hello everyone, i have been a big fan of REI club for over a year, i have gained valuable information from you guys and wanted to take my real estate business into the foreclosure/ loss mitigation arena, and now i have my first client, im getting beat up by the bank and im puzzled but here are the details.
my client is a single woman with great credit, she is not in default, she is current with her mortgage, and taxes, her mortgage is a 30 yr, fixed, 6.9%, principal at 149,900, she is slipping under the waves slowly, she is facing job loss due to a plant closure in 2 months,
i contacted her banks loss mit. department, we put together our loan modification package complete with hardship letter explaining the plant closing, being upside down with her mortgage etc. and her debt to income sheet, our package was complete and the loss mitigation dept even said that they had all the information they required.
they even lost the hardship letter and other information that i resubmitted, ( i knew that was going to happen because i read the posts on REI ) i even submitted a loan modification proposal asking for a principal of 135,000 at a rate of 5.5% 30 year fixed, and explained to them the proffit they had already made due to interest payments and the closing costs of the loan, my client has been in this loan 2 years, the loan is still with the original lender, are we asking for to much, they said that my client isnt making enough to cover her expenses, and i told them " no shit! thats why we are asking for a loan modification, now they want us to resubmit the package with a new hardship letter, and a debt to income statement showing how much she is making with unemployment, which will be half of what she is making now, what should i tell my client? do i tell her to go into default? wich is where she is going to end up, we just wanted to be straight up with the bank and prevent a problem before it started, please advise me on my next course of action…wayne
I’m not a loan modification expert
I have not saw a short sale or loan modfification done where the people are current on the mortgage?
thank you for responding to my post, my client will be going into default, we just wanted to be honest with the bank, but i believe you may be right, i think, that the bank figures if they are going to take the hit, then so is my clients credit, they have aknowledged that my client is with a deficit income, showing a minus 400 dollars at the end of the month, i think that im going to resubmit the package with a new income and expense report, the last one reflected when gas was up to 4 dollars a gallon, my client drives 25 miles to work one way, i will rework the numbers and resubmit with another hardship letter
Rates are a bit lower. Refinancing is not an option?
yes rates are great, my client is already upside down, a 149,000 mortgage on a home worth 135,000, the closing cost would take her principal to about 155,000. she is paying about 1250 a month on the p.i.t.i. facing job loss, i need to get her p.i.t.i. to around 950 a month, thank you for the reply, refi. is great advice, it may be a last resort since rates are great. :help
The most important thing is the Income/Expense report, many think that is that the less they put down in that paper the better, this is wrong. The bank WILL modify the loan if the person CAN afford the new payments, Banks will not modify the loan to what the client can afford. So make sure you put in the income and expense statement enough to cover a lower payment but not by much and you’ll get better results. Sending a new package different from the one you already sent would need some explanation. Ignorance is the best one.
Good Luck
wmarkley,
One of the problems a lot of people trying to do a short is they get a course with forms to do a short sale and send these to the lender. These are not too popular with the mitigator in many cases. The best thing to do is ask them for their short sale package and follow it to the letter without looking or sounding too professional. Ask for the mitigator’s help and give him exactly what he wants and you’ll be way ahead of the game.
Don
This is just a typical case where this particular homeowner’s hardship is such that she can no longer afford their home. Banks are modifying loans that are current as long as their are pending ‘product related’ hardships, meaning interest rate adjustments etc. However, it is extremely rare that banks are reducing principle under any circumstances. The best I’ve seen as a loss mitigation counselor is market rate reduction along with suggestions on spending habits and lifestyle adjustments. And, if they are behind, the payments are sometimes deferred or rolled back into the loan.
Although you can request ‘reasonable’ specifics for a loan modification you must be aware that the bank is actually only ‘servicing’ the loan and is often not the decision maker. Their decision is based on the financial situation of the borrower and ultimately the investor(s) holding the paper, perhaps on Wall Street. One should never expect a reduction in principal when negotiating a loan modification.