Loan Modification For Dummies

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  • Edition: 1st
  • Format: Paperback
  • Copyright: 2009-08-31
  • Publisher: For Dummies
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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

Introductionp. 1
About This Bookp. 1
Conventions Used in This Bookp. 2
What You're Not to Readp. 3
Foolish Assumptionsp. 3
How This Book Is Organizedp. 3
Getting Up to Speed on Loan Modificationp. 4
Kick-Starting the Process: Applying for a Loan Modificationp. 4
Hammering Out the Details with Your Lenderp. 4
Dealing with an Uncooperative Lenderp. 5
The Part of Tensp. 5
Appendixesp. 5
Icons Used in This Bookp. 6
Where to Go from Herep. 6
Getting Up to Speed on Loan Modificationp. 7
Keeping Your Home by Modifying Your Loanp. 9
Grasping the Loan Modification Conceptp. 9
Reducing and fixing the interest ratep. 10
Extending the termp. 10
Reducing the principal balancep. 11
Dealing with delinquenciesp. 11
Re-amortizing the loanp. 12
Considering Other Foreclosure Alternativesp. 13
Do You Qualify?p. 14
Assessing Your Needsp. 15
Opting to Work with a Pro or Go It Alonep. 15
Hiring a prop. 15
Dealing directly with your landerp. 16
Getting Your Ducks in a Rowp. 17
Gathering essential documentsp. 17
Plotting the timelinep. 17
Logging all correspondencep. 18
Following the Process from Point A to Point Bp. 18
Preparing and submitting your applicationp. 19
Playing the waiting gamep. 19
Making your case during the homeowner interviewp. 20
Structuring a workout planp. 20
Reviewing the lender's initial offerp. 21
Pitching your counterofferp. 21
Closing the deal: Now what?p. 22
Taking Legal Action-Only If Necessaryp. 22
Taking Stock of Your Situationp. 23
Understanding How You Ended Up in This Messp. 23
The mortgage meltdown: From Wall Street to Main Streetp. 24
Other events beyond your controlp. 28
Common triggers you may have some control overp. 29
Sizing Up Your Financial Situationp. 30
Tallying your monthly incomep. 30
Computing your payments on debtp. 31
Calculating your debt-to-income ratiosp. 32
Dissecting your current budgetp. 34
Estimating an Affordable House Paymentp. 37
Basing your estimate on a conservative back-end ratiop. 37
Basing your estimate on your monthly budgetp. 38
Evaluating Your Optionsp. 41
Negotiating a Work-Out Solution with Your Lenderp. 41
Modifying your existing loanp. 42
Reinstating the loanp. 43
Negotiating forbearancep. 43
Considering principal forbearancep. 44
Refinancing Out of Troublep. 45
Consolidating your debtsp. 45
Refinancing the old-fashioned wayp. 47
Doing a short re-fip. 47
Playing the Bankruptcy Cardp. 48
Getting Out from Under It: Selling Your Homep. 49
Selling for a profit: Do's and don'tsp. 49
Selling to break even with a short salep. 50
Selling quickly to an investorp. 51
Teaming Up with an Investor to Stay in Your Homep. 51
Selling your home and buying it backp. 52
Selling your home and renting it backp. 53
Ditching the Propertyp. 53
Exchanging a deed in lieu of foreclosurep. 53
Living rent-free through redemptionp. 54
Abandoning the propertyp. 55
Redeeming the Property Post-Auctionp. 55
Doing Nothing-A Terrible Choicep. 56
Keeping an Eye Open for Brand-New Optionsp. 57
Deciding Whether to Team Up with a Pro or Fly Solop. 59
Weighing the Pros and Cons of Hiring a Professionalp. 59
Examining the prosp. 60
Analyzing the consp. 62
Identifying Professionals Who Can Assist Youp. 64
Loan modification attorneyp. 64
Foreclosure attorneyp. 65
Bankruptcy attorneyp. 65
Real estate attorneyp. 65
Credit counselorp. 66
Real estate agentp. 67
Mortgage broker or loan officerp. 67
Choosing the Right Individual or Companyp. 68
Locating qualified candidatesp. 68
Doing some detective workp. 69
Asking the right questionsp. 69
Making an informed choicep. 71
Avoiding clever schemes and scamsp. 72
