“Before writing the letters, lenders like to see proof of income, such as a pay stub or tax return. But under the Real Estate Settlement Procedures Act rule that took effect Jan. 1, lenders may not require such documents before giving the borrower a good-faith estimate of closing costs.

“Since lenders are now being held to those estimates, they want to hold off on issuing them as long as possible. So some lenders are reconsidering or backing away from preapprovals. Without them lenders could end up wasting time on loan applications that fall out.” (See: Respa Rule Has Lenders Balking on Preapprovals, US Banker, March 2010)

No one has ever believed that a pre-approval or pre-qualification letter is a loan commitment of any kind because at the time the letter is provided the value of the property is unknown and the borrower has not submitted all required documentation. Moreover, requiring documentation to obtain a pre-approval or pre-qualification letter has certainly not been a concern for lenders who have offered low-doc and no-doc loan applications.

“In too many cases,” I wrote in 1999, “lenders provide nothing more than a glorified hand-holding letter when applicants seek preapproval. The usual letter isn’t an absolute loan commitment, because it typically contains language allowing the lender to again check credit and consider the property’s appraisal and survey before proceeding.” (See: Closing fast, It Could Happen, REALTOR magazine, November 1, 1999)

A Good Faith Estimate, on the other hand, IS a commitment from a lender. The new forms developed by HUD and required as of the first of January actually show the real costs of getting a loan.

If Lender Smith will not give you a pre-approval or pre-qualification letter, go elsewhere. You can bet that Lender Jones will want your business.

And Lender Wilson and Lender Johnson, etc., etc., etc.

No More Pre-approval Letters, Say Lenders is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

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You may find that in speaking with lenders or applying for help with the government’s loan modification programs that you will need a cover letter. What is it that you should say? In basic terms, you want to say in your hardship letter that you need consideration in difficult circumstances and that both you and the lender can benefit if some sort of accomodation can be worked out.

Some pointers:

• Always send letters and documents to lenders by certified mail with a return receipt requested. Keep the receipts you get from the Postal Service — they’re evidence that you did send material, that it was received and that it was not “lost” in the mail.
• Always include your loan number and full contact information on all documents you submit to the lender.
• If possible, get a direct email and phone number for your lender contact and include it in the letter — this will make it easy to follow up.
• Always be nice to the lender contact — most are folks just trying to do their job.
• Before sending any letter to anyone, read our loan modification posting to better understand what lenders may offer — and what paperwork is required.

Below is a model loan modification letter for use by anyone who needs such a note.

And to all who need this letter we say good luck. As the old expression goes, there but for providence go you or I.

Mr. & Mrs. Robert Jones
Street
City, State, ZIP Code
Daytime Telephone Number
E-Mail Address
Loan #123-456-789

 
Date
 
Lender Contact
Lender
Street
City, State, ZIP Code
Daytime Telephone Number
E-Mail Address

Dear Lender Contact:

During the past few months our financial situation has declined significantly as a result of (a job loss, the death of a spouse, a major income reduction, etc.). The result is that in good faith we are no longer able to make full and timely mortgage payments.

We are keenly aware that real estate values have fallen in our community and so the option of simply selling the property and repaying our mortgage is off the table. The current loan balance is greater than the value of the property which means whether the property is sold on the open market or foreclosed there will be a loss.

Our question is this: How can we work with you to prevent or minimize the loss which otherwise looms ahead for us both?

For instance, could current loan payments be deferred until the end of the loan term? Can we obtain a mortgage modification under the government’s Making Home Affordable program? Is there a state program which could help in our situation?

We are prepared to provide (or we have attached) complete documentation regarding our current income and financial situation as well as past tax returns, account statements and such other paperwork as you may require.

Thank you for your consideration during this difficult time.

Sincerely,
 

Mr. & Mrs. Robert Jones

How To Write A Successful Loan Modification Letter is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

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On Monday, May 11th, HUD posted Mortgagee Letter 2009-15 which explained that “Federal, state, and local governmental agencies and nonprofit instrumentalities of government, FHA-approved nonprofits, and FHA-approved mortgagees may provide short-term or “bridge loans– secured only by the anticipated tax credit due the homebuyer as collateral.”

