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The crucial information you need to secure a reliable loanmodification and save your home Behind on your mortgage payments? Worried about losing yourhome? Don't panic. Loan Modification For Dummies gives youthe reliable, authoritative, easy-to-understand guidance you needto apply for and secure a loan modification that lowers yourmonthly house payment and keeps you in your home. This practical, plain-English guide leads you step by stepthrough the loan modification process, from contacting your lenderto applying for a loan modification, evaluating the lender'sinitial offer, and negotiating a modification that lowers yourmonthly 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 aknowledgeable loan modification specialist, if you choose not to doit yourself. * Advice on determining whether you're likely to qualify for yourlender's loan modification program * Guidance on preparing and submitting a loan modificationapplication that improves your chances of success * Helps you figure out a monthly payment you really canafford * Tips on modifying your loan even when you owe more than yourhome's current market value * Negotiation advice for securing the best possible terms andlowest monthly payment * Resources for contacting your lender, obtaining free oraffordable third-party assistance, and getting government agencieson your side Read Loan Modification For Dummies and start saving yourhome today.
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Table of Contents
Introduction
About This Book
Conventions Used in This Book
What You’re Not to Read
Foolish Assumptions
How This Book Is Organized
Part I: Getting Up to Speed on Loan Modification
Part II: Kick-Starting the Process: Applying for a Loan Modification
Part III: Hammering Out the Details with Your Lender
Part IV: Dealing with an Uncooperative Lender
Part V: The Part of Tens
Part VI: Appendixes
Icons Used in This Book
Where to Go from Here
Part I: Getting Up to Speed on Loan Modification
Chapter 1: Keeping Your Home by Modifying Your Loan
Grasping the Loan Modification Concept
Reducing and fixing the interest rate
Extending the term
Reducing the principal balance
Dealing with delinquencies
Re-amortizing the loan
Considering Other Foreclosure Alternatives
Do You Qualify?
Assessing Your Needs
Opting to Work with a Pro or Go It Alone
Hiring a pro
Dealing directly with your lender
Getting Your Ducks in a Row
Gathering essential documents
Plotting the timeline
Logging all correspondence
Following the Process from Point A to Point B
Preparing and submitting your application
Playing the waiting game
Making your case during the homeowner interview
Structuring a workout plan
Reviewing the lender’s initial offer
Pitching your counteroffer
Closing the deal: Now what?
Taking Legal Action — Only If Necessary
Chapter 2: Taking Stock of Your Situation
Understanding How You Ended Up in This Mess
The mortgage meltdown: From Wall Street to Main Street
Other events beyond your control
Common triggers you may have some control over
Sizing Up Your Financial Situation
Tallying your monthly income
Computing your payments on debt
Calculating your debt-to-income ratios
Dissecting your current budget
Estimating an Affordable House Payment
Basing your estimate on a conservative back-end ratio
Basing your estimate on your monthly budget
Chapter 3: Evaluating Your Options
Negotiating a Work-Out Solution with Your Lender
Modifying your existing loan
Reinstating the loan
Negotiating forbearance
Considering principal forbearance
Refinancing Out of Trouble
Consolidating your debts
Refinancing the old-fashioned way
Doing a short re-fi
Playing the Bankruptcy Card
Getting Out from Under It: Selling Your Home
Selling for a profit: Do’s and don’ts
Selling to break even with a short sale
Selling quickly to an investor
Teaming Up with an Investor to Stay in Your Home
Selling your home and buying it back
Selling your home and renting it back
Ditching the Property
Exchanging a deed in lieu of foreclosure
Living rent-free through redemption
Abandoning the property
Redeeming the Property Post-Auction
Doing Nothing — A Terrible Choice
Keeping an Eye Open for Brand-New Options
Chapter 4: Deciding Whether to Team Up with a Pro or Fly Solo
Weighing the Pros and Cons of Hiring a Professional
Examining the pros
Analyzing the cons
Identifying Professionals Who Can Assist You
Loan modification attorney
Foreclosure attorney
Bankruptcy attorney
Real estate attorney
Credit counselor
Real estate agent
Mortgage broker or loan officer
Choosing the Right Individual or Company
Locating qualified candidates
Doing some detective work
Asking the right questions
Making an informed choice
Avoiding clever schemes and scams
Scraping Together Money for Upfront Fees
Teaming Up with Your Representative
Part II: Kick-Starting the Process: Applying for a Loan Modification
Chapter 5: First Things First: Contacting Your Lender
Checking Out Your Lender’s Web Site
Clicking your way to something useful
Knowing what to expect
Tracking Down a Representative Who Can Help
Making the initial call
Bypassing automated systems
Communicating effectively with foreign call centers
Taking names and extensions
Describing Your Situation
Finding Out What Your Lender Is Willing and Able to Do
Checking Application Requirements
Listing the items required
Getting a shipping address and fax number
Asking about timelines
Keeping the Debt Collectors at Bay
Chapter 6: Gathering Facts, Figures, and Documentation
Digging Up Documents
Proof of income
Proof of hardship
Mortgage statements and related documents
Other loan statements
Monthly bills and expenses
Closing papers
Documenting Your Property’s Market Value
Authorizing Your Representative to Speak with Your Lender
Chapter 7: Knowing What to Ask For
Recognizing Your Three Main Objectives
Curing any default
Lowering your monthly payment
Keeping your home
Establishing a Baseline with Your Current Mortgage
Playing “What If?”
