MakingHomeAffordable.gov offers features including interactive self-assessment tools that seek to empower homeowners to determine if they’re eligible to participate and calculate the monthly mortgage payment reductions they could stand to realize under the Making Home Affordable program. Additional site features include:

• Extensive information about the Administration’s Making Home Affordable plan
• A calculator feature that allows homeowners to estimate the reduction to their monthly mortgage payment that they might stand to realize under the plan
• Resources to find free, HUD-approved counseling services for borrowers who have additional questions
• A handy checklist to ensure homeowners collect all the documents they need before calling their servicers

First announced by President Barack Obama in February, Making Home Affordable is said to offer assistance to as many as nine million homeowners making a good-faith effort to make their mortgage payments, while attempting to prevent the destructive impact of the housing crisis on families and communities.

Since releasing the guidelines to enable servicers to begin modifications of eligible mortgages under Making Home Affordable on March 4th, representatives from Treasury, HUD and other members of a broad interagency task force, have conducted detailed briefings and training sessions for mortgage loan servicers and investors, nonprofit housing counselors and nationwide borrower advocacy groups. Through these early and aggressive efforts to arm those interacting directly with borrowers with information, interagency representatives have briefed more than 2,500 participants on the Administration’s plans in the last two weeks.

A wide array of large banks to small lenders have already agreed to participate in Making Home Affordable, and servicers have undertaken steps to proactively engage borrowers and respond to their inquiries related to the new program. For example, JP Morgan Chase has put several special tools into place and initiated proactive solicitations to eligible borrowers around the Making Home Affordable program, including an online site to provide program details and allow borrowers to download a new financial information package; increased staffing in a dedicated service center that provides simple entry point for all borrowers, including CHASE, heritage Washington Mutual and EMC; a partnership with Fannie Mae to solicit over 125,000 eligible borrowers; and solicitation to an additional 180,000 non-GSE eligible borrowers.

Ralph R. Roberts, GRI, CRS Award-Winning REALTOR® and Author Loan Modification For Dummies (avail. Summer 2009)

California’s Attorney General, Jerry Brown, yesterday announced the arrest of two real estate fraudsters — Mary Alice Yraceburu and Marianne Curtis — who, according to the Calif. AG’s office “coldly and heartlessly” conned over 160 distressed homeowners out of thousands of dollars for non-existent loan modification services.

In total, the California Attorney General’s Office filed 49 felony charges in Orange County Superior Court against the 45-year-old Yraceburu, of Riverdale, Calif., and the 67-year-old Curtis, of Costa Mesa, Calif. Yraceburu was arrested yesterday in Fresno County, while Curtis was arrested in Orange County on the following charges:

• 24-counts of grand theft
• 25-counts of violations of California’s foreclosure consultant statutes
• One special allegation that the total value of theft was over $65,000
• One special allegation that the total value of theft was over 100,000

Both women are convicted felons who have served time in state and federal prisons.

The two women operated a company called Foreclosure Freedom, which sent hundreds of fliers to Californians promising help in stopping the foreclosure of their homes. The fliers read: “FINAL NOTICE – Respond only to this notice immediately.” This is similar to the “First Gov” scam, which the Attorney General’s Office stopped late last year.

When homeowners called the number on Foreclosure Freedom’s flyer, they were told their mortgages could be renegotiated to a lower monthly payment. Callers who signed up for the service, however, were required to pay thousands of dollars in up-front fees and were instructed not to contact their lenders. Instead, they were assured the company had “private lenders and specialists exclusive to their company who are very experienced in the options and methods used to renegotiate home loans,” yet neither of the women who operated the company had real estate licenses, legal training, or any experience in the home mortgage business.

California investigators found no evidence of any successful loan modifications and most of the victims were either forced into bankruptcy or eventually lost their homes to foreclosure.

If convicted of all charges, Mary Yraceburu and Marianne Curtis face 21-years in prison.

Ralph R. Roberts, GRI, CRS Award-Winning REALTOR® and Author Loan Modification For Dummies (avail. Summer 2009)

Suppose you’re behind on your house payments. You dial the phone number on your most recent mortgage statement, clear the usual hurdles, and finally reach someone who understands your situation and offers to help. You are one of the lucky homeowners who has a cooperative lender. Now what? What can you do to team up with your lender to optimize the outcome? This blog post reveals ten ways you can expedite the process and negotiate an affordable loan modification that enables you to catch up on any missed payments, lower your monthly mortgage payment, and keep your house.

The following 10 tips apply whether you are working directly with your lender or teaming up with an attorney, law firm, or other professional you hired to represent your interest. If you hired professional representation, team up with your representative and defer all correspondence and phone calls from your lender to your representative – don’t communicate with your lender unless your representative specifically advises you otherwise.