Immediately the letter was removed from the site. However, we have a copy of HUD Mortgagee Letter 2009-15.

It is not clear if HUD has changed its policy or if the letter will be back. As of early May 18th, the letter has not been re-posted on the HUD Mortgagee Letter site.

If the policy is to allow state and non-profit groups to use the $8,000 first-time buyer credit created by the Obama Administration as a downpayment, then such purchasers would be able in many cases to buy a home with nothing down or close to it.

For instance, FHA requires 3.5 percent down. If a home is purchased for $225,000 the downpayment would be $7,875. Closing costs would be extra, but in today’s market it might be possible to get a seller to pay some or all of the closing costs because the FHA allows a 6-percent “seller contribution” from owners. Please speak with lenders and real estate brokers for specifics.

Stay tuned — we’ll follow up as more information becomes available.

Will HUD Allow FHA Loans With No Money Down? is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

Technorati Tags: 15, 2009, down, FHA, HUD, letter, money, mortgagee, no

If you have not previously been in the civilian workforce, if you are just finishing school or military service, then you will need to develop both a resume and a first cover letter.

Why You Need A Cover Letter

The purpose of a resume is to provide a brief, accurate and dull accounting of dates, accomplishments and references, a checklist to date of who you are and what you’ve been doing.

That’s fine and appropriate, and it’s also necessary because resumes are important to employers. Resumes provide a way to quickly sort through job candidates, to narrow the field.

You want to be part of that smaller group of candidates — but you also want to shine.

A resume is incomplete. It tells us something about you in a historical sense, but it doesn’t say much about interests, values, motivations or perspectives. It doesn’t say why you want the job or why you’re better than the next person. If a resume by itself gets you an interview that’s great, but that’s not enough.

In a tough, competitive world you have to stand out. As adults we keep score and there are penalties for not competing. Going for a job is not the time to be shy, embarrassed, uncertain or unsure. While a resume documents your details, a cover letter let’s you shine.

How To Write A First Cover Letter

Step 1: Find the right person to contact. The right person may be someone in human resources, a company official or the supervisor who is looking for a new employee. No matter. You have to get the right name with the right spelling. You need the right address including the correct ZIP code.

If you know the person to contact, so much the better. You can often check names and spelling online. With big companies, the company operator (dial “0″ if there’s a phone tree) can often be helpful.

In other cases you can call the company and simply ask for the name of the person who heads human resources. Then call back and ask for the individual’s mailing address — remember, it may be different than the company’s main office or work site.

Be aware that in some cases companies do not want to give out specific names. The reasons usually concerns privacy and security. This is a problem in the sense that you do not want to send a letter to a blind address if it can be avoided. The solution is to call the human resources office and ask if you can address your letter to a specific individual — sometimes staff members will be helpful. Alternatively, you can try the back door and look up the human relations department online to see if any names show up. If yes, call the company and ask if Smith still works there. If the name is complex, ask how to spell it.

Step 2: Educate yourself. Find out about the company with an online search. What are their latest products and services? Where do they have offices and facilities? What does their web site say about them and their self-perceptions? Do they have interests in charities? Local community events? A unique tradition?

Step 3: Once you have a name you then need to write a letter with a proper business format. The attached PDF shows how a model cover letter should be written and organized.

Normally you want to use only one page for a first cover letter. At the top of the letter you want your contact information, the date, the recipient’s contact information and the salutation (Dear…).

Step 4: Once the format is set up you then want to write the body of your letter. In writing this material remember these rules:

• Write in sentences and paragraphs with proper spelling and grammar.
• Write short sentences and paragraphs, otherwise the page will be a huge gray blur that’s uninviting and difficult to read.
• Write in simple language with words that most people use in everyday conversation. Example: Don’t say that all real estate is nonhomogeneicwhen you mean that all real estate is different. Both expressions are correct, but the first term is ridiculous.
• Avoid clichés. No one “gives 110 percent.” Why? No one has 110 percent to give. And, no, nobody cares whether or not you can get your “arms around the problem.”
• Try not to use the same word twice in a sentence. If you need an alternative, try Thesaurus.com

A typical body for a first cover letter might look like this:

I am now completing my business degree from Jones University (or finishing my tour of duty with the United States Army, or completing my technical training, etc.) and in the process of looking for my first job. While I was in school (or the service, etc.) I had an opportunity to consider many fields and professions, but what interested me most was the combination of technology and sales (or healthcare, or teaching, or accounting, or engineering, etc.)

