Loan Modification For Dummies

by Roberts, Ralph R.; Maljak, Lois; Kraynak, Joe

• ISBN13: 9780470501993
• ISBN10: 0470501995
• Edition: 1st
• Format: Paperback
• Copyright: 2009-08-31
• Publisher: For Dummies

Summary

The crucial information you need to secure a reliable loan modification and save your homeBehind on your mortgage payments? Worried about losing your home? Don't panic. Loan Modification For Dummies gives you the reliable, authoritative, easy-to-understand guidance you need to apply for and secure a loan modification that lowers your monthly house payment and keeps you in your home.This practical, plain-English guide leads you step by step through the loan modification process, from contacting your lender to applying for a loan modification, evaluating the lender's initial offer, and negotiating a modification that lowers your monthly payment while helping you catch up on any past-due amounts. You'll learn how to communicate with your bank or loan servicer, recognize and avoid loan-modification scams, and find a knowledgeable loan modification specialist, if you choose not to do it yourself. Advice on determining whether you're likely to qualify for your lender's loan modification program Guidance on preparing and submitting a loan modification application that improves your chances of success Helps you figure out a monthly payment you really can afford Tips on modifying your loan even when you owe more than your home's current market value Negotiation advice for securing the best possible terms and lowest monthly payment Resources for contacting your lender, obtaining free or affordable third-party assistance, and getting government agencies on your sideRead Loan Modification For Dummies and start saving your home today.

Author Biography

Ralph R. Roberts is a nationally recognized expert in the fields of loan modification, foreclosure self-defense, and real estate and mortgage fraud prevention, as well as an award-winning author. Lois Maljak is coauthor with Roberts of Foreclosure Self-Defense For Dummies.