1. Come clean – honesty is the best policy

It can be tempting to bend the truth when you are trying to convince a lender to approve a loan modification. Some homeowners are embarrassed by something they did to place their finances in jeopardy – possibly a gambling addiction of substance abuse. Others try to fudge the numbers to make themselves eligible for a loan modification they cannot otherwise qualify for. Even worse, some homeowners lie to their partners or try to conceal the problem until it is too late to do anything about it.

Only by laying all your cards on the table and disclosing the truth can you begin to attend to the root cause of your financial hardship and then develop and implement solutions that put you back on the path to long-term financial health.

2. Understand your lender’s point of view

Regardless of how you ended up in the situation you’re in, blaming the lender or the mortgage broker or loan officer who placed you in your current mortgage does little good, unless you can prove your point in court. Usually, you have a better chance of resolving the problem by understanding your lender’s point of view, even if you don’t agree with it. So, what is the lender’s point of view?

Lenders lack any emotional attachment to the situation. To them, it all boils down to money. If you can show them that modifying your loan cost them less than a foreclosure and they believe you will honor the terms of the loan modification, they are likely to approve it. If not, then they are likely to reject it.

Keep in mind that some homeowners who don’t need loan modifications are also applying for them. Lenders need to protect their own interests from homeowners who are trying to cheat them out of their profits. As a result, they need to carefully screen out ineligible applicants, which can often make the process much more difficult and frustrating for homeowners who genuinely suffer financial hardship and need a loan modification.

3. Keep a cool head

Understandably, homeowners often become frustrated and angry when seeking assistance from their lender. Unfortunately, anger can result in the following:

• “Accidental” disconnects: The customer service rep you’re speaking with may put you on hold permanently or hang up “accidentally.”
• Lost files: Your file may get “lost” or “misplaced.”
• Rejection: Your lender may decide that you are unreasonable and that foreclosing would be less costly overall.
• A bad offer: Your lender may offer a workout solution that is worse than what you would get had you been nice about it. Or, you may be so exhausted that you agree with the first offer your lender puts on the table rather than negotiating a better deal rationally.

Tip: If you doubt your own ability to remain calm, cool, and collected during the entire process, consider hiring a professional to represent you.

4. Give them what they need

Prior to applying for a loan modification, call your lender or visit its website to obtain an application packet or a list of items you need to submit with your application. Some lenders allow you to apply online, but you usually have to ship or fax supporting documentation separately.

Find out exactly which forms you need to fill out and which documents your lender needs to process your application, and provide everything to your lender or representative in the manner specified. Label everything clearly and legibly with your name and loan number and provide a checklist of all items you’re submitting in your application packet. Arrange the items in the order listed by your lender, so whoever is processing your application does not have to search for items. Include a cover page that in large print lists your name and loan number as well as an items-included list.

5. Ask for what you want

Before discussing the terms of the loan modification with your lender, you should have a fairly clear idea of what you want and need. Answer the following questions for yourself. This will help you field questions from your lender:

• How much do you owe in late or missed payments?
• Can you catch up the missed payments?
• Do you need additional time to catch up on missed payments?
• How much can you realistically afford to pay each month?
• Do you really want to keep your home or would you prefer to sell if you could walk away not owing anything?

State clearly what you want up front. If your lender is unwilling to agree to the terms you need, you’re better off knowing that up front, so you can explore other options. Don’t waffle – it will only lead to misunderstandings and unsatisfactory “solutions.”

6. Let them do their job

While you should track the process of your loan modification application and any negotiations, avoid the temptation to micromanage the process. Knowing the timeline in advance can help you develop realistic expectations of when you will hear back from someone, so you don’t have to keep calling to check progress. Remember, the more time they spend on the phone consoling anxious applicants, the less time they have to review your application and work out a solution.

The lender should have a timeline for just about every step in the process. Your lender can probably even tell you how many days it takes for items you fax in to get to where they need to be. Some lenders have a 4-day delivery period for faxed items. Most timelines are in place because of the volume of requests. Ask how long the steps in the process take. Follow up when timelines near expiration.

7. Get your financial house in order

Most homeowners, even those who can readily afford their monthly house payments, could benefit from reviewing their income and expenses and drawing up a monthly budget. If you don’t have some way of tracking income and expenses with realistic goals in mind, put a tracking system in place today and start developing a budget.

If you have a computer, a personal accounting program, such as Quicken or Microsoft Money can come in very handy. These programs allow you to assign each entry to a specific category, such as groceries, clothing, entertainment, utilities, auto insurance, auto: gas, auto: maintenance; and so on. You can then generate reports showing monthly totals for spending in each category.