In researching career options on the Internet, I discovered that Smith Technology and Logistics has an innovative sales program. I also learned that your company is both growing and well-regarded, and that your new product line for the airline industry has received widespread and positive reviews.

By way of background, I expect to graduate (complete my tour of duty, etc.) on July 15th. I have worked as a sales intern with a local company, Blatchford, Inc., and I have also worked in the college admissions office. During the summers I worked at a local bakery selling an assortment of store goods, interacting with customers and operating a cash register.

I am a graduate of the John F Kennedy High School in Glompus, NY and its Leadership Training Institute. In high school I was a member of the National Honor Society and participated in more than 500 hours of community service.

Thank you for your attention and for taking the time to consider this letter. I can be reached by cell phone (240-555-5555 ) or by e-mail at peter@jobtoe.com.  My resume is attached for your records.

I look forward to hearing from you and would welcome the opportunity to meet and discuss any position which might be available.

Sincerely,

Peter G. Miller

Notice that the model letter does not mention any particular job or specific salary. Instead, it gives the writer — and the employer — some wiggle room, some things to discuss once everyone has a better chance to know one another.

Also, the letter functions as a quickie bio. It tells where the writer is today, when the writer will graduate or leave the service, mentions some work history and discusses the recipient’s company in positive terms.

Step 5: Once you have your letter written, you want to use a spell checker to assure that everything is properly spelled. Then you want to print out your letter and read it out loud.

Does the letter sound like something a national television anchor might say? Where is the wording rough? Where can sentences be improved? Are there better words to include.

Rewrite and rewrite you letter until it sparkles and says exactly what you want to say. Put in the time to make it right.

Once your draft is complete then ask other people to read it — out loud. Can they read it easily? Does everything sound right?

Make your corrections and repeat Step 5. Remember the goal here is not to hurry, it’s to market yourself in the best way possible.

When you’re satisfied with your first cover letter be sure to again spell check the material to assure that it’s right.

That’s it. You now have your first cover letter. Good hunting.

Here’s a model cover letter which may show some ideas.

How To Write Your First Cover Letter (With Sample) is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

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For much of human history mortgage lenders have been vehemently opposed to loan modifications — except when it’s to their advantage. Now, however, a nationwide foreclosure glut is forcing lenders to re-think the issue and for the first time do-it-yourself mortgage modifications are possible.

Not likely. Not guaranteed. But possible.

What we commonly call a “mortgage” is really a contract between a borrower and a lender. The borrower gets cash up-front and in exchange the lender gets a promise of full repayment with interest over time. Importantly, a mortgage is secured by the property — if the borrower doesn’t pay, the lender has the right to sell the property to get back its money.

The paragraph above pretty-much describes the traditional lending system. A local lender — say a bank, savings and loan association or a credit union — made a loan to a local homeowner. The lender made sure the borrower was qualified for the loan and that the property value was sufficient to repay the debt if something went wrong. Why? The lender kept the loan for as long as it was outstanding. The lender’s profit was in the cashflow from the loan — the difference between the interest being paid each month by the borrower and the lender’s cost of funds.

In other words, mortgages were traditionally made by so-called “spread” lenders, companies that had a vested interest in getting loans right. Such lenders wanted fully-documented loans, careful property appraisals and sizeable downpayments because they were prepared to hold the loan for many years. What they didn’t want were foreclosures because foreclosures mean losses. Examples of spread lenders today include community banks, credit unions, Hudson City Bancorp and ING DIRECT USA.

Lenders Without Cash

In recent years the system has changed. Now we have lots of companies that look like “lenders” and who make loans to local borrowers. The catch is that such “lenders” either don’t have any cash to fund mortgages or they have the money but don’t want to keep the loan.

