THE OLD RULES OF MORTGAGE LOAN MODIFICATION
Designed for a homeowner that experienced a temporary economic hardship which caused them to fall behind between 2-6 months on their mortgage payment. The situation or cause of hardship must be over in order to qualify.
• Repayment Plan. Banks required a contribution of between 20-50% of the arrearages to reinstate the loan with the remaining arrearages stretched out between 6-18 monthly payments in addition to the agreed upon monthly mortgage payment. This is banks preferred first option, very few people could do this.
• Forbearance Modification. The loan would be reinstated with all the arrearages put on the back of the loan and loan term amortize to keep the same monthly mortgage payment.
• Forbearance Plan. Lender agrees to hold the loan in limbo where as no monthly payments would be required for a short period of time. This is NOT A PERMINANT LOAN MODIFICATION!
Issues of caution for homeowners attempting to do
Loan Modification Negotiations themselves:
Homeowners are being told by the Government and NPO that have the banks best interest in
mind, that anyone can get a Loan Modification and they can do it themselves. People think since it
is a simple process it will be easy to do on their own. All find out the hard way it is EXTREMELY
DIFFICULT to convince the lender to take a loss in lowering the payment by reducing their profit
margin. In today’s volatile market homeowners are finding that the lender may initiate a loan
modification via direct negotiation with the borrower. There are many issues of caution any
homeowner needs to be aware of before they attempt a loan modification in order to accomplish
results in the homeowner’s best interests, not the Banks. You only get one attempt for a
successful Loan Modification! A home owner who has never done a successful loan
modification in basically going into the deal blind as to how the process works, as well as all
the options available of how to modify the loan, what the lender is looking for and what red
flags may come up during the process to kill a successful loan modification. If you modify your
loan based upon the terms your bank offers you, you simply won’t receive the best Loan
Modification possible. This is why it is important to choose a party not affiliated with your bank
to negotiate your loan modification. Borrowers must recognize that a bank or lending institution is a
business that is driven by profit. Accordingly, they will always offer you a deal that benefits them
far more than it benefits you. They’ll offer you a short-term solution to a long-term problem and
because of this, most borrowers default on their loan again within six months of negotiating a loan
1. Adversarial position, bank distrusts information given by home owner.
2. Homeowner's own negotiation skills, time and dedication.
3. Knowledge of all the possible options available to modify a home loan.
4. Knowledge of how the general process of how a successful loan modification
works and what information to tell the Bank and what not to tell them.
5. Homeowners are giving control to the Banks who are master negotiators and big time
investors only in business to make a profit for their own best interests.
6. The banks absolutely DO NOT HAVE TO DO A LOAN MODIFICATION, they are not
required to give a homeowner any type of relief, anyone who says different is either ignorant or
7. Bottom line is you HAVE TO FORCE them to do it by SHOWING the bank it is in their best
interests or else worse things are to come like foreclosure, short sale or bankruptcy.
Without the actual hands on experience there is no way for a homeowner to prepare for what
the lender is looking for or what red flags may come up which would kill their options before
or during the process of a loan modification. Their fore a third party loss mitigation negotiator is a
professional experienced at doing loan modifications, they know what the lender requires to see in
order to do a loan modification, they know what could kill the possibility and they know all the
options available to modify any loan type. If you are a home owner willing to try a loan modification
for yourself then read on and you will find a summarization of a loan modification bellow in order to
make an informed decision of which direction to go. Hiring a third party negotiator who has the
experience, expertise and knowledge of all the new government regulations as well as the lenders
own internal motivation can get a home owner the best terms available. It is important to note
that the lender is not the be all end all decision maker to resolve your situation. You
have every right to negotiate in your best interests. Remember Banks and Credit Unions are
only in business to create loans and collect payments with interest as their rate of return. They
want you to keep your home too, but more important they are willing to negotiate with you to keep
their payments coming in. If this fails no matter who is at fault the lender does not want to take
your home through foreclosure just the same as any home owner does not want to be foreclosed
on, because it is a serious blemish on the lender’s credit and a loss to their financials as well.