If you’re budget challenged, consider hiring an accountant or credit counselor to get you on track. It’s worth the investment.

8. Keep everyone posted of any changes

If anything changes related to your financial situation, be sure to keep your representative or lender (if you’re negotiating the loan modification on your own) in the loop. Withholding information that may affect your eligibility could cause problems.

9. Make sure the lender’s offer is truly affordable

Assuming you qualify for a loan modification, your lender will present you with an offer. Be sure to review the offer carefully and have your attorney look it over – before you sign on the dotted line. Make sure the monthly payment is truly affordable. If the loan modification is unaffordable or makes your budget so tight that you’re only one car repair or medical bill away from defaulting again, head back to the negotiating table to try to work out a better deal. It doesn’t do you or your lender any good to accept an agreement that puts you on the path to repeating this same scenario.

10. Hold up your end of the bargain

By the time you finalize your agreement, you and your lender will have invested a great deal of time and effort in hammering out the details. To ensure long-term success, put some effort into keeping your budget on track. If you are having trouble, consult a credit counselor, who can help hold you accountable for your spending. Budgeting can be tough at first, but it pays huge dividends down the road. Most people who acquire the necessary skills discover that by tweaking their spending priorities they have more than enough to cover their expenses.

The key to success is discipline and commitment. All the effort you spend setting up a plan is of no use if you don’t follow the plan you created. It’s like signing up for a gym membership and then never walking through the doors to work out. Reestablishing your financial health will be work, but the results will be worth the effort. Like that gym membership, you won’t realize results over night, but commitment to the routine will pay off.

Remember, loan modification success is a team effort. Do your part to achieve long-term success.

Ralph R. Roberts, GRI, CRS Award-Winning REALTOR® and Author Loan Modification For Dummies (avail. Summer 2009)

Suppose you’re behind on your house payments. You dial the phone number on your most recent mortgage statement, clear the usual hurdles, and finally reach someone who understands your situation and offers to help. You are one of the lucky homeowners who has a cooperative lender. Now what? What can you do to team up with your lender to optimize the outcome? This blog post reveals ten ways you can expedite the process and negotiate an affordable loan modification that enables you to catch up on any missed payments, lower your monthly mortgage payment, and keep your house.

The following 10 tips apply whether you are working directly with your lender or teaming up with an attorney, law firm, or other professional you hired to represent your interest. If you hired professional representation, team up with your representative and defer all correspondence and phone calls from your lender to your representative – don’t communicate with your lender unless your representative specifically advises you otherwise.

1. Come clean – honesty is the best policy

It can be tempting to bend the truth when you are trying to convince a lender to approve a loan modification. Some homeowners are embarrassed by something they did to place their finances in jeopardy – possibly a gambling addiction of substance abuse. Others try to fudge the numbers to make themselves eligible for a loan modification they cannot otherwise qualify for. Even worse, some homeowners lie to their partners or try to conceal the problem until it is too late to do anything about it.

Only by laying all your cards on the table and disclosing the truth can you begin to attend to the root cause of your financial hardship and then develop and implement solutions that put you back on the path to long-term financial health.

2. Understand your lender’s point of view

Regardless of how you ended up in the situation you’re in, blaming the lender or the mortgage broker or loan officer who placed you in your current mortgage does little good, unless you can prove your point in court. Usually, you have a better chance of resolving the problem by understanding your lender’s point of view, even if you don’t agree with it. So, what is the lender’s point of view?

Lenders lack any emotional attachment to the situation. To them, it all boils down to money. If you can show them that modifying your loan cost them less than a foreclosure and they believe you will honor the terms of the loan modification, they are likely to approve it. If not, then they are likely to reject it.

Keep in mind that some homeowners who don’t need loan modifications are also applying for them. Lenders need to protect their own interests from homeowners who are trying to cheat them out of their profits. As a result, they need to carefully screen out ineligible applicants, which can often make the process much more difficult and frustrating for homeowners who genuinely suffer financial hardship and need a loan modification.

3. Keep a cool head

Understandably, homeowners often become frustrated and angry when seeking assistance from their lender. Unfortunately, anger can result in the following:

• “Accidental” disconnects: The customer service rep you’re speaking with may put you on hold permanently or hang up “accidentally.”
• Lost files: Your file may get “lost” or “misplaced.”
• Rejection: Your lender may decide that you are unreasonable and that foreclosing would be less costly overall.
• A bad offer: Your lender may offer a workout solution that is worse than what you would get had you been nice about it. Or, you may be so exhausted that you agree with the first offer your lender puts on the table rather than negotiating a better deal rationally.

Tip: If you doubt your own ability to remain calm, cool, and collected during the entire process, consider hiring a professional to represent you.

