| ext">Loan modification is still the #1 best alternative to | | | | and/or caused increased expenses, etc.e. ASK FOR |
| foreclosure. But getting one through requires some | | | | WHAT YOU WANT — ask for a low interest |
| little-known information and strategy. You’ve got | | | | rate (2%-3%) for the first 5 years while you get back |
| to know what the banks are looking for, and how to fill | | | | on your feet; and then ask that they stretch your loan |
| out the paperwork so you not only qualify for loan | | | | term out to 40 years; and that the remaining 35 years |
| modification, but get in on those unheard of two and | | | | be at 4% to 5%. Use an amortization calculator |
| three percent interest rates that can make your | | | | (search online) and calculate what your payment |
| monthly payment go down by as much as 40 - 50%! | | | | would be at 2%, 3%, 4%, and 5%. Tell them that you |
| Banks are allowing some pretty unbelievable workouts | | | | CAN afford payments based on a 2%, 3% right now, |
| with unheard of low rates. Has there ever been a time | | | | and that later, because of better work projections or |
| when you got a 2% interest rate! That is happening | | | | opportunities — or whatever reason — |
| everyday to some people. Will you ever have this | | | | that you can later afford a payment based on 4% or |
| opportunity to lock in these silly low rates again? | | | | 5%. I always ask for 2% for the first 5 years and then |
| Probably not, so take your loan modification | | | | 4% to 5% for the rest of a 40 year loan when I help |
| paperwork VERY seriously and don’t talk | | | | people fill out their paperwork.f. Close with a sentence |
| yourself out of your own modification. | | | | or two that tells them you want to keep you and your |
| If you’re one of the millions who make up 1 in 7 | | | | family in your home (mention of kids if you have them |
| homes in foreclosure or default, then what | | | | helps) and that you want to avoid foreclosure and |
| you’re about to learn can stop your foreclosure | | | | further damage to your credit. |
| and substantially reduce your monthly mortgage | | | | 2. Financial worksheet/Personal budget: Get this form |
| payment — giving you the financial relief you | | | | from your bank. Your modification will go through |
| need to stay afloat and stabilize your life with lower | | | | faster and cleaner is you use the banks form instead |
| mortgage payments now and over the long run. | | | | of making your own Excel spreadsheet. One of the |
| The main problem - and what stands between you | | | | banks formulas I was telling you about comes into play |
| and a modified lower monthly payment — has | | | | when they review your financial worksheet. This is |
| been perfectly summed up in this recent Los Angeles | | | | where most people blow their chances for getting a |
| Times article
| | | | modification. The banks are looking to see that you |
| Getting loans through the system to the | | | | can afford the new, modified payment — the |
| modification finish line is tough for banks and loan | | | | one based on 2% or 3% — with about $200 to |
| servicers, says Douglas Potolsky, Chase Home | | | | $300 left over. This is a fine line between showing that |
| Lending senior vice president. The main obstacle, he | | | | you don’t make too much or too little to afford |
| and other banks say, is borrowers who don’t | | | | the modified payment. This is how you get to that |
| properly complete their paperwork. | | | | balancing point:a. For now, where you see the line to |
| The trick is to know how to fill out the darn paperwork | | | | write in your monthly mortgage expense, do not put in |
| so you don’t talk yourself right out of your own | | | | your current payment. Put in the modified payment |
| modification! | | | | you’re going after — the one that you |
| 90% of the loan modification requests are not going | | | | calculated with the amortization calculator at 2% (or |
| through because people fill out their paperwork to their | | | | 3%) or somewhere in between. This is a temporary |
| DISADVANTAGE. They either disqualify themselves | | | | placeholder for the purpose of getting the sum of this |
| because they show they make too much, or too little, | | | | payment plus all your other monthly expenses minus |
| to afford the NEW modified payment — | | | | your monthly income to come out to about $200 - |
| that’s the lower one that’s based on the | | | | $300 left over. Then, before you fax in this worksheet |
| 2% to 4% rates that bank can give you in modification, | | | | with your other paperwork, make sure you erase that |
| but won’t if your financials and other paperwork | | | | lower mortgage payment that served as a placeholder |
| pieces qualify for this payment. | | | | to make all of your numbers jibe, fill in your actual, |
| 90% of the people who fill out the paperwork for loan | | | | current mortgage payment. Or make a copy of the |
| modification do not know how the banks are looking at | | | | blank worksheet like I do — then it’s clean |
| their numbers and story. Banks actually have a couple | | | | as a whistle.b. Write in your income and all of your |
| of formulas they work by when calculating your | | | | other expenses. The trick is using some of the |
| financials in relation to your hardship letter, pay stubs, | | | | categories that are not easily tracked — like |
| checking account statements, and past 2 years of | | | | your monthly food, gas, and credit card payments |
| income tax returns. You must make all of these pieces | | | | — that you can increase or decrease if you |
| jibe together for one consistent financial hardship story. | | | | need to get your end balance to be at that $200 - |
| Basically this is how you want to fill out the main two | | | | $300 left over after Income minus Expenses. Realize |
| pieces of paperwork for loan modification — the | | | | that they will be cross-checking the numbers on your |
| hardship letter and financial worksheet: | | | | financial worksheet with your checking account |
| 1. Hardship letter: Be consistent and make sure the | | | | statements (you submit the past two months checking |
| hardship story and the numbers you provide on | | | | and savings bank statements). Realize too that if you |
| your financial worksheet make one strong, consistent | | | | have a bunch of money (over $2,000 or $3,000 sitting |
| picture. In about 1 — 1 ½ pages, make sure | | | | in savings), that the bank will see this as a place you |
| you give the following information in this sequence:a. | | | | can pull from and pay them. |
| Include your loan number at the topb. ASK for a loan | | | | Most people don't understand what's behind the banks |
| modification in the first sentencec. Make it evident that | | | | strategy and that they are indeed debt collectors! |
| you are capable of earning consistent income, but right | | | | They want to make sure you can pay or |
| now, your hardship is making your mortgage - and life - | | | | they’re not going to give you a new loan |
| unaffordable. Tell them you need helpd. Explain | | | | (modified loan). People don't realize what they should |
| — with emotion — all of the reasons | | | | ask for, what to say ... and what not to say ... or how |
| you’re in hardship. Banks are especially looking | | | | to talk to their bank to get the right story on record. |
| for things like reduced or lost income from one or | | | | Because they don’t have this critical insight, |
| more household members, increased expenses that | | | | many are losing out on the best loan modification |
| were unexpected or unavoidable, a medical problem | | | | opportunity of the century. |
| that left you sick or disabled and from earning income, | | | | |