Negotiating with your lender:
Step one is to open a file of your own. Your file is going to become an exceptional tool to
accomplish a loan modification. Record or document all calls to your lender even if you do not
accomplish anything. Write down the date of all calls you make and who you talk to, what they say
and what you agree to. Put all correspondence you receive from the lender in your file. Log any
messages you get from the lender on your voice mail. Be aware the lender is doing the same.
income you have the option to negotiate with all your creditors to reduce monthly payments with
some kind of modification or have them accept a payoff short of the current balance. Inform all
your creditors of your situation and let them know if another creditor was willing to make
modifications for you. Put the fear in the lender of a grim future if they don’t give you what you’re
asking for, like bankruptcy discharge of their dept. If keeping your home is top priority then make
sacrifices by cutting back on wants and buying thrifty values on your needs.
. The lender will need to know writing what caused you to fall behind or struggle and is it
temporary in nature in that you now have the income to make a portion of the mortgage payment.
They should send you a loss mitigation package with forms to fill out and a list of require
documents; pay stubs, bank account and tax returns. You have to convince the lender you
can do what you ask for with a loan modification. Think of it as a backwards loan
application. It is important to give the lender precisely what they want at this stage without lying
and again make sure to test yourself first on paper with your financial expense sheet to make sure
you really can do it.
First ask all of your creditors what all the options are for repayment over time. Don’t agree to any
single creditor arrangement until you have considered all the options from all creditors you owe.
You need to know all your options and what the results of each would mean to you.
Analyze each possible resolution and then decide which is best for you according to your
goal and the resolution you would like to accomplish. Don’t give them any financial
information at this time, you don’t want to give them any red flags that would hurt your situation
before considering your overall financials. Remember whatever you tell them over the phone they
will make a note of it and it will be saved in their file. You need to be courteous but firm so when
they ask anything, just say I am not sure at this time I need to consider all my income and
expenses and get back to you.
Redo your income/expense financial based on the option or goal you would like to accomplish
and formulate a plan according to your goal you would like to accomplish. You should
never give up your negotiating position so to start the initial loan modification offer you first ask
for the sun, the moon and the stars:
Sun= all arrearages put into the back of the loan principal
Moon= 3% interest rate
Stars= 30-40 year term mortgage starting from the day of acceptance. You do not have to
, this is an option for homeowners who want to really get aggressive in lowering reamortize at all
their monthly payment.
If a foreclosure has been set you will need to keep that time frame in mind and you can
negotiate to stop the foreclosure in order to resolve the situation in a positive win-win for all
Then call your creditors one at a time starting with your highest priority and set up a plan to get
you are speaking with not able to do a workout then ask if they are the final decision maker. There
are sometimes three parties involved in a loss mitigation workout:
1. Loan servicer, just collects payments according to the loan provisions.
2. Loan owner, could be a different lender then the company you send payments to.
3. Private Mortgage Insurer, insurance company that would back the loan if it takes a loss of
You may need to talk to true owner of the loan or the PMI company if a insurance policy is in
place. The true loan owner may have hired another bank to collect payments and they may have a
PMI policy in place that you may not know about.
You need to contact and convince the parties that would ultimately be taking the loss
of your loan modification that this is the best solution for them and if they don’t agree to it
then they will be losing more money. If you have a Veterans Administration or Federal Housing
Authority or Housing and Urban Development backed loan then they may have a set type of plan
called forbearance that you may use. If you loan is backed by Fannie Mae or Freddie Mac you may
be able to get Barack Obama’s (HAMP) Home Affordable Modification Program.
Whatever you agree upon make sure you get it in writing. If you are far behind on your
mortgage payment you can’t just send in payments without a written loan modification.