4. Give them what they need

Prior to applying for a loan modification, call your lender or visit its website to obtain an application packet or a list of items you need to submit with your application. Some lenders allow you to apply online, but you usually have to ship or fax supporting documentation separately.

Find out exactly which forms you need to fill out and which documents your lender needs to process your application, and provide everything to your lender or representative in the manner specified. Label everything clearly and legibly with your name and loan number and provide a checklist of all items you’re submitting in your application packet. Arrange the items in the order listed by your lender, so whoever is processing your application does not have to search for items. Include a cover page that in large print lists your name and loan number as well as an items-included list.

5. Ask for what you want

Before discussing the terms of the loan modification with your lender, you should have a fairly clear idea of what you want and need. Answer the following questions for yourself. This will help you field questions from your lender:

• How much do you owe in late or missed payments?
• Can you catch up the missed payments?
• Do you need additional time to catch up on missed payments?
• How much can you realistically afford to pay each month?
• Do you really want to keep your home or would you prefer to sell if you could walk away not owing anything?

State clearly what you want up front. If your lender is unwilling to agree to the terms you need, you’re better off knowing that up front, so you can explore other options. Don’t waffle – it will only lead to misunderstandings and unsatisfactory “solutions.”

6. Let them do their job

While you should track the process of your loan modification application and any negotiations, avoid the temptation to micromanage the process. Knowing the timeline in advance can help you develop realistic expectations of when you will hear back from someone, so you don’t have to keep calling to check progress. Remember, the more time they spend on the phone consoling anxious applicants, the less time they have to review your application and work out a solution.

The lender should have a timeline for just about every step in the process. Your lender can probably even tell you how many days it takes for items you fax in to get to where they need to be. Some lenders have a 4-day delivery period for faxed items. Most timelines are in place because of the volume of requests. Ask how long the steps in the process take. Follow up when timelines near expiration.

7. Get your financial house in order

Most homeowners, even those who can readily afford their monthly house payments, could benefit from reviewing their income and expenses and drawing up a monthly budget. If you don’t have some way of tracking income and expenses with realistic goals in mind, put a tracking system in place today and start developing a budget.

If you have a computer, a personal accounting program, such as Quicken or Microsoft Money can come in very handy. These programs allow you to assign each entry to a specific category, such as groceries, clothing, entertainment, utilities, auto insurance, auto: gas, auto: maintenance; and so on. You can then generate reports showing monthly totals for spending in each category.

If you’re budget challenged, consider hiring an accountant or credit counselor to get you on track. It’s worth the investment.

8. Keep everyone posted of any changes

If anything changes related to your financial situation, be sure to keep your representative or lender (if you’re negotiating the loan modification on your own) in the loop. Withholding information that may affect your eligibility could cause problems.

9. Make sure the lender’s offer is truly affordable

Assuming you qualify for a loan modification, your lender will present you with an offer. Be sure to review the offer carefully and have your attorney look it over – before you sign on the dotted line. Make sure the monthly payment is truly affordable. If the loan modification is unaffordable or makes your budget so tight that you’re only one car repair or medical bill away from defaulting again, head back to the negotiating table to try to work out a better deal. It doesn’t do you or your lender any good to accept an agreement that puts you on the path to repeating this same scenario.

10. Hold up your end of the bargain

By the time you finalize your agreement, you and your lender will have invested a great deal of time and effort in hammering out the details. To ensure long-term success, put some effort into keeping your budget on track. If you are having trouble, consult a credit counselor, who can help hold you accountable for your spending. Budgeting can be tough at first, but it pays huge dividends down the road. Most people who acquire the necessary skills discover that by tweaking their spending priorities they have more than enough to cover their expenses.

The key to success is discipline and commitment. All the effort you spend setting up a plan is of no use if you don’t follow the plan you created. It’s like signing up for a gym membership and then never walking through the doors to work out. Reestablishing your financial health will be work, but the results will be worth the effort. Like that gym membership, you won’t realize results over night, but commitment to the routine will pay off.

Remember, loan modification success is a team effort. Do your part to achieve long-term success.

Ralph R. Roberts, GRI, CRS Award-Winning REALTOR® and Author Loan Modification For Dummies (avail. Summer 2009)

Suppose you’re behind on your house payments. You dial the phone number on your most recent mortgage statement, clear the usual hurdles, and finally reach someone who understands your situation and offers to help. You are one of the lucky homeowners who has a cooperative lender. Now what? What can you do to team up with your lender to optimize the outcome? This blog post reveals ten ways you can expedite the process and negotiate an affordable loan modification that enables you to catch up on any missed payments, lower your monthly mortgage payment, and keep your house.