Huh? How can companies without money make loans? They sell the mortgage in an electronic arena called the secondary market. Money from the sale of the mortgage on the secondary market funds the loan.

The benefit of this system is that by selling a loan the lender now has more dollars to lend. More loans, in turn, mean more fees, charges and profits. No less important, the secondary system means that local lenders will not run out of money. If a lender has $5,00,000 and makes 10 loans for $500,000 each then it might seem as though the lender could not fund any more mortgages. However, by selling the loans in the secondary market the lender gets fresh cash and therefore can make new loans.

Now the loan — most-likely your loan — is owned by an investor, not a lender. That investor paid a given amount for your loan under the assumption that your loan would generate a certain interest rate. No less important, you probably don’t know the investor that owns your loan. Instead, your payments are likely being collected by a servicer.

Fannie & Freddie

We now know that your mortgage most probably is not owned by the company that sold you the loan. If that’s the case then who does own it?

Remember we said the loan was sold in the secondary market to an investor. Buyers on the secondary market include pension funds, insurance companies and investors worldwide. However, the two biggest buyers of local loans are Fannie Mae and Freddie Mac.

To understand the importance of Fannie Mae and Freddie Mac consider some numbers. First, it’s generally estimated that there are about 50 million homes which have been financed with a mortgage. Second, Fannie Mae and Freddie Mac own more than 30 million of those loans.

Because Fannie Mae and Freddie Mac own so many mortgages other mortgage investors — but not all — have generally adopted their standards. If you want to know how the loan system generally works it’s good to keep your eyes on Fannie Mae and Freddie Mac.

No Modifications, Not Now, Not Ever

The mortgage system generally worked well until the past few years. There surely were foreclosures in the past, but typically there were very few foreclosures and most were related to such issues as the loss of a job, the death of a spouse, medical bills and divorce.

In the last few years the situation has changed. As the federal government reported in late 2008, “delinquencies on mortgages have tripled, not just for subprime and Alt-A, but also for prime mortgages. Foreclosures have increased almost 150% from two years ago.” Figures from the foreclosure listing site, RealtyTrac.com, show that during the months of March, April and May 2009 there were more than 1,00,000 foreclosure filings nationwide –more filings than in all of 2005.

Despite new and higher foreclosure levels, investors — the folks who own loans — have generally refused to modify mortgages. Their reasoning goes like this:

First, a contract is a contract. You got the money we promised and you should pay the money you promised.

Second, if loan terms are modified we’ll get a lower rate of return.

Third, if we have an asset with a lower rate of return it’s worth less and we will have made a bad investment.

In fact, investors have a pretty good argument except for one looming problem: Foreclosure rates are high and climbing — and the loss from a foreclosure according to a Congressional report is typically $40,000 to $80,000 per property. Given the lousy choice of foreclosure or the less-lousy choice of a loan modification, investors are beginning to consider modifications.

Workouts

When lenders talk about loan workouts what they typically mean are two options:

• Modifications. A situation where the debt is restructured. For example, the loan term might be increased from 30 years to 40 years, thus reducing the monthly payment.
• Payment Plans. Loans where there’s a change in contract terms. For instance, the interest rate is reduced 1 percent for the next 12 months or penalties and fees are forgiven.

Notice that with workouts there’s one option lenders typically do not offer: A principal reduction. Notice also that in some cases monthly payments can actually rise with new mortgage terms.

Claim Advances

If you have mortgage insurance (MI), if you’re facing foreclosure and if you’re having a tough time that’s temporary then you may be able to get help from your mortgage insurance company with a claim advance.

If the property is foreclosed then the mortgage insurance company can owe big money to the lender. Instead, if your situation is short term, the mortgage insurance company may be willing to lend you money to bring the mortgage current, typically with little interest and very soft terms. Ask your lender and your mortgage insurance company about such help.

The New Deal

In November 2008 the Bush Administration announced that Fannie Mae and Freddie Mac would now offer a streamlined modification program (SMP) so that borrowers could more easily obtain loan modifications.

However, a look at the SMP standards suggests that meaningful modifications — if any — were enormously difficult to get under the program.