If you are behind and you send in a partial payment of the arrearages without lender approval
then this may be grounds for the lender finding you in default of what you agreed upon when you
first got the loan which would show you to be irresponsible toward your dept. If you find that even
with the best terms of a loan modification you either can’t afford to do it or you don’t want to
because you own more than the home is worth then please contact us for more options available
to you to resolve your situation in a positive way according to your goals and what you want to
These are the new rules of mortgage loan modification
• is a stretch but achievable if circumstances necessitates it. 2% interest rate
• If 2 or more months behind on the loan payments, it can be reinstated with the new lower
monthly payment and without having to pay all the arrearages.
• For those who want to really lower their payment even more they can add 10 years onto the term
of the loan, amortize to a 30 year or even a 40 year.
• is the newest advent to loan modifications. At this time it is difficult to get Principle Reduction
but not impossible. The value of the property must be upside down (underwater), that is the home
must be worth much less then the loan amount.
• Forbearance Plan. Lender agrees to hold the loan in limbo where as no monthly payments
would be required for a short period of time. This is NOT A PERMINANT LOAN MODIFICATION!
definitely qualifies and tried to get a loan modification but the bank said no and is acting
exceptionally unfair with the homeowner, an attorney can be hired to sue the bank to perform a
loan modification and/or additional damages.
• to first discover if there are Forensic Loan Audit any mistakes or violations the lender made
which violate State or Federal regulations, then if such violations are found the next step is to
hire an attorney and sue for either; Loan Modification, return of all past payments, elimination of all
future payments, reduction of principal, deem the loan void and/or have a Judge remove all liability
to repay therefore canceling the loan.
Loss Mitigation Professional Negotiators:
Why do third party negotiators help?
1. Confirm to bank that Hardship is real.
2. Confirm to bank that current financials are real and home owner can accomplish what they are
3. Knowledge of all the possible Loan Modification Options, Techniques, Tools, as well as all
state and federal guidelines to . get the lowest possible payment
4. Aggressive Attorney based company that represents the homeowner's best interests and
goal they want to accomplish, NOT THE BANK!
5. Accomplish a win-win resolution while putting the biggest loss on the lender and get the
homeowner the lowest monthly payment possible.
6. They know who to talk to that is the real owner of the loan and decision maker (may be
different then the servicing bank you send payments to.)
What types of people may be in need of Loss Mitigation professionals?
1. Some people are destitute and so they cannot afford services and do not qualify.
2. The second type are those who distrust lawyers and would first try to borrow money from banks,
neighbors, friends, family, workmates, Church and deplete their savings to resolve their situation in
any way they can.
3. The smartest group of people would be those that have a financially stable income even if it is not
enough to pay the full mortgage payment. These people can afford their services and realize their
importance to help homeowners accomplish a positive resolution to their goals.
What should be considered when hiring a Loss Mitigation professionals to help a home
owner get a loan modification?
1. Attorney based company. (required in most states)
2. Money Back Guarantee. (No upfront fee required in some states)
3. Experienced knowledgeable fulltime Consultant you can get answers to your questions
whenever you need.
4. Principle Reduction. (if they don’t offer this they are either inexperienced or are way behind the market today)
5. Forensic Loan Audit. (how could a company best accomplish a loan modification if they don’t first look at exactly what they are
modifying? Everyone’s situation is different and if others are trying to get you the same cookie cutter results then you could be losing some
important options and/or valuable time)
6. Debt reduction. (most people struggling with their mortgage have thousands of dollars in unsecured debt that can be reduced to 50-
60% of the face amount)
7. Stop Foreclosure. (no use in accomplishing a loan modification if they cannot prevent foreclosure during the process)
8. Reputation and Results VERIFIED by an Accredited Agency.
While there are many reasons why a homeowner may be delinquent or in default of their loan all can
be classified into one or more of these categories:
1. New member in household: newborn baby, aging parents or other family.
2. Over extension of personal finances or increase of many essential expenses.
3. Illness or injury of any family member.
4. Adjustable rate mortgage payment increases.
5. Loss of income any reason.
6. Military recalled to Active Service.
7. Reduction of income.
8. Divorce or separation.
9. Death in the family.
10. Business Failure
13. Medical Bills
14. Job Relocations
15. Damage to property
All Loan Modification options for distressed homeowners:
A loan modification may include three possible changes: Pay Rate Reduction, Loan
Reinstatement and a Reamortization agreement. A loan modification requires a home owner
to demonstrate to the lender that they have experienced a financial or economic hardship and that
they can now afford to make a newer lower mortgage payment. The lender is willing to take the
loss if they can justify it as the best solution for them and if they give the homeowner a new lower
monthly payment that they can make it on time, every time from then on.