The following 10 tips apply whether you are working directly with your lender or teaming up with an attorney, law firm, or other professional you hired to represent your interest. If you hired professional representation, team up with your representative and defer all correspondence and phone calls from your lender to your representative – don’t communicate with your lender unless your representative specifically advises you otherwise.

1. Come clean – honesty is the best policy

It can be tempting to bend the truth when you are trying to convince a lender to approve a loan modification. Some homeowners are embarrassed by something they did to place their finances in jeopardy – possibly a gambling addiction of substance abuse. Others try to fudge the numbers to make themselves eligible for a loan modification they cannot otherwise qualify for. Even worse, some homeowners lie to their partners or try to conceal the problem until it is too late to do anything about it.

Only by laying all your cards on the table and disclosing the truth can you begin to attend to the root cause of your financial hardship and then develop and implement solutions that put you back on the path to long-term financial health.

2. Understand your lender’s point of view

Regardless of how you ended up in the situation you’re in, blaming the lender or the mortgage broker or loan officer who placed you in your current mortgage does little good, unless you can prove your point in court. Usually, you have a better chance of resolving the problem by understanding your lender’s point of view, even if you don’t agree with it. So, what is the lender’s point of view?

Lenders lack any emotional attachment to the situation. To them, it all boils down to money. If you can show them that modifying your loan cost them less than a foreclosure and they believe you will honor the terms of the loan modification, they are likely to approve it. If not, then they are likely to reject it.

Keep in mind that some homeowners who don’t need loan modifications are also applying for them. Lenders need to protect their own interests from homeowners who are trying to cheat them out of their profits. As a result, they need to carefully screen out ineligible applicants, which can often make the process much more difficult and frustrating for homeowners who genuinely suffer financial hardship and need a loan modification.

3. Keep a cool head

Understandably, homeowners often become frustrated and angry when seeking assistance from their lender. Unfortunately, anger can result in the following:

• “Accidental” disconnects: The customer service rep you’re speaking with may put you on hold permanently or hang up “accidentally.”
• Lost files: Your file may get “lost” or “misplaced.”
• Rejection: Your lender may decide that you are unreasonable and that foreclosing would be less costly overall.
• A bad offer: Your lender may offer a workout solution that is worse than what you would get had you been nice about it. Or, you may be so exhausted that you agree with the first offer your lender puts on the table rather than negotiating a better deal rationally.

Tip: If you doubt your own ability to remain calm, cool, and collected during the entire process, consider hiring a professional to represent you.

4. Give them what they need

Prior to applying for a loan modification, call your lender or visit its website to obtain an application packet or a list of items you need to submit with your application. Some lenders allow you to apply online, but you usually have to ship or fax supporting documentation separately.

Find out exactly which forms you need to fill out and which documents your lender needs to process your application, and provide everything to your lender or representative in the manner specified. Label everything clearly and legibly with your name and loan number and provide a checklist of all items you’re submitting in your application packet. Arrange the items in the order listed by your lender, so whoever is processing your application does not have to search for items. Include a cover page that in large print lists your name and loan number as well as an items-included list.

5. Ask for what you want

Before discussing the terms of the loan modification with your lender, you should have a fairly clear idea of what you want and need. Answer the following questions for yourself. This will help you field questions from your lender:

• How much do you owe in late or missed payments?
• Can you catch up the missed payments?
• Do you need additional time to catch up on missed payments?
• How much can you realistically afford to pay each month?
• Do you really want to keep your home or would you prefer to sell if you could walk away not owing anything?

State clearly what you want up front. If your lender is unwilling to agree to the terms you need, you’re better off knowing that up front, so you can explore other options. Don’t waffle – it will only lead to misunderstandings and unsatisfactory “solutions.”

6. Let them do their job

While you should track the process of your loan modification application and any negotiations, avoid the temptation to micromanage the process. Knowing the timeline in advance can help you develop realistic expectations of when you will hear back from someone, so you don’t have to keep calling to check progress. Remember, the more time they spend on the phone consoling anxious applicants, the less time they have to review your application and work out a solution.

The lender should have a timeline for just about every step in the process. Your lender can probably even tell you how many days it takes for items you fax in to get to where they need to be. Some lenders have a 4-day delivery period for faxed items. Most timelines are in place because of the volume of requests. Ask how long the steps in the process take. Follow up when timelines near expiration.

7. Get your financial house in order

Most homeowners, even those who can readily afford their monthly house payments, could benefit from reviewing their income and expenses and drawing up a monthly budget. If you don’t have some way of tracking income and expenses with realistic goals in mind, put a tracking system in place today and start developing a budget.

If you have a computer, a personal accounting program, such as Quicken or Microsoft Money can come in very handy. These programs allow you to assign each entry to a specific category, such as groceries, clothing, entertainment, utilities, auto insurance, auto: gas, auto: maintenance; and so on. You can then generate reports showing monthly totals for spending in each category.

