of something else. There are whole websites now dedicated to renters. Actually it was one idea I had a while ago that I was never able to pursue. But it’s like there are now whole websites dedicated to renters to find out if their landlord is in default, presumably before they sign a lease.

Mike: Right.

Ryan: And what that I think demonstrates is that landlords care nothing clearly about a lease in a foreclosure situation. What that says to us is that’s the very last consideration, if any, on the landlord’s mind. You know, and in many cases I’m sure that it’s happened. That they’ve rented out the place and took the deposit and took the thing, two days later it was lost at auction. I bet you anything that that’s happened. And you’re never getting that money back. I’ll tell you that. Probably not. You’ll never find that landlord again. But also, I think from that perspective anyway, from a landlord’s perspective in signing a lease and sticking a tenant in there, not a whole lot of risk.

Mike: I like your initial recommendation. Just deal with it up front with them and explain the next few months, the next six months are going to be a little rocky while I negotiate this loan modification. You know, like you said, just negotiate some kind of concession.

Ryan: When your finances are a mess, your house is under water, and you’re just trying to choose between option number one and number two and neither are what you really want, it can be an emotional and frustrating time. Believe me we know, because we’ve personally been there unfortunately. The important thing is that you try to get clear and figure out your end game here. If you want to keep your home, great. Then loan modification is often the fastest, simplest, and easiest way to do that. You can lower your monthly payments and reduce your burden each month.

We’re huge advocates of “do it yourself loan modification”, but that does not mean you should do it alone. If you haven’t already, order our 60 Minute Loan Modification Kit. With it you get a one on one coaching call with Mike, and you get to take advantage of our critiques. We will take a look at your hardship letters, rewrite them if necessary. We’re going to look at your budget and advise you to adjust if necessary. Our simple program has helped so many people. Just the sort of thing to

No related posts.