Scraping Together Money for Upfront Feesp. 73
Teaming Up with Your Representativep. 74
Kick-Starting the Process: Applying for a Loan Modificationp. 75
First Things First: Contacting Your Leaderp. 77
Checking Out Your Lender's Web Sitep. 77
Clicking your way to something usefulp. 78
Knowing what to expectp. 78
Tracking Down a Representative Who Can Helpp. 79
Making the initial callp. 80
Bypassing automated systemsp. 82
Communicating effectively with foreign call centersp. 82
Taking names and extensionsp. 84
Describing Your Situationp. 84
Finding Out What Your Lenders Is Willing and Able to Dop. 85
Checking Application Requirementsp. 87
Listing the items requiredp. 88
Getting a shipping address and fax numberp. 88
Asking about timelinessp. 89
Keeping the Debt Collectors at Bayp. 89
Gathering Facts, Figures, and Documentationp. 91
Digging Up Documentsp. 91
Proof of incomep. 92
Proof of hardshipp. 92
Mortgage statements and related documentsp. 93
Other loan statementsp. 95
Monthly bills and expensesp. 96
Closing papersp. 96
Documenting Your Property's Market Valuep. 98
Authorizing Your Representative to Speak with Your Lenderp. 99
Knowing What to Ask Forp. 101
Recognizing Your Three Main Objectivesp. 101
Curing any defaultp. 102
Lowering your monthly paymentp. 103
Keeping your homep. 104
Establishing a Baseline with Your Current Mortgagep. 105
Playing ""What If?""p. 107
Test-driving a lower interest ratep. 107
Spreading payments over a longer termp. 108
Adjusting the principal balancep. 109
Mixing it up by adjusting several variablesp. 111
Trying on an interest-only loanp. 112
Considering the Potential Falloutp. 113
Assessing the effect on the former loanp. 114
Forecasting the effect on your credit ratingp. 114
Gauging the effect on your ability to pursue future actionsp. 114
Assessing the tax implications for discharged debtp. 115
Preparing and Submitting Your Applicationp. 117
Penning Your Hardship Letterp. 118
Recognizing eligible hardshipsp. 118
Answering a few questionsp. 119
Reviewing sample hardship lettersp. 120
Creating Financial Statementsp. 123
Painting a current financial portraitp. 123
Projecting your post-modification financesp. 125
Signing, Sealing, and Deliveringp. 127
Arranging your documentsp. 127
Signing on the dotted linesp. 128
Labeling every pagep. 128
Copying the entire packetp. 129
Submitting your applicationp. 129
Keeping the Process on Track and on Timep. 131
Knowing What to Expectp. 131
Documenting the Process for Your Recordsp. 132
Recording conversationsp. 133
Keeping copiesp. 134
Cross-checking the ""facts""p. 135
Following Up with Calls and Correspondencep. 135
Keeping in touch by phonep. 135
Sending or faxing a letterp. 137
Remaining in the loop via e-mailp. 137
Dealing with Lender Delaysp. 138
Negotiating an Extension or Adjournmentp. 139
In the Meantime: Exploring Other Optionsp. 140
Hammering Out the Details with Your Lenderp. 141
Discussing Loan Modification Scenarios with Your Lenderp. 143
Looking at the Situation through Your Lender's Eyesp. 143
Practicing the Three C's of Working with a Loss Mitigatorp. 144
The first C: Communicationp. 145
The second C: Composurep. 146
The third C: Credibilityp. 146
Making Your Case during the Homeowner Interviewp. 147
Preparing for your interviewp. 148
Presenting your casep. 148
Examining the MHA Initiativep. 150
Refinancing your loanp. 150
Modifying your loanp. 151
Structuring a Loan Modificationp. 151
Making the house payment affordablep. 152
Catching up on deficiencies and penaltiesp. 153
Addressing interest-rate issuesp. 153
Request Denied: Now What?p. 154
Evaluating Your Lender's Initial Offerp. 155
Deciphering a Loan Modification Agreementp. 155
Checking the reference to your former mortgagep. 156
Analyzing the unpaid balancep. 157
Acknowledging the promise to payp. 158
Inspecting the monthly payment detailsp. 158
Wading through any interest rate adjustmentsp. 159