• SMP targets borrowers who have missed three payments or more, own and occupy their property as a primary residence and have not filed for bankruptcy.
• SMP creates a standard definition of an “affordable mortgage payment” — no more than 38 percent of a household’s monthly gross income.
• Servicers will have flexibility in modifying loans, including reducing the mortgage interest rate, extending the life of the loan or even deferring payment on part of the principal. The servicer receives an $800 payment for each modification.

The SMP standards are ridiculously impractical. Here’s why:

First, they require borrowers to miss three or more monthly payments, meaning that homeowners who participate must have lousy credit.

Some lenders counsel borrowers to purposely miss payments so they can qualify for the SMP. The view here is that such advice is terribly harmful because there’s no guarantee that the borrower will, in fact, get SMP relief and also because whether or not an SMP arrangement is possible the borrower will now have terrible credit, meaning that a new loan on sane terms from other sources will be virtually impossible.

Second, the SMP applies only to owner-occupants. This means the SMP effort is useless when an investment owner is in trouble. This anti-investor approach may seem somehow warranted because investors are supposed to face more risks than owner-occupants, but if you think about the consequences of this policy you can see that it’s misguided: If a property down the street is foreclosed and the value of YOUR home declines, no one cares if the foreclosed property was owned by an investor or an owner-occupant. All anyone sees is that there was a foreclosure and therefore a lower price shows when buyers look at local sales.

Third, the SMP says borrowers must devote at least 38 percent of their gross, pre-tax income to housing costs. In comparison, the usual qualification standard for a conventional loan is that 28 percent of the borrower’s income can be devoted to principal, interest, property taxes and insurance, what is known as “PITI” to lenders. In effect, borrowers who qualify for the SMP are required to spend vastly more money on housing than baseline conventional borrowers. The better idea is to lower monthly housing costs for troubled borrowers so their homes are not foreclosed.

Fourth, if you have declared bankruptcy you do not qualify for a loan modification under SMP — the very modification which may prevent the loss of all your assets.

Early Workouts

In December 2008, Fannie Mae — which held 18 million mortgages at the start of 2008 — said it would offer an “early workout” program as an alternative to the SMP.

How does the early workout program differ from the SMP?

• Early workouts, says the company, are “a separate Fannie Mae effort to assist a wider spectrum of distressed borrowers in various stages of delinquency, including those who are current on their loan payments but facing imminent default.” Translation: The new program can apply to borrowers who are current. You don’t have to miss mortgage payments to qualify, you don’t have to lose your credit standing.
• The early workout program has two phases, a trial period and then a modification. During the trial period a non-delinquent borrower must complete four timely, consecutive monthly payments at the new level. A delinquent borrower must make at least three consecutive monthly payments. Translation: Make certain you make all trial-period payments in full and on time. In fact, be smart — pay early.
• “Preforeclosure sales, acceptance of deeds-in-lieu of foreclosure, and short payoffs (accepting a payoff for less than the amount owed), will not be permitted loss mitigation alternatives for use with borrowers whose loans are current but are determined to be in imminent default,” says Fannie Mae. Translation: If you’re not in default why not try to save both the home and the mortgage?

While the early workout program has started with Fannie Mae it will logically be expanded to other lenders and investors. Since investor programs can differ, it’s important to know who or what actually owns your loan. Most probably, the people you identify as your “lender” are actually loan “servicers” and not the loan owners. The ability of servicers to make modification decisions may be limited — or non-existent — depending on the arrangement they have with the loan owner, something usually called a “pooling-and-servicing” (PAS) agreement.

The Obama Plan

In February 2009 the Obama Administration came out with a $75 billion foreclosure prevention plan which combines the best approaches from Fannie Mae and the FDIC.

The program is complex, but in basic terms it has two elements:

First, if you’re facing foreclosure and your loan is one of the 30 million owned by Fannie Mae and Freddie Mac, you may be able to refinance if the value of the property is not more than 25 percent greater than the remaining mortgage balance (originally the government limited refinancing to a 5 percent shortfall). In other words, the program does not require borrowers to have any equity in the property, but it does limit the amount of risk which the government is willing to take.