A Loan Modification is a life changing solution which gives a homeowner a fresh new start in
managing their home. For anyone that is behind on their mortgage payments the loan can be
reinstated and all arrearages either forgiven or put on the back of the loan without having to come
up with the full amount. A Loan Modification is also a great solution for a borrower who has an
adjustable rate mortgage that reset to a higher payment which they can't afford, cannot refinance
and want to stay in their property.
1. Mortgage pay rate reduction is a possibility if the borrower provides proof of an economic
hardship since they got the loan, but can now afford to make a new lower monthly payment. In
that situation, a mortgage pay rate reduction is an ideal solution because it will lower the monthly
mortgage payment to a manageable amount. Two ways to do this is by either lowering the
2. Reinstatement is possible for a loan modification when the borrower has not made payments
for a while, but the borrower can now afford to start making payments again. A reinstatement
agreement takes all the past due principle, interest, late fees and additional junk fees and adds it
to the back of the loan. The result of this negotiation is a slightly larger principal loan amount, but
it brings the loan current and the borrower can now continue on with their mortgage loan
3. Reamortization agreement is one more option to make payments more affordable by
extending the loan for a longer period of time. 10 years can be added to the term of any loan or
a reset to a 30 year or even a 40 year Term is possible today.
THE NEW RULES OF MORTGAGE LOAN MODIFICATION,
Including President Barack Obama’s (HAMP) information, aka Home Affordable Modification Program Making Home Affordable, Home Affordable Modifications.
Residential homeowners have 3 choices of how to
accomplish a successful mortgage loan modification.
1. Homeowner ASKS their mortgage lender to help them! High failure rate and poor results
when accomplished without professional help.
2. Hire a Professional Loan Modification Company. This 3 rd party company works in behalf of
the homeowners not the banks. They the bank what needs to be done. TELL Why 3rd party loss
3. Hire an Attorney to sue the lender for a loan modification. This is not a first option, it is
difficult to accomplish and should only be considered after hiring a professional Attorney based
Loan Modification Company.
To their own detriment this
type of person is very reluctant
to look fore, ask fore, or
believe this is an outside
source of help for them. They
will first max out their credit
cards, then exasperate their
savings account and then cut
back on luxuries. We even
know of one person who used
up a lifetime of savings in their
retirement account to keep
their family in financial
hardship a secret for 2 years
before realizing there is real
help for them.
This type of person dislikes
Attorneys and professional
companies who provide real
help for a fee. They borrow
from friends, family and Church
to keep afloat. They try
anything any everything that
does not work because it
comes to them for free and so
they get what they paid for,
NOTHING! This is
unsustainable with an average
delay of only 6 months before
the panic stage. This is a great
cause of ruined relationships
with those people who are
most important in ones life.
GOOD NEWS FOR:
This person is living month to
month just making enough to
pay all bills in full on time. May
work overtime and/or two jobs.
May not have credit cards or
want to run up a high balance
on them. This person is willing
to ask for help but is not able
to pay for professional services
until after the financial relief
has been accomplished.
STICK IT TO THE
No matter what their personal
hardship may be a smart
person will investigate and find
a source of help. They will then
do their due diligence to find
which professional company to
hire. They will ask friends,
family, neighbors, Church and
workmates what and who they
know or could recommend in
that specific industry. They will
then examine those specific
companies referred to them via
Better Business Borough
ratings and direct contact with
the company and ask them
specific questions of concern
before getting started.