Inspecting any term extensionp. 160
Capitalizing or waiving penalties and other feesp. 161
Steering Clear of Common Trapsp. 162
Dismissing the take it or leave it threatp. 162
Waving off legal waivers to your legal rightsp. 163
Warning! Shifting interest ratesp. 164
Ducking repeated defaultsp. 164
Negotiating a Better Dealp. 167
Recommitting to a Reasonable Solutionp. 167
What's fair for homeownersp. 168
What's fair for lenders and investorsp. 169
Reminding Your Lender What You Can Afford to Payp. 170
Reminding Your Lender What It Stands To Losep. 171
Estimating the lender's losses in foreclosurep. 172
Calculating the lender's losses from a loan modificationp. 173
Gaining a strategic advantage with what you knowp. 175
Not Taking ""No"" for an Answerp. 176
Applying Some Subtle Legal Pressurep. 177
Consider mentioning the B word: Bankruptcyp. 177
Bring up concerns about predatory lendingp. 178
Have an audit performedp. 178
Dealing with an Uncooperative Lenderp. 181
Brushing Up on Your Legal Rightsp. 183
Knowing Exactly What Your Lender Must Disclosep. 184
Disclosing loan terms and costsp. 184
Disclosing other important informationp. 188
Using the TILA and HOEPA to Your Advantagep. 190
Identifying noncompliance issuesp. 190
Pushing for a resolutionp. 191
Leveraging the Power of RESPAp. 193
Identifying RESPA violationsp. 193
Recognizing potential penalties for violationsp. 194
Getting Special Treatment: Military Servicemembers Onlyp. 194
Auditing Your Mortgage Loanp. 197
Recognizing Common Signs of Predatory Lendingp. 198
Inflated interest ratep. 198
Inflated appraisalp. 199
Doctored loan applicationp. 200
Approving an unaffordable loanp. 201
Equity stripping (loan flipping)p. 203
High-risk loansp. 203
Discriminatory interest ratep. 204
Excessive or unwarranted feesp. 204
Stiff prepayment penaltiesp. 205
Requiring mandatory arbitrationp. 206
High-pressure sales tacticsp. 206
Recalling and Documenting the Experiencep. 207
Combing Through Your Loan Documents for Fraud Flagsp. 208
Comparing the GFE to the HUD-1p. 208
Inspecting the Universal Residential Loan Application (1003)p. 209
Examining your mortgage and promissory notep. 210
Hiring a Pro to Do It All for Youp. 211
Anticipating the Lender's Response to Any Legal Claimsp. 212
Applying Some Legal Pressurep. 213
Filing a Formal Complaint with Your Lenderp. 213
Filing a Complaintp. 217
Taking action at the state levelp. 217
Filing with federal regulatorsp. 219
Contacting professional associationsp. 220
Following through on your complaintp. 221
Filling a Lawsuitp. 221
Ordering a mortgage auditp. 222
Getting up to speed on the procedurep. 222
Securing professional representationp. 223
Calling the Copsp. 224
The Part of Tensp. 225
Ten Tips for Long-Term Successp. 227
Get the Best Deal You Canp. 227
Get Credit Counselingp. 228
Try Modifying Other Loans, Toop. 228
Prioritize Your Debt Paymentsp. 229
Slash Discretionary Spendingp. 229
Pay Yourself an Allowancep. 230
Haggle Over Every Purchasep. 231
Moonlight to Earn Extra Incomep. 232
Put Everyone to Workp. 232
Check Your Progressp. 232
Ten Common Loan Modification Mythsp. 233
My Bank Wants To Take My Homep. 233
My Credit Score Is Too Lowp. 234
I Can't Qualify until My Loan Is in Defaultp. 234
I'm Better Off Declaring Bankruptcy or Walking Awayp. 235
I Can Negotiate Myself For Freep. 236
It's Too Late to Modify My Loanp. 236
The Lender Doesn't Have to Negotiatep. 237
Upfront Fees Are a Scamp. 237
I'll Lose My Home If I Don't Qualify for a Loan Modificationp. 238
I Can Modify Only the Loan on My Primary Residencep. 238
Appendixesp. 239
Resourcesp. 241
Major Lender Web Sites and Customer Service Numbersp. 241
Consumer Support and Federal Agenciesp. 245
Consumer supportp. 245
Federal agenciesp. 247
State Attorneys Generalp. 251
Glossaryp. 255
Indexp. 263
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