By Moe Bedard 

If you have been looking for mortgage help or assistance with a loan modification, then you have came to the right website for safe and accurate information. This blog and our forum at LoanSafe.org was created for the sole purpose of assisting homeowners who are struggling with their mortgages to find the “real deal” when it comes to understanding what these crazy lenders and servicers are doing to help.

By all means DO NOT TRUST these phony loss mitigation companies that are preying on homeowners everywhere. Many of these fly by night companies are coming out of the wood work and their sole purpose is to scam desperate homeowners.

You will see these scammer websites advertised all over the search engines like Google and Yahoo.

Many make false claims that that they have a 98% success rate or they can obtain $100,000 mortgage loan principle reductions and their results are guaranteed. They take your $3,000 and you never see them again. There is no way in hell, ANYONE can promise that and remember, if it sounds too good to be true, then it is.

You are not alone and in fact there are millions in your same position!

The first thing you need to know is that you are not alone. There are literally millions of people suffering as a result of their mortgages and this housing crisis. Yes, SUFFERING! This is no game and I do not take this lightly. You shouldn’t either, but realize that you are not alone and you will get through this. One way or another.

Moe’s most important homeowner tip for mortgage help:

One of the first things that a homeowner should do is identify that the mortgage on their current property is a lawful one. Meaning that there are no Truth in Lending Act or RESPA violations and there wasn’t fraud involved on behalf of the lender or broker that originated your loan. If there is legal issues, then you can use these violations to your advantage and put the lender on the defense.

Red Flags and things to look out for in your mortgage loan. If your lender or mortgage broker violated the law, by all means, you may have found the holy grail to help you get out of your toxic or fraudulent mortgage.

Start by comparing the loan you got with the one you thought you were getting. Are the terms the same? That is, is your Annual Percentage Rate (”APR”) the same as the one you were quoted? Are your total monthly payments the same as you were told they would be? Is there a prepayment penalty, and if so, were you told about this prepayment penalty?

If you have refinanced your primary residence, that is, the home your currently live in, then the first thing you should look at is the “notice of Right to Cancel” which is also called the Three Day Right of Rescission. You usually has three days after signing loan documents to change your mind and cancel the loan.

The borrower must be told of this right in writing.

If the creditor fails to properly provide notice of this right to cancel, the right of rescission may be extended for up to three years.

When the right is extended for three years you can rescind the loan at any time before three years, meaning that the loan is treated as if it never existed. Essentially, you become entitled to all profits made by the creditor as a result of this loan. This means that the creditor must refund all interest paid, all closing fees, all broker fees, and even pay for your attorney fees. As you can imagine, this amount can be quite significant.

The extended right of rescission is a powerful tool to help borrowers who have been victims of predatory lending, and helping our clients exercise this right is often the first step in holding a creditor responsible for illegal behavior.

If you are the victim of predatory lending or mortgage fraud, then please call our sponsor, the Law Offices of Gregory A. Paiva & Associates at 888-432-6643 for a FREE consultation.

Gregory A. Paiva – “We use powerful laws like the Truth in Lending Act (TILA) and the Real Estate and Settlement Procedures Act (RESPA) to bring lenders to their knees. These laws MUST be followed and failure to do so can result in significant damages to the lender. So, naturally, they will be very amicable to working your loan out to more affordable terms to avoid costly litigation.

Many times the borrower is charged a lot of unexplainable fees and charges for the the lender cannot back up these charges. The Law Offices of Gregory A. Paiva & Assoicates, demand that these fees be fully documented to the penny and we insure that our clients are not being over charged by their lender or servicer.

We do not tolerate abuse and command respect with our thorough knowledge of the law. We are consumer and homeowner advocates that will protect you and your home.”

If it is determined that no laws have been violated on your mortgage, then it’s time to approach your lender for a possible loan workout or loan modification.

The factors they will look at to see if your are eligible for a loan modification are:

1. Nature of Hardship Causing Your Mortgage Problems
2. Ability to pay
3. Amount Owed
4. Equity in the property
5. Future financial situation
6. What is better for them. To foreclose or pursue a loan workout with you and or modify your loan. Meaning which approach will best benefit the lender in the long run.

Mortgage help can take form either via a loan workout or loan modification  and this generally occurs where the parties to a problem loan mutually agree to workout the problem by creating new and better loan terms. The hope is that the new loan will enable to the borrower to meet their obligations.

Make the Plan and Work the Plan:

When applying for loan modification help, make a game plan on how exactly you are going to approach your lender or servicer. You need o plan for the worst and hope for the best. So, that means you are going to make 2 plans. 1 plan is to approach a loan workout plan with your lender and the 2nd plan is a “backup” plan in case your attempts to get a loan modification do not work. The 2nd plan is for your to prepare for the worst case scenario.

Understanding your lenders or servicers employees:

These people are trained in minimizing loss for their company and they get paid to by getting the most amount of money out of you as possible or declare that your case is un workable and foreclose on you. That is how they mitigate loss. If you understand this, then you’ll know that you have to approach them and all conversations very carefully. They are people just like you and they are just doing a job.

Many do not care much about anything but lunch and Friday’s. You have to befriend them and “win” their compassion and open ear.. My advice is to be as nice as you can  to these people who answer the phone (no matter how pissed off you are at your lender). They have a tough job with hundreds of angry homeowners calling every day. Stand out and be the nice, calm and collective homeowner. You’ll be surprised that this simple tip will get you FAR!