If you’re budget challenged, consider hiring an accountant or credit counselor to get you on track. It’s worth the investment.

8. Keep everyone posted of any changes

If anything changes related to your financial situation, be sure to keep your representative or lender (if you’re negotiating the loan modification on your own) in the loop. Withholding information that may affect your eligibility could cause problems.

9. Make sure the lender’s offer is truly affordable

Assuming you qualify for a loan modification, your lender will present you with an offer. Be sure to review the offer carefully and have your attorney look it over – before you sign on the dotted line. Make sure the monthly payment is truly affordable. If the loan modification is unaffordable or makes your budget so tight that you’re only one car repair or medical bill away from defaulting again, head back to the negotiating table to try to work out a better deal. It doesn’t do you or your lender any good to accept an agreement that puts you on the path to repeating this same scenario.

10. Hold up your end of the bargain

By the time you finalize your agreement, you and your lender will have invested a great deal of time and effort in hammering out the details. To ensure long-term success, put some effort into keeping your budget on track. If you are having trouble, consult a credit counselor, who can help hold you accountable for your spending. Budgeting can be tough at first, but it pays huge dividends down the road. Most people who acquire the necessary skills discover that by tweaking their spending priorities they have more than enough to cover their expenses.

The key to success is discipline and commitment. All the effort you spend setting up a plan is of no use if you don’t follow the plan you created. It’s like signing up for a gym membership and then never walking through the doors to work out. Reestablishing your financial health will be work, but the results will be worth the effort. Like that gym membership, you won’t realize results over night, but commitment to the routine will pay off.

Remember, loan modification success is a team effort. Do your part to achieve long-term success.

Ralph R. Roberts, GRI, CRS Award-Winning REALTOR® and Author Loan Modification For Dummies (avail. Summer 2009)

Understandably, if you applied for a loan modification and failed to hear from your lender after two to three weeks, you’d tend to get a little antsy and perhaps even annoyed (especially if you continue to receive late payment notices and nasty phone calls from collection agencies). With this in mind, many homeowners ask me, “How long will it be before I hear anything?” and “What should I do while I’m waiting?.” This blog post should help answer those very pressing questions.

How long does a loan modification take?

The loan modification process typically takes 30 to 90 days, depending mostly on your lender and your ability to efficiently work through the process with your attorney or other loan modification representative.

Note: The loan modification timeline is not set in stone. The more complex your situation or the greater the degree of concessions needed from the investor, the longer the process takes. Borrowers with a lot of collateral issues can see their loans take longer than what has become the typical 30- to 90-day timeframe.

A professional can often reduce the amount of time required by processing your paperwork efficiently, presenting your application exactly the way the lender wants it, and knowing from past experience what the lender is able and typically willing to agree to. Although each borrower’s situation is unique, knowing the measures the lender is willing to take for similarly situated borrowers can be a real time saver.

Whether you are dealing directly with your lender or through a loan modification specialist, ask several questions up front:

• How long is the process likely to take? Find out the best- and worst-case scenarios and then count out the days and mark them on your calendar.
• When can I expect to hear something about my case? Mark this date on your calendar.
• If I don’t hear anything by the specified date, whom should I contact? Get the person’s name, employee identification number (if available), phone number, and any extension you need to dial to reach the person directly.

What should I do while I’m waiting?

Playing the waiting game can be agonizing, particularly when you have no idea of whether your application will be accepted or rejected or what the lender will offer in terms of a workout. It feels like your future hangs in the balance, and you remain in the dark. Knowing the standard timeline for processing a loan modification can certainly help relieve some anxiety.

In addition, you can continue to make progress on your own by doing the following:

• If you hired a loan modification specialist to represent you, do not speak with your lender or lender’s representative. Refer all matters to the professional who is representing you. Anything you say to the lender could confuse things or compromise your representative’s ability to negotiate the best deal on your behalf.
• Log all phone calls and correspondence between you and your lender or representative. Write down the number you called, the person you talked with, what the person said, and what you said – not word for word, just jot down the key points.
• Keep track of important dates. If you do not hear something back on the date promised, call the next day to find out what’s going on. Lenders almost never call you back with updates. If you hired a third party representative, they will (or should) keep you posted, but the lender simply doesn’t have the time to make follow up phone calls. If you’re dealing with your lender directly, you’ll have to be the one making the calls. Mark your calendar and schedule periodic update phone calls. Consistent follow up is paramount to a successful modification.
• Explore other options. If the lender denies your request for a loan modification or presents an offer that you cannot accept, you will need a plan B (and maybe a plan C and a plan D). In addition, other options may be better for you than a loan modification. Consult a real estate agent about listing your home for sale. Talk to a mortgage broker or loan officer about refinancing. Speak with a bankruptcy attorney to find out whether filing bankruptcy would be a better choice.
• Don’t be surprised if you continue to receive delinquency notices or late payment phone calls. Lenders rarely put a stop on the foreclosure process until a workout solution is fully in place. You should ask your lender if your attempts to negotiate a solution will stop or at least postpone other collection actions. If they do not, you should find out what that means for you. If the lender is able to foreclose in 30 days and a workout takes 60 days, there’s a slight timeline problem. Push to have all default and foreclosure actions put on hold while your workout attempts are underway.