As the government explains: “The unpaid principal balance of the first lien mortgage does not exceed 125 percent of the current market value of the property. (For example, if the property is worth $200,000, the borrower must owe $250,000 or less on that first lien mortgage).”

Second, imagine that you’re not facing foreclosure but have a toxic loan. Payments have risen rapidly or about to rise. You’re not in trouble yet, you’re making all your payments, but you could be in hot water within the next few months.

In this case, hopefully, the lender will try to reduce your interest rate so that no more than 38 percent of your gross (pre-tax) income is set aside for housing. The government will then subsidize your loan to bring the monthly housing cost down to 31 percent. Note that not all lenders are participating in the Obama plan as of this writing.

In other words, this is the Fannie Mae early workout program supported, finally, with government funds.

The Obama plan, for the first time, uses federal dollars for real people with real mortgage problems, not just bankers and Wall Street insiders.

It’s estimated that as many as 7 to 9 million borrowers will be helped by the Obama program, however the program will not protect everyone against foreclosure. If the value of your home is too low, if you do not earn enough income or if you have a rental property that’s in trouble, you won’t be eligible for help. Unfortunately, for millions of people who have bought in recent years with little or no money down, or have bought with loans that negatively amortize, or who have lost their jobs, the Obama program will not work for them. For a list of specific limitations and exclusions, press here.

The Obama plan if successful could substantially reduce the inventory of unsold homes in many areas and thus bring a halt to home-price declines — assuming job losses can be contained. We should get some sense of the program’s success or failure by mid- to late-summer, 2009.

For additional information, try:

• http://www.financialstability.gov/makinghomeaffordable/
• http://www.freddiemac.com/avoidforeclosure/
• http://www.fanniemae.com/homeowners/index.html

Steps To Take

As you look at loan modification options you can see that loan owners logically do not want to make such arrangements if they can be avoided and they are not required to modify loans. Thus, if you want a loan modification, if you want to avoid foreclosure, you must make the first move.

What should you do? The first step is to analyze your financial situation,

1. What percentage of your gross income (your income before tax deductions) is now devoted to housing costs, meaning mortgage principal, interest, taxes and insurance — PITI.
2. How much could you pay each month if PITI was limited to 38 percent of your gross income?
3. How much could you pay each month if PITI was limited to 31 percent of your gross income? This is an important question because the FDIC has been using a 31-percent benchmark when modifying loans made by IndyMac, the lender taken over by the FDIC in 2008. The 31-percent standard has now spread to other programs.
4. What are your assets? Include such items as savings accounts, IRAs, other retirement accounts, certificates of deposit, stock, bonds, vehicles, other real estate. Be sure to include account numbers, the date when valued, contact information for the account holder such as a brokerage or bank, balances and required payments.
5. What is the value of your home? Local real estate brokers may be willing to help provide a general valuation on a pro bono basis with a comparative market analysis (CMA) or a broker’s price opinion (BPO)– it’s good PR for the broker and you could be a future source of referrals and business.
6. What are your debts? Include credit cards with account numbers, account information, total debt and required monthly payments. Also, student debts, auto loans, other mortgages, etc. Again, show account numbers, balances, required payments and contact information.
7. What are your typical monthly expenses for utilities, condo fees, gasoline, health insurance, child care, alimony, etc.
8. Have in hand your tax returns for the past three years and payment stubs for the last three payment periods.
9. Make sure your information is accurate and current. Have receipts and documents to support your statements.
10. No matter how enticing, do NOT sell your home with a quitclaim deed, especially if the property is being sold “subject to” the mortgage without FIRST speaking with a real estate attorney or legal clinic of your choice or to your state attorney general.
11. No matter how enticing, do NOT sell your home by making a payment to someone else. Remember, when you sell a home buyers pay YOU — not the other way around. Again, for specifics FIRST speak with a real estate attorney or legal clinic of your choice or to your state attorney general.

Once you’ve gathered baseline information arrange your data with a spreadsheet so it’s easy to follow — income, assets, debts, etc. Then review your numbers and write out a one-page letter explaining why your need for a modification is compelling.

One useful approach is to download and complete the free loan modification forms used under the Obama Administration’s Make Homes Affordable loan modification program.