Who qualifies for a loan modification
• An Adjustable Rate Mortgage that has increased in monthly payments.
• Value of the property upside down (underwater), that is the home must be worth much less
then the loan amount.
• Could not qualify for a refinance for any reason.
• Anyone 2 or more months behind on payments.
• Anyone struggling to pay all their monthly expenses, but can afford to pay a portion (50-75%) of
the monthly mortgage payment.
Banks are here to help
Banks are in business to do
one thing, MAKE MONEY.
They create loans and collect
payments, that’s it, if that
does not work then they have
a priority list to get what they
want. (checking and savings
accounts the banks can collect
payments without loaning out)
This is insight of the
Banks priority plan of
recovery, on secured
loans which fall behind:
1. Collect full payment on
time every time for duration of
2. Payment of full delinquent
amount owed plus late fees.
3. Collect payment of full
monthly amount, plus
repayment of all arrearages
spread out over 6-12 months.
4. Place all arrearages on
back of loan, reinstate to
regular payment amount.
5. Loan Modification to
6. Force borrower to sell
collateralized property and
pay off loan in full.
7. Short Sale if the borrower
is upside down (underwater)
on value of the property.
8. Deed-in-lieu: (voluntary
foreclosure) The lender may
accept title to the property as
settlement for the debt
9. Foreclosure. This is the
lenders last ditch resolution
which hurts them as much as
10. Bankruptcy, Adds high
cost and a lot of lost time to
the Bank. You cannot keep
the Real Estate, the lender
still has its rights in the
property, including the right to
4 stages that a home owner facing foreclosure will go through. -think foreclosure cannot happen to them
2. Realization- knowing it really could happen.
3. Procrastination- They may think they have time until the actual auction date so they may waste valuable time.
4. Panic- Time and other positive resolution options are lost, they have not accomplished a positive resolution and now they are searching for one.
2. Get current with loan and
continue the agreed upon
rent it back to you. (cannot do
on a short sale)
to an owner/occupant before
Foreclosure sale date.
who will pay the delinquent
loan costs, stop the
foreclosure and then sell to
buyer at an acceptable value
buy property “Subject To” all
existing liens and take over
payments of the Mortgage.
5. Lease the property for
monthly rent more then the
mortgage payment and
collect 1 st month and
security deposit if enough to
bring loan current.
There are two more
1. Deed-in-lieu: the lender
may accept title to the
property as settlement for
the debt (voluntary
2. Do nothing, let the bank
foreclose, loose your home,
ruin your credit and
Investigate Your Loan Before You Attempt Negotiations!
The best possible results
If you want the best possible results, priority treatment and timely responses from your lender you need material
Audit of the loan in question. Why rely on a charitable contribution from you lender because of a hardship? You may
be able to turn the table on the lender, seize control of your situation and go on the offensive.
Forensic and Securitization Audits reveal the problems to both parties
A Forensic Audit is a detailed investigation of your loan documents from the time you applied for credit up to and
including origination. The investigation is done by experienced auditors, who are well versed in the Local, State and
Federal laws that protect consumers and guide lending practices. A Securitization Audit reveals the path of how the
Note was serviced after origination until the present day. If any violations are found you can get much better results
and open up more options.
The desire to solve the problem is stronger for both parties
reasons behind their inabilities to pay or continue to maintain payments is because the Homeowner is the injured
party. When you can reveal to your Lender all the violations that exist in your loan, not only have you shown why you
have struggled with the payments, but you have shown the problems the Lender has too. It is in the Lender's best
interest to get this situation resolved and it is in both parties best interest if these violations can be resolved by
accepting a Loan Modification which would correct past violations and give all parties a winning and sustainable
Disclaimer: All information on this site may be shared or duplicated for your use.
RealEstateSecretsToday.com does not perform Forensic Loan Audits, Securitization Audits, Loan Modifications, Principal Reduction, Owner
Financing or Short Sales.