The Mortgage HELP Plan:

1. Gather all your financial information and separate it into 3 categories

  •  Income – Any and all income. Wages, social security, child support, welfare etc.
  •  Assets – All real estate, 401k, IRA, stocks & bonds, autos, boats etc.
  •  Expenses – All expenses, mortgage payment, taxes, utilities, vehicles, cell phone, child care, insurance etc.
  •  Income & Expense Sheet – Now make a income and expense sheet with all your data. Here is a sheet to help you.

Your lender or servicer will ask you to fill out a financial statement and this is what the lender will use to determine if you are eligible for a loan modification

2. Write a hardship letter. Here in an example hardship letter

You’ll need to provide this hardship letter, documenting the reason you are unable to afford the mortgage (or reason you have fallen behind) and the reason that you are a good candidate for loan modification.  This letter will give your lender or servicer a clear picture and shows that you are a responsible borrower who has just suffered a hardship or a rate reset that is causing your problems.

  • This letter is going to explain what is causing your mortgage woes and why you are having problems
  • Make it short and sweet. 1 page to 2 at max. Remember you are sending this letter to an “employee” who is very busy and does not have time to read 5 page hardship letters.

3. Prepare for your first phone call:

The trick with any bank and getting a work out done is learning to navigate their phone system so as to increase your chances of getting a live person. Over the years I’ve learned some tricks that help, sometimes you hear options that you know will lead to a person like when it says “to speak to a representative press ___” but sometimes they don’t give you these options.

So, you have to think, what options WOULD get a live person. For example often anything that involves new clients signing up will get a live representative…because they always want new business. You have to be a little savvy though; you can’t just tell the sales guy you called them so you could get a warm body to answer the phone!

Once you get a live person, you want to be working your way up to a decision maker. This is sometimes harder to do for a homeowner than a 3rd party. Often with the homeowner they get stonewalled at the first level, and sadly the first tier in Loss Mitigation is really a glorified collections department. They are paid hourly employee’s who have very little if not zero motivation to go the extra mile and help you get some needed comfort and relief while resolving your problem. Often they just compound the problem by being rude and demanding, telling people things like “just pay your bills”. So it’s essential that you get beyond these people and to a specialist.

4.  Document your efforts

  • Make a separate folder for this and attach a “conversation log” or a “call log”
  • Document every call, conversations, fax, letter, email on your call log
  • This is very important in case you receive abuse and neglect from your lender or servicer. This will be your “evidence” in case you have to file a complaint with the Housing and Urban Development (HUD) or if your decide to bring a lawsuit against your predatory lender or servicer.

5.  Do you have complaints against your servicer? Please do not take this abuse and understand your have rights that protect you from predatory servicing.

The Real Estate Settlement Procedures Act (RESPA) is a consumer protection statute, first passed in 1974. RESPA covers loans secured with a mortgage placed on a one-to-four family residential property. These include most purchase loans, assumptions, refinances, property improvement loans, and equity lines of credit. HUD’s Office of RESPA and Interstate Land Sales is responsible for enforcing RESPA.

Loan servicing complaints

Section 6 provides borrowers with important consumer protections relating to the servicing of their loans. Under Section 6 of RESPA, borrowers who have a problem with the servicing of their loan (including escrow account questions), should contact their loan servicer in writing, outlining the nature of their complaint. The servicer must acknowledge the complaint in writing within 20 business days of receipt of the complaint.

Within 60 business days the servicer must resolve the complaint by correcting the account or giving a statement of the reasons for its position. Until the complaint is resolved, borrowers should continue to make the servicer’s required payment.

Borrowers may obtain actual damages, as well as additional damages if there is a pattern of noncompliance.

Closing loan modification thoughts:

The MOST crucial element to this whole process is your Budget and if you have done your due diligence, you’ll be ready . They will ask you for a detailed list of your monthly expenses. If it’s too tight, you may not get approved, if you have too much extra income you are going to have an outrageous payment plan.

Don’t agree to it!

The 2nd MOST important thing you can do is DO NOT SPEND YOUR MORTGAGE PAYMENTS.

Often people stop making their payment because they are falling behind on other bills, or they can’t quite make the whole house payment. Over the years more often than not, the people I met with still have an income coming in each month, they just can’t meet all their obligations, so while the house is falling behind they take advantage of the fact that they aren’t paying the house payment in order to catch up on other debts.  Sock away as much of that money each month as you can. Its crucial, here’s why;

If you don’t pay your mortgage for 3-4 months and your lender decides to negotiate a repayment plan or a loan modification, then they will want what is called “good faith” money for you to come to the table with. Typically this is from 30-75% and sometimes 100% of what you owe in delinquent fees and attorney fees. Often I speak with homeowners who spend all their money and have nothing to work with. If that is the case, then don’t expect them to work with you or you better have a REAAAALLLY good explanation and proof as to why you have no money to bring to the table.You can search for more homeowner tips under the category “Loan Modification” on the right bar of my blog.

Other great mortgage help reads from Moe to help you in your quest.

http://loanworkout.org/2007/10/19/should-you-handle-a-loan-modification-on-your-own.aspx

http://loanworkout.org/2007/10/18/tips-to-get-you-a-loan-modification.aspx

http://loanworkout.org/2007/10/12/loan-modification-success-story.aspx

http://loanworkout.org/2007/10/06/a-real-story-on-how-fight-for-a-countrywide-loan-modification.aspx

http://loanworkout.org/2007/10/01/example-hardship-letter.aspx

http://loanworkout.org/2007/10/04/fha-va-and-rural-mortgage-modification-information.aspx

http://loanworkout.org/2007/07/09/whats-a-loan-workout–repayment-plan.aspx

Contact your lender as soon as possible or have a competent third party handle it for you. There are non-profit HUD certified Housing Counseling Agencies in every town in America and also reputable for profit organization that can help you.

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