Mod Speed!

 

 

Modifications move at the speed of slight. No, that’s not a typo, it’s a description. One thing that folks need to keep in mind when in the modification process: Nothing ever happens quickly. Mortgage companies historically take their time when doing anything that they perceive may cost them money. Weather it’s a simple reduction in rate, or a principal balance reduction, the bottom line on the deal is changing, and not necessarily to the lender’s benefit.

Add to that the incredible volume of modification requests they are now receiving on a daily basis, and you have a recipe for what we euphemistically call a ‘slowdown’ in response time. They are hoping to lose some of those requests to attrition, ie: If you finally get fed up with repeatedly not getting anywhere, you’ll just drop the whole idea and continue to make your monthly payments. You get things like multiple requests for the same documents that have already been sent and received, files that go to loan purgatory for seemingly unending periods of time, and a never ending stream of representatives who have no idea what they have or what they need.

It’s no wonder the average homeowner can’t get anything done! Who has the time to spent 3 to 5+ hours a week on the phone with their lender? Or faxing documents back and forth, to this department or that department? Now more than ever, it’s imperative to have someone on your side, who can make the calls, send the faxes, update the info, evaluate the financials, and basically be ready when the lender requests some obscure document. And that is exactly why we’re here.

Can an independent third party get you a modification in record time? No, but hiring someone to do the legwork for you can save you time, which can save you money. And not just in the long-term either. I’ve spoken to homeowners who have lost days of work trying to get their own modifications done. That money is never recovered. It should be tallied up as a modification expense.

In the end, it’s a long, slow process, which can be incredibly frustrating. As a professional in the field, I have been on both sides of the modification fence, both as a Negotiator for the largest home lender in the world, making the best deal possible for the lender, and now as an independent third party, negotiating on the homeowner’s behalf. It still takes what feels like forever, but I get results, and you don’t have to deal with the day to day headaches.

Loan Mod Article

“Hardship Letter”

 

In any given loan modification, one of the very first things the lenders ask for is a ‘Hardship Letter’. They will not even begin the process without having one on file in most cases. It is of the utmost importance because it states, in plain terms, the cause of the financial burden, as well as the scope of the crisis that caused it. That being said, this is the item most often done incorrectly, and is a leading cause of modifications being denied.

 

The biggest mistake most homeowners make on the hardship letter is being too vague. When a lender’s Loss Mitigation department reviews a file, the first thing they look at, before even the financial information, is the reason for the default, or possible default. If you state “I lost my job, and could no longer make my payments.” Your request will be declined. You need to say: “In December 2008, I was laid off from my job as a bookbinder with Goofy Publishing, where I was employed for 22 years.” They want to know exactly what the hardship is, and when it started, so be sure to include dates.

 

The lender wants to look at the letter, and have it coincide with the beginning of the default, so if you lost your job in October, but had already started missing payments in August, then there is obviously another reason besides the loss of wage for the default. This raises red flags, and will put you on the fast-track to denial of a mod. Whatever the reason for default is, they want to know the full story, and the reason for that is a good one: They want to know that the problem is resolved. If your dog got sick, and you had to pay $5000 in vet bills, include that in the letter, but make sure that the whole story gets told, whatever it is, while keeping in mind that the hardship must have a solid ending point.

 

If you state, “I lost my job and could no longer make my payments, but now I’m working again.”, well, you haven’t really told the story. It needs to be complete, with a beginning, middle and, most importantly, and end :

“In December 2008, I was laid off from my job as a bookbinder with Goofy Publishing, where I was employed for 22 years. After being unemployed for 3 months, I was able to regain employment as an editor at Mickey’s Coffee and Books in March of 2009, but had to take a 30% pay reduction. Due to the lack of income January through March, I was unable to make my monthly mortgage payments, and became seriously delinquent. With the reduction of my income, I do not believe I will be able to continue with the payments as they were. I am confident however that I will be able to make my monthly payments in the future, if those payments are reduced.”

 

Note that the problem that caused the default has been resolved, but there is still a need due to the lower income amount. Also take note that the last sentence states very clearly what the homeowner is requesting-a lower monthly payment.

 

Last, but not least, tell the truth. If you lie, or change dates to suit your needs, it will seriously lessen your chances for success. That doesn’t mean telling your lender you lost the mortgage payments for the next 6 months at the Craps table in Vegas, but if that’s what happened, don’t tell them your daughter is terminally ill. Figure out a better way to state the facts, without making up a bogus sob-story. Believe me, they’ve heard them all, and can usually tell when something doesn’t jibe.

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