Test-driving a lower interest rate
Spreading payments over a longer term
Adjusting the principal balance
Mixing it up by adjusting several variables
Trying on an interest-only loan
Considering the Potential Fallout
Assessing the effect on the former loan
Forecasting the effect on your credit rating
Gauging the effect on your ability to pursue future actions
Assessing the tax implications for discharged debt
Chapter 8: Preparing and Submitting Your Application
Penning Your Hardship Letter
Recognizing eligible hardships
Answering a few questions
Reviewing sample hardship letters
Creating Financial Statements
Painting a current financial portrait
Projecting your post-modification finances
Signing, Sealing, and Delivering
Arranging your documents
Signing on the dotted lines
Labeling every page
Copying the entire packet
Submitting your application
Chapter 9: Keeping the Process on Track and on Time
Knowing What to Expect
Documenting the Process for Your Records
Recording conversations
Keeping copies
Cross-checking the “facts”
Following Up with Calls and Correspondence
Keeping in touch by phone
Sending or faxing a letter
Remaining in the loop via e-mail
Dealing with Lender Delays
Negotiating an Extension or Adjournment
In the Meantime: Exploring Other Options
Part III: Hammering Out the Details with Your Lender
Chapter 10: Discussing Loan Modification Scenarios with Your Lender
Looking at the Situation through Your Lender’s Eyes
Practicing the Three C’s of Working with a Loss Mitigator
The first C: Communication
The second C: Composure
The third C: Credibility
Making Your Case during the Homeowner Interview
Prepping for your interview
Presenting your case
Examining the MHA Initiative
Refinancing your loan
Modifying your loan
Structuring a Loan Modification
Making the house payment affordable
Catching up on deficiencies and penalties
Addressing interest-rate issues
Request Denied: Now What?
Chapter 11: Evaluating Your Lender’s Initial Offer
Deciphering a Loan Modification Agreement
Checking the reference to your former mortgage
Analyzing the unpaid balance
Acknowledging the promise to pay
Inspecting the monthly payment details
Wading through any interest rate adjustments
Inspecting any term extension
Capitalizing or waiving penalties and other fees
Steering Clear of Common Traps
Dismissing the take it or leave it threat
Waving off legal waivers to your legal rights
Warning! Shifting interest rates
Ducking repeated defaults
Chapter 12: Negotiating a Better Deal
Recommitting to a Reasonable Solution
What’s fair for homeowners
What’s fair for lenders and investors
Reminding Your Lender What You Can Afford to Pay
Reminding Your Lender What It Stands To Lose
Estimating the lender’s losses in foreclosure
Calculating the lender’s losses from a loan modification
Gaining a strategic advantage with what you know
Not Taking “No” for an Answer
Applying Some Subtle Legal Pressure
Consider mentioning the B word: Bankruptcy
Bring up concerns about predatory lending
Have an audit performed
Part IV: Dealing with an Uncooperative Lender
Chapter 13: Brushing Up on Your Legal Rights
Knowing Exactly What Your Lender Must Disclose
Disclosing loan terms and costs
Disclosing other important information
Using the TILA and HOEPA to Your Advantage
Identifying noncompliance issues
Pushing for a resolution
Leveraging the Power of RESPA
Identifying RESPA violations
Recognizing potential penalties for violations
Getting Special Treatment: Military Servicemembers Only
Chapter 14: Auditing Your Mortgage Loan
Recognizing Common Signs of Predatory Lending
Inflated interest rate
Inflated appraisal
Doctored loan application
Approving an unaffordable loan
Equity stripping (loan flipping)
High-risk loans
Discriminatory interest rate
Excessive or unwarranted fees
Stiff prepayment penalties
Requiring mandatory arbitration
High-pressure sales tactics
Recalling and Documenting the Experience
Combing Through Your Loan Documents for Fraud Flags
Comparing the GFE to the HUD-1
Inspecting the Universal Residential Loan Application (1003)
Examining your mortgage and promissory note
Hiring a Pro to Do It All for You
Anticipating the Lender’s Response to Any Legal Claims
Chapter 15: Applying Some Legal Pressure
