Modify Your mortgage in Ten Steps and One hour

My name is Rick Byrd.  I have been a real estate broker in Las Vegas for 20 years.  For the past 15 months I have been involved in the loan modification business with friends and clients.  I've modified 100's of mortgages.   I've seen the good and the bad.  And here is the real story.

Before you start is your loan;

Owner occupied

Under $729,000

Do you have income?

If you answered yes to all three continue.  If you answered no you're marching up hill with bad boots.

Step One

Figure out how much money you make.  It doesn't matter how you get it as long as you can prove it.  You need to Calculate your Gross Income and Net Income.  Gross is the big number you tell all your friends and family about.  Net is the smaller number.

Step Two

Calculate all your expenses.  Just the big ones reported to credit agencies.   Auto/transportation, auto expenses including insurance.  Utilities.  Food.  Insurance.  Minimum credit card debt.  You owe $25,000 they want $45 a month.  You may want to go to your lenders web site and download a hardship package or assistance package it will have a financial worksheet included in the package. This worksheet is a good guideline of what your lender wants to know about.

Step Three

Take your gross income from step 1 and multiply by 31%.  This is your new payment under Making Home Affordable guidelines.  This new payment should not be less than 60% of your current payment.  Current being the highest payment.  On ARM's and pay options or interest only it is the big number that you would pay if there was not a reduced payment. 

Step Four

Add all of your expenses from step 2 to the new payment under step 3.  These two numbers should be less than what your net income is.  You should have $300 - $600 residual money left.  Any less and you need to find more money -maybe a roommate that doesn't exist or you need to lose some expenses.  Any more and you may need to find more expenses or loose some income.  All numbers must be truthful and provable.  This step is the make or break part of the process, your finances have to be dead on to be approved for a modification.

Step Five

Call your lender.  You want to talk to home retention, loss mitigation.  Anything but collections.  If the live person on the other end asks you for one dime hang up you are talking to collections.  It's up to you but if they sound like Abu from the Simpsons but say their name is Michael you might want to hang up.

Step Six

Once you are talking to the right department ask them who owns your loan and does it qualify for a modification.  The answer should be yes.  Almost every loan will qualify for Making Home Affordable or some in house program, now called traditional modifications.  Explain to them you would like to start a case and see if you qualify for an instant modification.

            NOTE: your loan may be owned by an investor not willing to modify.  You're negotiator will notify you of this.  If this is the case even the almighty above cannot save your house.  Don't pay an attorney or modification company.  YOU ARE MOST LIKELY GOING TO LOSE YOUR HOUSE. Your only recourse maybe BK to buy time for the laws and process to change.

Step Seven

Take your financial numbers from above.  These are the numbers you want to use.  Remember the person on the other end wants to help you.  They may give you guidance and ask about more money or less expenses.  They are steering you, listen to what they are saying.  But don't waffle, stick to your written game plan.  It is easy to blow over or under the $300-$600 buffer you are working with.

Step Eight

Reiterate that you have calculated your payment based on Making Homes Affordable as outlined by President Obama. 

Step Nine

Remain calm.  If you're new payment is 31% of your net income.  And you expenses/debt and new payment are lower than your income and the new payment is not 60% lower than the original payment and you have a job you qualify.  Let them work out the numbers. 

Step Ten

Write down what they say.  Write down the numbers they are calculating.  When they finish they are going to say you are approved for a trial modification for three months.  That's what they do.  That's the starting point. Three month trial modification.   There is not going to be principal reduction.  If that is what you are after go ahead and short sale your home or walk away.  Principal reductions are small miracles granted the same as the faces of deity in toast.  They are going to request more papers to be faxed in or give you their web site to download a modification package.  They will give you a special fax number, write it down and fax to it and only it.  I would fax it every other day for a week.  They loose lots of files and paperwork.  You will most likely need two current pay stubs, two complete bank statements, a utility bill, 2008 tax return soon to be 2009, hardship letter, and 4506T IRS form.  Get this done asap.

Sit back and relax you are done.  One hour, no cost. 

If it doesn't work and you hit a wall with your negotiator maybe they are lacking some personality skill sets.  You can always wait a few days and try again.

Once your trial modification is complete it gets fuzzy.  Banks and Lenders are stuck at this point.  Pres. Obama is implementing more programs to force lenders to finalize the modification of mortgages but right now it is an impasse.  Patience is on your side. 

Good luck.  Pass this on.  If every person in mortgage distress would modify their mortgage it would stop the foreclosures and the real estate Market would return to normal or better than normal and I could make some real money again. 

If you need help or assistance e-mail me, I will be glad to help and advise you  RWB