Loan Modification For Dummies E-Book

Ralph R. Roberts

• Herausgeber: John Wiley & Sons
• Kategorie: Ratgeber
• Sprache: Englisch

Seitenzahl: 439

Veröffentlichungsjahr: 2009

Beschreibung

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.

Leseprobe

Loan Modification For Dummies®

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

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Sections 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, 978-750-8400, fax [phone]. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, [phone], fax [phone], or online at http://www.wiley.com/go/permissions.

Trademarks: Wiley, the Wiley Publishing logo, For Dummies, the Dummies Man logo, A Reference for the Rest of Us!, The Dummies Way, Dummies Daily, The Fun and Easy Way, Dummies.com, Making Everything Easier!, and related trade dress are trademarks or registered trademarks of John Wiley & Sons, Inc. and/or its affiliates in the United States and other countries, and may not be used without written permission. All other trademarks are the property of their respective owners. Wiley Publishing, Inc., is not associated with any product or vendor mentioned in this book.

Limit of Liability/Disclaimer of Warranty: The contents of this work are intended to further general scientific research, understanding, and discussion only and are not intended and should not be relied upon as recommending or promoting a specific method, diagnosis, or treatment by physicians for any particular patient. The publisher and the author make no representations or warranties with respect to the accuracy or completeness of the contents of this work and specifically disclaim all warranties, including without limitation any implied warranties of fitness for a particular purpose. In view of ongoing research, equipment modifications, changes in governmental regulations, and the constant flow of information relating to the use of medicines, equipment, and devices, the reader is urged to review and evaluate the information provided in the package insert or instructions for each medicine, equipment, or device for, among other things, any changes in the instructions or indication of usage and for added warnings and precautions. Readers should consult with a specialist where appropriate. The fact that an organization or Website is referred to in this work as a citation and/or a potential source of further information does not mean that the author or the publisher endorses the information the organization or Website may provide or recommendations it may make. Further, readers should be aware that Internet Websites listed in this work may have changed or disappeared between when this work was written and when it is read. No warranty may be created or extended by any promotional statements for this work. Neither the publisher nor the author shall be liable for any damages arising herefrom.

For general information on our other products and services, please contact our Customer Care Department within the U.S. at 877-762-2974, outside the U.S. at 317-572-3993, or fax [phone].

For technical support, please visit www.wiley.com/techsupport.

Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books.

Library of Congress Control Number: 2009932703

ISBN: 978-0-470-50199-3

Manufactured in the United States of America

10 9 8 7 6 5 4 3 2 1

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 [phone].

Some of the people who helped bring this book to market include the following:

Acquisitions, Editorial, and Media Development

Project Editor: Sarah Faulkner

Senior Acquisitions Editor: Lindsay Sandman Lefevere

Senior Copy Editor: Elizabeth Rea

Assistant Editor: Erin Calligan Mooney

Editorial Program Coordinator: Joe Niesen

Technical Editor: Craig D. Doyle, Esq.

Editorial Manager: Christine Meloy Beck

Editorial Assistants: Jennette ElNaggar, David Lutton

Cover Photos: iStock

Cartoons: Rich Tennant (www.the5thwave.com)

Composition Services

Project Coordinator: Sheree Montgomery

Layout and Graphics: Reuben W. Davis, Melissa K. Jester, Christin Swinford

Proofreaders: ConText Editorial Services, Inc., Caitie Copple

Indexer: Valerie Haynes Perry

Publishing and Editorial for Consumer Dummies

Diane Graves Steele, Vice President and Publisher, Consumer Dummies

Kristin Ferguson-Wagstaffe, Product Development Director, Consumer Dummies

Ensley Eikenburg, Associate Publisher, Travel

Kelly Regan, Editorial Director, Travel

Publishing for Technology Dummies

Andy Cummings, Vice President and Publisher, Dummies Technology/General User

Composition Services

Debbie Stailey, Director of Composition Services

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.