1. Request Form (Request for Modification and Affidavit)
2. The Help Guide you can use to complete the Request Form (Request for Modification and Affidavit)
3. Tax Authorization (IRS 4506T-EZ Form)
4. Proof of Income
5. Proof of Income Checklist
6. Get contact information for major mortgage servicers that are participating in the program.

Your goal is to convince the loan owner that a modification is in HIS best interest. This is a business matter, it must reflect cold hard facts and it must be documented. Make sure your letter is properly written, properly spelled and grammatically correct. Write and re-write your letter until it discusses only the need for a modification and the probable consequences to the lender if you cannot modify the loan.

To see an example, go to LoanSafe.org and read their model hardship letter and related information.

Contacting The Lender

Take a look at your loan document. What is the loan number?

Who do you contact regarding mortgage payments? This will be the lender or the loan servicer, most likely there is an 800-number on your monthly bill. Check and see if there’s a specific number for the “loss mitigation” department or something similar.

As you communicate with the lender take these steps.

• Always write down the name of the person with whom you are speaking, the date and the time. Get their direct phone number if possible. Keep notes in a file of each and every phone call you make, with whom you spoke, the date and time, the number you called and what was said.
• Never yell at the person on the other end of the line. Their goal in life is not to make things hard for you. They may have instructions from the loan owner which makes it difficult or impossible for them to help in your situation. Always assume they’re trying their best. Remember the old saying, you catch more flies with honey than with vinegar. Treat lender representatives with respect and dignity.
• Ask for the name and number of people who actually make modification decisions. This usually means someone in the loss mitigation department. If you can’t get such information by phone, search around the lender’s website or search Google for the lender and the term “loss mitigation.”

Once you get to speak with a loss mitigator offer all the data you’ve put together. Make certain to send your materials by certified mail with a return receipt requested — this way you will have proof showing when the material was mailed, that it was received and when it was received.

Once the lender has your materials the real question then becomes will he make the modification? If yes, what changes will be made and how long will they last?

Be persistent. You must follow-up because there is no chance that a modification can be done with one letter or one phone call. Always ask what you can do to make the matter easier and faster for the loan owner — and then do it.

In the end what is your goal, what would you like from the lender? The best possible result would be a smaller and more-affordable monthly mortgage payment which has been created by a lower interest rate, a longer loan term, or both. In addition, getting the lender to waive accumulated fees, penalties and charges is also a benefit.

Once you have a lower payment then you must keep your end of the bargain — every payment, without exception, must be made in full and on time. This is not only fair to the lender, it will also help build your credit standing.

Getting Help

If you have mortgage problems there are plenty of people who are willing to help you — for a fee. Unfortunately, while there are experienced individuals and organizations who can provide assistance, there are others who simply want your money.

You are vastly more-likely to get a loan modification if you have assistance. Good sources of such assistance include:

• Local attorneys and legal clinics that specialize in real estate.
• Local law schools with pro bono or low-cost programs to assist members of the community.
• Local bar associations with pro bono programs. In Maryland, for example, the Washington Post reports that more than 600 lawyers have volunteered to help homeowners with mortgage problems.
• HUD has a list of foreclosure avoidance counselors at: http://www.hud.gov/offices/hsg/sfh/hcc/fc/.
• Your state attorney general. State attorneys general often have existing contacts with lenders. Contact your state attorney general directly for help and assistance.
• Community housing organizations — they often have contacts with local attorneys.
• Legal Services Corporation — Funds 900 offices around the country to help the poor obtain legal services.
• National Consumer Law Center — An excellent source of legal information for the public.
• LoanSafe.org has online tools and information and has been featured in the New York Times.
• The Neighborhood Assistance Corporation of America has been a forceful and effective advocate for those facing foreclosure.

Homeowners Assistance Program (HAP) For Military & Civilian Personnel

The government has established a Homeowners Assistance Program (HAP) to “assist eligible homeowners who face financial loss when selling their primary residence homes in areas where real estate values have declined because of a base closure or realignment announcement.” Translation: It’s a program to help those who may be forced to have a short sale or foreclosure because a local base has closed or contracted.

HAP offers significant benefits — if you have any association with the military please go to the HAP site to see who qualifies and what benefits are available.