Table of Contents

Introduction	p. 1
About This Book	p. 1
Conventions Used in This Book	p. 2
What You're Not to Read	p. 3
Foolish Assumptions	p. 3
How This Book Is Organized	p. 3
Getting Up to Speed on Loan Modification	p. 4
Kick-Starting the Process: Applying for a Loan Modification	p. 4
Hammering Out the Details with Your Lender	p. 4
Dealing with an Uncooperative Lender	p. 5
The Part of Tens	p. 5
Appendixes	p. 5
Icons Used in This Book	p. 6
Where to Go from Here	p. 6
Getting Up to Speed on Loan Modification	p. 7
Keeping Your Home by Modifying Your Loan	p. 9
Grasping the Loan Modification Concept	p. 9
Reducing and fixing the interest rate	p. 10
Extending the term	p. 10
Reducing the principal balance	p. 11
Dealing with delinquencies	p. 11
Re-amortizing the loan	p. 12
Considering Other Foreclosure Alternatives	p. 13
Do You Qualify?	p. 14
Assessing Your Needs	p. 15
Opting to Work with a Pro or Go It Alone	p. 15
Hiring a pro	p. 15
Dealing directly with your lander	p. 16
Getting Your Ducks in a Row	p. 17
Gathering essential documents	p. 17
Plotting the timeline	p. 17
Logging all correspondence	p. 18
Following the Process from Point A to Point B	p. 18
Preparing and submitting your application	p. 19
Playing the waiting game	p. 19
Making your case during the homeowner interview	p. 20
Structuring a workout plan	p. 20
Reviewing the lender's initial offer	p. 21
Pitching your counteroffer	p. 21
Closing the deal: Now what?	p. 22
Taking Legal Action-Only If Necessary	p. 22
Taking Stock of Your Situation	p. 23
Understanding How You Ended Up in This Mess	p. 23
The mortgage meltdown: From Wall Street to Main Street	p. 24
Other events beyond your control	p. 28
Common triggers you may have some control over	p. 29
Sizing Up Your Financial Situation	p. 30
Tallying your monthly income	p. 30
Computing your payments on debt	p. 31
Calculating your debt-to-income ratios	p. 32
Dissecting your current budget	p. 34
Estimating an Affordable House Payment	p. 37
Basing your estimate on a conservative back-end ratio	p. 37
Basing your estimate on your monthly budget	p. 38
Evaluating Your Options	p. 41
Negotiating a Work-Out Solution with Your Lender	p. 41
Modifying your existing loan	p. 42
Reinstating the loan	p. 43
Negotiating forbearance	p. 43
Considering principal forbearance	p. 44
Refinancing Out of Trouble	p. 45
Consolidating your debts	p. 45
Refinancing the old-fashioned way	p. 47
Doing a short re-fi	p. 47
Playing the Bankruptcy Card	p. 48
Getting Out from Under It: Selling Your Home	p. 49
Selling for a profit: Do's and don'ts	p. 49
Selling to break even with a short sale	p. 50
Selling quickly to an investor	p. 51
Teaming Up with an Investor to Stay in Your Home	p. 51
Selling your home and buying it back	p. 52
Selling your home and renting it back	p. 53
Ditching the Property	p. 53
Exchanging a deed in lieu of foreclosure	p. 53
Living rent-free through redemption	p. 54
Abandoning the property	p. 55
Redeeming the Property Post-Auction	p. 55
Doing Nothing-A Terrible Choice	p. 56
Keeping an Eye Open for Brand-New Options	p. 57
Deciding Whether to Team Up with a Pro or Fly Solo	p. 59
Weighing the Pros and Cons of Hiring a Professional	p. 59
Examining the pros	p. 60
Analyzing the cons	p. 62
Identifying Professionals Who Can Assist You	p. 64
Loan modification attorney	p. 64
Foreclosure attorney	p. 65
Bankruptcy attorney	p. 65
Real estate attorney	p. 65
Credit counselor	p. 66
Real estate agent	p. 67
Mortgage broker or loan officer	p. 67
Choosing the Right Individual or Company	p. 68
Locating qualified candidates	p. 68
Doing some detective work	p. 69
Asking the right questions	p. 69
Making an informed choice	p. 71
Avoiding clever schemes and scams	p. 72
Scraping Together Money for Upfront Fees	p. 73
Teaming Up with Your Representative	p. 74
Kick-Starting the Process: Applying for a Loan Modification	p. 75
First Things First: Contacting Your Leader	p. 77
Checking Out Your Lender's Web Site	p. 77
Clicking your way to something useful	p. 78
Knowing what to expect	p. 78
Tracking Down a Representative Who Can Help	p. 79
Making the initial call	p. 80
Bypassing automated systems	p. 82
Communicating effectively with foreign call centers	p. 82
Taking names and extensions	p. 84
Describing Your Situation	p. 84
Finding Out What Your Lenders Is Willing and Able to Do	p. 85
Checking Application Requirements	p. 87
Listing the items required	p. 88
Getting a shipping address and fax number	p. 88
Asking about timeliness	p. 89
Keeping the Debt Collectors at Bay	p. 89
Gathering Facts, Figures, and Documentation	p. 91
Digging Up Documents	p. 91
Proof of income	p. 92
Proof of hardship	p. 92
Mortgage statements and related documents	p. 93
Other loan statements	p. 95
Monthly bills and expenses	p. 96
Closing papers	p. 96
Documenting Your Property's Market Value	p. 98
Authorizing Your Representative to Speak with Your Lender	p. 99
Knowing What to Ask For	p. 101
Recognizing Your Three Main Objectives	p. 101
Curing any default	p. 102
Lowering your monthly payment	p. 103
Keeping your home	p. 104
Establishing a Baseline with Your Current Mortgage	p. 105
Playing ""What If?""	p. 107
Test-driving a lower interest rate	p. 107
Spreading payments over a longer term	p. 108
Adjusting the principal balance	p. 109
Mixing it up by adjusting several variables	p. 111
Trying on an interest-only loan	p. 112
Considering the Potential Fallout	p. 113
Assessing the effect on the former loan	p. 114
Forecasting the effect on your credit rating	p. 114
Gauging the effect on your ability to pursue future actions	p. 114
Assessing the tax implications for discharged debt	p. 115
Preparing and Submitting Your Application	p. 117
Penning Your Hardship Letter	p. 118
Recognizing eligible hardships	p. 118
Answering a few questions	p. 119
Reviewing sample hardship letters	p. 120
Creating Financial Statements	p. 123