When your fate is in someone else’s hands, 30 to 90 days can seem like an eternity. By doing your part to keep the process on track, remain informed, and explore other options, you not only improve your chances of achieving a positive outcome, but you can also reduce the stress that commonly accompanies the waiting process.

Ralph R. Roberts, GRI, CRS Award-Winning REALTOR® and Author Loan Modification For Dummies (avail. Summer 2009)

After reading about President Obama’s plan to cure the foreclosure epidemic, I wish I could say, “It’s about time!” For far too long, the federal government here in the United States has been focused on bailing out Wall Street rather than Main Street. I was hoping President Obama would reverse the trend. Unfortunately, his plan looks like more of the same.

Obama is setting aside $75 billion… of whose money? According to a treasury official, $50 billion will come from the remaining $350 billion in Troubled Asset Relief Program funds, and $25 billion will come from Fannie Mae and Freddie Mac. This is taxpayers’ money – Main Street money.

And where is that money ultimately ending up? To “subsidize” lenders and investors – that’s Wall Street – for doing what they need to be doing anyway – modifying loans.

The fact is that loan modification is a good business decision for lenders and investors. According to various estimates, lenders stand to lose an average of about $50,000 to $80,000 per foreclosure. A loan modification does not wipe out a lender’s profit. To the contrary, it helps lenders avoid taking a huge loss on foreclosure while at the same time allowing them to keep a performing asset on their books. As a result of a loan modification, the lender keeps collecting interest. The loan remains profitable, albeit less profitable than it would have been had the homeowner been able to afford the originally agreed-upon payments, but still profitable. So why are taxpayers going to subsidize lenders?

Last Sunday (February 15, 2009) 60 Minutes ran a segment entitled “World of Trouble,” in which investigative reporter Scott Pelley interviewed Paul Bishop, a former loan originator for World Savings Bank which, at the time, was the second largest savings and loan. Bishop reported witnessing rampant fraud throughout the organization in the origination and approval of mortgage loan. And as I have been reporting over the past two years, what was going on at World Savings Bank was the rule rather than the exception in the mortgage lending industry. Everyone knew what was going on. The few people who tried to stop it were silenced and either demoted or fired.

Mortgage lenders were well aware that they were approving mortgage loans that never should have been approved in the first place. Loan originators and banks were raking in profits leading up to the mortgage meltdown, and they weren’t exactly spreading the wealth to American taxpayers. Now that the time has come for them to pay the price for irresponsible lending practices, they are calling on the American taxpayer to subsidize their losses? This is absurd.

Don’t get me wrong. I applaud President Obama for focusing efforts on bringing relief to Main Street, but the government shouldn’t be using Main Street money to do it. I think a more prudent move would be in the form of an executive order demanding that banks modify loans to a level of affordability and end foreclosures until they have cleaned up the mess that they themselves have contributed so much to creating.

Ralph R. Roberts, GRI, CRS Award-Winning REALTOR® and Author Loan Modification For Dummies (avail. Summer 2009)

After reading about President Obama’s plan to cure the foreclosure epidemic, I wish I could say, “It’s about time!” For far too long, the federal government here in the United States has been focused on bailing out Wall Street rather than Main Street. I was hoping President Obama would reverse the trend. Unfortunately, his plan looks like more of the same.

Obama is setting aside $75 billion… of whose money? According to a treasury official, $50 billion will come from the remaining $350 billion in Troubled Asset Relief Program funds, and $25 billion will come from Fannie Mae and Freddie Mac. This is taxpayers’ money – Main Street money.

And where is that money ultimately ending up? To “subsidize” lenders and investors – that’s Wall Street – for doing what they need to be doing anyway – modifying loans.

The fact is that loan modification is a good business decision for lenders and investors. According to various estimates, lenders stand to lose an average of about $50,000 to $80,000 per foreclosure. A loan modification does not wipe out a lender’s profit. To the contrary, it helps lenders avoid taking a huge loss on foreclosure while at the same time allowing them to keep a performing asset on their books. As a result of a loan modification, the lender keeps collecting interest. The loan remains profitable, albeit less profitable than it would have been had the homeowner been able to afford the originally agreed-upon payments, but still profitable. So why are taxpayers going to subsidize lenders?