Making Home Affordable

Be certain to check the government’s loan modification web site, MakingHomeAffordable.com. This site is entirely-free and contains the latest information regarding loan modifications under the Obama program.

To Check The Stats

To see how lenders are doing, look for the latest Making Home Affordable Program Reports issued by the Treasury Department.

To Contact Lenders

The government maintains an extensive list of individual lender foreclosure and modification contacts including names, addresses, websites, phone numbers and fax numbers. Be sure to press the show all servicers link if you cannot find a lender in the search box.

Help for Lenders

If you’re a lender and want additional information, information, policies and news regarding the Making Home Affordable program, please see HUD’s special site for lenders at www.hmpadmin.com.

How To Get A Successful Loan Modification (With Obama Update) is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

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“Several attempts to contact you by phone and mail regarding a delinquency of your mortgage account have elicited no satisfactory response on your part to remedy this situation,” said the letter, ominously.

“At this time your mortgage is PAST DUE in the amount of $xxxx.xx. This amount represents your 05/05/07- 06/05/07 installments of $xxxx.xx plus $xxx.xx in late fees and/or insufficient funds charges.” And more.

“THIS ACCOUNT WILL BE REPORTED AS DELINQUENT TO THE NATIONAL CREDIT BUREAUS IN TEN DAYS.”

Oh my, whatever to do?

What made this letter especially interesting is that I have no account with this lender. Mind you, I would be okay sending them a check had they provided me with a loan, but that’s not the case. I have never heard of the lender, their mortgage or the glorious property which presumably secures someone else’s financing.

Given that the country is awash in a growing number of foreclosures and delinquencies — and not wishing to join such ranks — you can bet this letter caught my attention.

When receiving such missives, whether correct or not, it’s imperative to immediately respond. I called the handy 800-number and spoke with a very nice person who was both helpful and puzzled.

As much as it’s good to promptly respond, it’s also good to respond cautiously. For instance, I did not provide a Social Security number or any other information over the phone. Since the lender has the account they should have such information on hand. If they want me to confirm a number they have that’s fine — but they won’t get any information from me.

After looking through a variety of forms and folders — and asking if I was sure I didn’t own property at beautiful Landfill Meadows or whatever it was called — the mortgage rep determined that there was indeed a mix-up of some sort.

So far, so good. Problem almost solved — but not quite.

The promise to contact “national credit bureaus” if the bill is unpaid is significant. The cost to borrow money depends on good credit and a negative report is not something to take lightly.

These days when financial mistakes are made it’s a good idea to check and see if the problem is identity theft. Did the lender’s records show that someone with my name and address had actually obtained a loan from them? If yes, we then have a serious matter.

If you have an identity theft concern you’re entitled to take a number of steps to protect your name and credit. The Federal Trade Commission has excellent material online that discusses identity theft, plus they show your rights under FACTA — the Fair and Accurate Credit Transactions Act.

At my request, the good folks at the mortgage company are sending a letter to confirm that I am not, in fact, late on any payment — indeed, I don’t owe them a dime and have no account with them.

And as much I have faith in the lender’s administrative process, you can bet that in a few weeks I will check my credit report on AnnualCreditReport.com, the credit information site created under FACTA.

There I will retrieve a free copy of my credit report without any requirement to buy a credit “protection” plan or otherwise spend a dime.

I do, however, have some belief that the lender will follow through. The reason is that the dunning letter was actually quite reasonable.

“In order to return your mortgage account to a current status, prevent the accrual of additional late charges, a default or foreclosure report to the national credit bureaus, the referral of your account to a collection agency and any future legal action we offer various payment options,” said their missive.

The recipient was then offered the opportunity to pay the bill over a period of several months.

This makes a lot of sense. The lender will lose if the property is foreclosed — for a single-family home a typical loss is on the order of $40,000 — thus everyone is best served by figuring out a way to modify the loan.

And repaying a mortgage, after all, is not unfair. Borrowed money should be repaid — especially by the person who actually did the borrowing….

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Published originally by Realty Times on July 17, 2007 and posted with permission.

Hey Buddy, You Owe Us Money is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

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