Painting a current financial portrait	p. 123
Projecting your post-modification finances	p. 125
Signing, Sealing, and Delivering	p. 127
Arranging your documents	p. 127
Signing on the dotted lines	p. 128
Labeling every page	p. 128
Copying the entire packet	p. 129
Submitting your application	p. 129
Keeping the Process on Track and on Time	p. 131
Knowing What to Expect	p. 131
Documenting the Process for Your Records	p. 132
Recording conversations	p. 133
Keeping copies	p. 134
Cross-checking the ""facts""	p. 135
Following Up with Calls and Correspondence	p. 135
Keeping in touch by phone	p. 135
Sending or faxing a letter	p. 137
Remaining in the loop via e-mail	p. 137
Dealing with Lender Delays	p. 138
Negotiating an Extension or Adjournment	p. 139
In the Meantime: Exploring Other Options	p. 140
Hammering Out the Details with Your Lender	p. 141
Discussing Loan Modification Scenarios with Your Lender	p. 143
Looking at the Situation through Your Lender's Eyes	p. 143
Practicing the Three C's of Working with a Loss Mitigator	p. 144
The first C: Communication	p. 145
The second C: Composure	p. 146
The third C: Credibility	p. 146
Making Your Case during the Homeowner Interview	p. 147
Preparing for your interview	p. 148
Presenting your case	p. 148
Examining the MHA Initiative	p. 150
Refinancing your loan	p. 150
Modifying your loan	p. 151
Structuring a Loan Modification	p. 151
Making the house payment affordable	p. 152
Catching up on deficiencies and penalties	p. 153
Addressing interest-rate issues	p. 153
Request Denied: Now What?	p. 154
Evaluating Your Lender's Initial Offer	p. 155
Deciphering a Loan Modification Agreement	p. 155
Checking the reference to your former mortgage	p. 156
Analyzing the unpaid balance	p. 157
Acknowledging the promise to pay	p. 158
Inspecting the monthly payment details	p. 158
Wading through any interest rate adjustments	p. 159
Inspecting any term extension	p. 160
Capitalizing or waiving penalties and other fees	p. 161
Steering Clear of Common Traps	p. 162
Dismissing the take it or leave it threat	p. 162
Waving off legal waivers to your legal rights	p. 163
Warning! Shifting interest rates	p. 164
Ducking repeated defaults	p. 164
Negotiating a Better Deal	p. 167
Recommitting to a Reasonable Solution	p. 167
What's fair for homeowners	p. 168
What's fair for lenders and investors	p. 169
Reminding Your Lender What You Can Afford to Pay	p. 170
Reminding Your Lender What It Stands To Lose	p. 171
Estimating the lender's losses in foreclosure	p. 172
Calculating the lender's losses from a loan modification	p. 173
Gaining a strategic advantage with what you know	p. 175
Not Taking ""No"" for an Answer	p. 176
Applying Some Subtle Legal Pressure	p. 177
Consider mentioning the B word: Bankruptcy	p. 177
Bring up concerns about predatory lending	p. 178
Have an audit performed	p. 178
Dealing with an Uncooperative Lender	p. 181
Brushing Up on Your Legal Rights	p. 183
Knowing Exactly What Your Lender Must Disclose	p. 184
Disclosing loan terms and costs	p. 184
Disclosing other important information	p. 188
Using the TILA and HOEPA to Your Advantage	p. 190
Identifying noncompliance issues	p. 190
Pushing for a resolution	p. 191
Leveraging the Power of RESPA	p. 193
Identifying RESPA violations	p. 193
Recognizing potential penalties for violations	p. 194
Getting Special Treatment: Military Servicemembers Only	p. 194
Auditing Your Mortgage Loan	p. 197
Recognizing Common Signs of Predatory Lending	p. 198
Inflated interest rate	p. 198
Inflated appraisal	p. 199
Doctored loan application	p. 200
Approving an unaffordable loan	p. 201
Equity stripping (loan flipping)	p. 203
High-risk loans	p. 203
Discriminatory interest rate	p. 204
Excessive or unwarranted fees	p. 204
Stiff prepayment penalties	p. 205
Requiring mandatory arbitration	p. 206
High-pressure sales tactics	p. 206
Recalling and Documenting the Experience	p. 207
Combing Through Your Loan Documents for Fraud Flags	p. 208
Comparing the GFE to the HUD-1	p. 208
Inspecting the Universal Residential Loan Application (1003)	p. 209
Examining your mortgage and promissory note	p. 210
Hiring a Pro to Do It All for You	p. 211
Anticipating the Lender's Response to Any Legal Claims	p. 212
Applying Some Legal Pressure	p. 213
Filing a Formal Complaint with Your Lender	p. 213
Filing a Complaint	p. 217
Taking action at the state level	p. 217
Filing with federal regulators	p. 219
Contacting professional associations	p. 220
Following through on your complaint	p. 221
Filling a Lawsuit	p. 221
Ordering a mortgage audit	p. 222
Getting up to speed on the procedure	p. 222
Securing professional representation	p. 223
Calling the Cops	p. 224
The Part of Tens	p. 225
Ten Tips for Long-Term Success	p. 227
Get the Best Deal You Can	p. 227
Get Credit Counseling	p. 228
Try Modifying Other Loans, Too	p. 228
Prioritize Your Debt Payments	p. 229
Slash Discretionary Spending	p. 229
Pay Yourself an Allowance	p. 230
Haggle Over Every Purchase	p. 231
Moonlight to Earn Extra Income	p. 232
Put Everyone to Work	p. 232
Check Your Progress	p. 232
Ten Common Loan Modification Myths	p. 233
My Bank Wants To Take My Home	p. 233
My Credit Score Is Too Low	p. 234
I Can't Qualify until My Loan Is in Default	p. 234
I'm Better Off Declaring Bankruptcy or Walking Away	p. 235
I Can Negotiate Myself For Free	p. 236
It's Too Late to Modify My Loan	p. 236
The Lender Doesn't Have to Negotiate	p. 237
Upfront Fees Are a Scam	p. 237
I'll Lose My Home If I Don't Qualify for a Loan Modification	p. 238
I Can Modify Only the Loan on My Primary Residence	p. 238
Appendixes	p. 239
Resources	p. 241
Major Lender Web Sites and Customer Service Numbers	p. 241
Consumer Support and Federal Agencies	p. 245
Consumer support	p. 245
Federal agencies	p. 247
State Attorneys General	p. 251
Glossary	p. 255
Index	p. 263
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