Last Sunday (February 15, 2009) 60 Minutes ran a segment entitled “World of Trouble,” in which investigative reporter Scott Pelley interviewed Paul Bishop, a former loan originator for World Savings Bank which, at the time, was the second largest savings and loan. Bishop reported witnessing rampant fraud throughout the organization in the origination and approval of mortgage loan. And as I have been reporting over the past two years, what was going on at World Savings Bank was the rule rather than the exception in the mortgage lending industry. Everyone knew what was going on. The few people who tried to stop it were silenced and either demoted or fired.

Mortgage lenders were well aware that they were approving mortgage loans that never should have been approved in the first place. Loan originators and banks were raking in profits leading up to the mortgage meltdown, and they weren’t exactly spreading the wealth to American taxpayers. Now that the time has come for them to pay the price for irresponsible lending practices, they are calling on the American taxpayer to subsidize their losses? This is absurd.

Don’t get me wrong. I applaud President Obama for focusing efforts on bringing relief to Main Street, but the government shouldn’t be using Main Street money to do it. I think a more prudent move would be in the form of an executive order demanding that banks modify loans to a level of affordability and end foreclosures until they have cleaned up the mess that they themselves have contributed so much to creating.

Ralph R. Roberts, GRI, CRS Award-Winning REALTOR® and Author Loan Modification For Dummies (avail. Summer 2009)

In case you missed it, Ralph R. Roberts, founder and primary author of this blog, appeared on CNN over the weekend to answer a series of hard-hitting questions from struggling homeowners facing the prospect of losing their home in foreclosure.

As you can see from the two video segments pasted in below, Roberts, an award-winning author and REALTOR®, shared numerous insights from one of his latest books, Foreclosure Self-Defense For Dummies:

Part Two:

In several blog entries here on KeepMyHouse.com, I point out that loan modification is a no-brainer for lenders. In short, when dealing with distressed homeowners, lenders essentially have the following choices:

• Loan modification
• Foreclosure
• Forbearance
• Deed in lieu
• Short sale

All things being equal, offering a loan modification to borrowers is usually the best option for lenders, because they avoid the high cost of foreclosure (by some estimates $50,000 to 100,000 per foreclosure) and they continue to collect interest on the loan – at a lower rate of return, but still more than enough to earn a profit.

Unfortunately, in many cases, another factor comes into play – mortgage insurance. If a loan is FHA- or VA-secured or the owners are paying PMI (private mortgage insurance), the lender stands to lose much less from foreclosure, because insurance will make up a portion of the difference. In other words, the lender’s motivation to work out a reasonable deal with the homeowner/borrower is undermined by mortgage insurance – often mortgage insurance that the homeowner is paying for!

When foreclosure numbers spiked, so did mortgage insurance claims. This is what contributed to the need for insurance giant AIG to receive bailout money from the government. Without it they could not have paid all the claims being made and still remain in business. AIG going out of business would have jeopardized the stability of millions of loans and caused even greater market insecurity.

If you are wondering why the federal government is willing to subsidize lenders for modifying mortgages and subsidize homeowners for making their monthly mortgage payments, wonder no more. One reason the government wants to bail out homeowners is because it has to. The government stands to lose more if homeowners with government-secured mortgages default on their loans than by paying ten thousand dollars or so to subsidize loan modifications for at-risk loans.

You can also stop wondering why mortgage lenders approved all of those risky mortgage loans in the first place. Risks to the lenders were often reduced by the fact that the loans were insured. They could afford to gamble, because after all, someone else would be there to pick up the tab on any losses.

Having insurance when disaster strikes is usually a good thing, but in the case of the foreclosure crisis, having mortgage insurance can work against you. It’s not like homeowner’s insurance that protects your investment in the case of a natural disaster. It only protects the lender’s investment – leaving you and your family without a roof over your heads. In addition, as a recent visitor here on KeepMyHouse.com pointed out, eliminating PMI for loans that require it could make house payments more affordable, put more money in people’s pockets, and help stimulate the economy.

I am not entirely against having the government secure loans or requiring homeowners to pay PMI on certain mortgage loans. Up to this point, these programs have helped more people achieve the American Dream of Homeownership. However, when these same programs are working against homeowners during an unprecedented economic crisis, I think it’s time to review the real purpose of these programs. Lenders need to start relying less on mortgage insurance and more on loan modification to mitigate their losses and help more Americans keep their homes.

Ralph R. Roberts, GRI, CRS Award-Winning REALTOR® and Author Loan Modification For Dummies (avail. Summer 2009)