Filing a Formal Complaint with Your Lender
Filing a Complaint
Taking action at the state level
Filing with federal regulators
Contacting professional associations
Following through on your complaint
Filing a Lawsuit
Ordering a mortgage audit
Getting up to speed on the procedure
Securing professional representation
Calling the Cops
Part V: The Part of Tens
Chapter 16: Ten Tips for Long-Term Success
Get the Best Deal You Can
Get Credit Counseling
Try Modifying Other Loans, Too
Prioritize Your Debt Payments
Slash Discretionary Spending
Pay Yourself an Allowance
Haggle Over Every Purchase
Moonlight to Earn Extra Income
Put Everyone to Work
Check Your Progress
Chapter 17: Ten Common Loan Modification Myths
My Bank Wants To Take My Home
My Credit Score Is Too Low
I Can’t Qualify until My Loan Is in Default
I’m Better Off Declaring Bankruptcy or Walking Away
I Can Negotiate Myself for Free
It’s Too Late to Modify My Loan
The Lender Doesn’t Have to Negotiate
Upfront Fees Are a Scam
I’ll Lose My Home If I Don’t Qualify for a Loan Modification
I Can Modify Only the Loan on My Primary Residence
Part VI: Appendixes
Appendix A: Resources
Consumer support
Federal agencies
Appendix B: Glossary
Loan Modification For Dummies®
by Ralph R. Roberts, Lois Maljak, and Paul Doroh, with Joe Kraynak
Loan Modification For Dummies®
Published byWiley Publishing, Inc.111 River St.Hoboken, NJ 07030-5774www.wiley.com
Copyright © 2009 by Wiley Publishing, Inc., Indianapolis, Indiana
Published simultaneously in Canada
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About the Authors
Ralph R. Roberts, GRI, CRS, is an award-winning REALTOR® and author and a tireless defender of the American dream of home-ownership. Ralph experienced the loss of real estate to foreclosure and added a foreclosure division to his nationally recognized real estate business. Since then, Ralph has led thousands of families through the foreclosure maze, informing them of their options, including loan modification, and steering them clear of the most common pitfalls while empowering them with the information required to save their homes and get on with their lives.
Ralph is a nationally recognized expert in the fields of loan modification, foreclosure self-defense, and real estate and mortgage fraud prevention. He’s also an award-winning author who has penned several successful real estate books, including Foreclosure Self-Defense For Dummies (Wiley) and Protect Yourself from Real Estate and Mortgage Fraud: Preserving the American Dream of Homeownership (Kaplan). For the latest news, information, and insight on foreclosure alternatives, including loan modification, visit www.KeepMyHouse.com.
Lois “Lane” Maljak is Ralph’s second in command and a foreclosure expert in her own right. Lois formerly ran Ralph’s foreclosure department, HomeSavers, during which time she met with hundreds of distressed homeowners every year, assisting them in foreclosure and pre-foreclosure, counseling them on their available options, and helping them leave a difficult situation in their past. Lois has a combination of compassion and expertise that makes her uniquely qualified to counsel distressed homeowners. She’s also coauthor of Foreclosure Self-Defense For Dummies (Wiley).
Paul Doroh is an attorney and residential real estate professional who would like to see all homeowners empowered with the information and guidance they need to keep their homes, understand and lower their mortgage payments, make educated and sound financial decisions, and get on with their lives. Paul also coauthored Foreclosure Self-Defense For Dummies (Wiley) and periodically contributes to numerous real estate–related publications.
Joe Kraynak is a freelance author who has written and coauthored numerous books including Foreclosure Self-Defense For Dummies, Flipping Houses For Dummies, Financing Real Estate Investments For Dummies, and Foreclosure Myths (Wiley); Take the Mic and Stage a Poetry Slam (Sourcebooks); and Master Visually: Optimizing PC Performance (Wiley). For more about Joe, visit his blog at JoeKraynak.com.
Dedication
To the homeowners on Main Street and those who assist them in keeping the American dream of homeownership alive and thriving.
Authors' Acknowledgments
Thanks to acquisitions editor Lindsay Lefevere, who chose us to author this book and guided us through the tough part of getting started; and to our agent, Neil Salkind (www.studiob.com/salkindagency), who ironed out all the preliminary details to make this book possible.
A special thanks to Barbara Jacobs, owner and manager of B&S Consulting Group LLC in Southfield, Michigan, who shared her extensive knowledge and experience through several of the case studies presented in this book. The knowledge and skills she acquired while working as a senior credit analyst, in loss mitigation, and in special investigations for companies like Fannie Mae, Lehman Bros., and Aurora Loan Services are now put to work educating and helping homeowners (with a special focus on seniors) discover their modification options and interpret their mortgage loans.
Sarah Faulkner, our project editor, deserves a loud cheer for acting as a very patient collaborator and gifted editor — shuffling chapters back and forth, shepherding the text and graphics through production, making sure any technical issues were properly resolved, and serving as the unofficial quality control manager. Elizabeth Rea, our copy editor, earns an editor of the year award for ferreting out our typos, misspellings, grammatical errors, and other language faux pas, in addition to assisting Sarah as reader advocate — asking the questions we should have asked ourselves. We also tip our hats to the Composition crew for doing such an outstanding job of transforming a loose collection of text and illustrations into such an attractive bound book.
We owe special thanks to our technical editor, Craig D. Doyle, Esq., for flagging technical errors in the manuscript, helping guide its content, and offering his own insight and advice from the world of foreclosure self-defense and loan modification.
Publisher’s Acknowledgments
We’re proud of this book; please send us your comments through our online registration form located at http://dummies.custhelp.com. For other comments, please contact our Customer Care Department within the U.S. at 877-762-2974, outside the U.S. at 317-572-3993, or fax 317-572-4002.
Some of the people who helped bring this book to market include the following:
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Project Editor: Sarah Faulkner
Senior Acquisitions Editor: Lindsay Sandman Lefevere
Senior Copy Editor: Elizabeth Rea
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Technical Editor: Craig D. Doyle, Esq.
Editorial Manager: Christine Meloy Beck
Editorial Assistants: Jennette ElNaggar, David Lutton
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Introduction
The Titanic was unsinkable. That’s what the experts thought, at least. Likewise, most experts believed that property values in the United States would continue to rise for as far as their foresight could see. Unfortunately, the short-sighted experts were tragically wrong. The housing bubble burst, as all bubbles eventually do, leaving many homeowners stranded at sea and drowning in debt.
If you’re like most homeowners in default or facing foreclosure, you probably never imagined yourself in such a dire situation. Maybe your loan officer sold you a time-bomb loan, like a particularly high-risk adjustable-rate mortgage (ARM), and convinced you that if the interest rate rose too high, you could always refinance and get a lower rate. Maybe you purchased your house thinking your job was secure . . . and then the economy tanked. Perhaps you’re one of the many people without medical insurance who got sick and was quickly buried under a mountain of medical bills.
Lesen Sie weiter in der vollständigen Ausgabe!
Lesen Sie weiter in der vollständigen Ausgabe!
Lesen Sie weiter in der vollständigen Ausgabe!
Lesen Sie weiter in der vollständigen Ausgabe!
Lesen Sie weiter in der vollständigen Ausgabe!
Lesen Sie weiter in der vollständigen Ausgabe!
Lesen Sie weiter in der vollständigen Ausgabe!
Lesen Sie weiter in der vollständigen Ausgabe!
Lesen Sie weiter in der vollständigen Ausgabe!
Lesen Sie weiter in der vollständigen Ausgabe!
Lesen Sie weiter in der vollständigen Ausgabe!
Lesen Sie weiter in der vollständigen Ausgabe!
Lesen Sie weiter in der vollständigen Ausgabe!
Lesen Sie weiter in der vollständigen Ausgabe!
Lesen Sie weiter in der vollständigen Ausgabe!
Lesen Sie weiter in der vollständigen Ausgabe!
Lesen Sie weiter in der vollständigen Ausgabe!
Lesen Sie weiter in der vollständigen Ausgabe!
Lesen Sie weiter in der vollständigen Ausgabe!
Lesen Sie weiter in der vollständigen Ausgabe!
Lesen Sie weiter in der vollständigen Ausgabe!
Lesen Sie weiter in der vollständigen Ausgabe!
Lesen Sie weiter in der vollständigen Ausgabe!
Lesen Sie weiter in der vollständigen Ausgabe!
Lesen Sie weiter in der vollständigen Ausgabe!