Realty First and Mortgage Services
7625 Sunrise Blvd. Ste. 209-210
Citrus Heights CA. 95610
916-708-3851 Fax 916-729-0471

License # 01149313 16 + Years Experience

If you are requesting a Loan Modification, your letter should focus squarely on your commitment to your home. Your “hardship” may simply be that you got into a mortgage that you can no longer afford – probably due to a payment adjustment. Whatever your specific circumstances, you want to make it clear in your letter that once the modification is approved the lender can count on you to remain current in your mortgage.

Be careful not to engage in the blame game. If you feel that you need a Loan Modification because you were sold on a bad loan product, say it in your hardship letter without pointing an accusing finger.

Stay In Contact

It won’t be long after you fall behind on your mortgage that you will hear from your mortgage company. The mortgage company will attempt t find out about circumstances and determine if you will be able to resume making regular payments. If your lender calls, take the call. And, if your lender leaves a message, return the call. Making progress with your lender will require communication.

Listen Carefully

When you do speak with your mortgage company remain helpful and friendly always, but listen carefully. A Forbearance Agreement is a business arrangement, treat it accordingly. Answer the questions you are asked, but avoid the temptation to embellish … stick to the point!

Careful listening is important for two reasons:

A.      By listening you will know what the mortgage company wants from you. Give them what they require in terms of documents and information, but do not send them things they do not ask for. Sending information beyond what is requested won’t help, in fact, it could hurt

   You may find that your mortgage company is so anxious to avoid foreclosure that they will offer very attractive terms in Forbearance of Loan Modification Agreement. Don’t offer solutions until you learn what the mortgage company has in mind. Ask them for an outline of what might work and STOP SPEAKING. 

Stay Upbeat

As you work through the process of providing your mortgage company with the documents and information they need, maintain a positive attitude. The mortgage company will be listening to not only what you say but also how you say it. In the end, someone at the mortgage company is going to have to recommend the approval of your application for a Forbearance or Loan Mitigation Agreement. You want that person to believe in your file and to believe in you.

Take Careful Notes

Always take careful notes of all conversations you have with the mortgage company. Note the date and time of all conversations as well as the name of the person whom you speak with. If you can’t keep up with the conversations when taking notes, don’t be afraid to ask the representative to repeat information. Get the details. Your notes should include as many specific points as possible. The more detailed your notes, the more effective you will be in recreating the conversation later. Good notes from previous conversations could give you the leverage you need to get the mortgage company to honor an offer that was made previously.

Don’t Abandon The Property

Do not abandon the property because you may not qualify for assistance if you leave. Stay in your home, speak with the lender and see what options they might have to resolve your situation. Remember… if the lender thinks you don’t care about your home they may assume that you have no intention of paying them back. This is exactly what you don’t want to happen. 

Be Nice!

In most cases you will be negotiating with a representative of your mortgage holder who is handling a high volume of loan files – all similar to yours. When things don’t move along quickly,

 Patience on the part of borrowers often runs short. Before you make a call out of frustration, stop and consider the position of the lender representative. He/she is probably carrying a very heavy file load. All the borrowers they speak with are thinking only about one file, their own. It makes for a difficult juggling act for the lender representative.

 If you want to get your file moved to the top of the pile, you need to do one thing for sure – be nice. Listen to what your lender representative has to say throughout the process. Learn something about the lender representative and then ask about it in subsequent conversations. Whether it’s a trip they mentioned to you, something about their kids or a new car they’re thinking

 of buying, bring it up in conversation. The mortgage holder employees that handle delinquencies are not used to being treated nicely. You’ll find by doing so your file will move along much faster.

Don’t Get Frustrated

When faced with the stress and the pressure that a mortgage delinquency creates, it’s easy to get impatient. No one wants to lose a home to foreclosure and until you get approval on a forbearance or Loan modification Agreement the threat of foreclosure lingers. With that said, getting an agreement approved will likely require patience on your part. The mortgage company representative you work with will be processing many files simultaneously. There will be times that it seems your file is not getting the level of attention you believe it should. TAKE A DEEP BREATH, this is the point at which many pending Forbearance or Loan Modification Agreements fall apart. A frustrated borrower loses patience and makes a decision at an emotional moment that undermines the entire file.  

Can I Get a Direct Number? 

It will at times be a struggle to get through the automated phone system your mortgage company almost certainly uses. Frequently it’s possible to avoid this aggravation by getting a direct phone

 number for the representative with whom you are working. A second benefit of getting a direct phone number for the lender representative is that it may aid you in your effort to work with the same person throughout the process. It’s no fun recounting your situation, because you start with a new lender representative on each call you make.

Be Prepared 

Don’t rely on your memory. Have everything written down clearly and all of your credit records at hand. Never speak to any of your lenders representative without having all your facts assembled in your strategy planned.

Review the Agreement Carefully

 Whether it is a Loan Modification Agreement or Forbearance Agreement, review it carefully. Once you have been fully approved by your mortgage holder, they will prepare the Forbearance Agreement.

REVIEW IT CAREFULLY

Pay particular attention to the following items in the agreement:

Ø       Interest rate and payment calculation

Ø       Provisions for the mortgage holder’s recovery of delinquent interest and accrued fees. Review both the method of recovery/repayment and the calculation of the total amount to be recovered.

Ø       Penalties that take effect if the loan is not kept current. In some cases the lender will attempt to keep the foreclosure door open, thereby allowing for an accelerated foreclosure if the loan becomes delinquent gain. When reviewing the agreement consult your notes taken throughout your negotiation on the Forbearance agreement. If you do find something in the agreement that is not consistent with your understanding give the lender the benefit of doubt when resolving the misunderstanding. It is likely the discrepancy is a result of miscommunication and can be easily corrected. This is where your careful, detailed noted will come in handy.   

Get Legal Advice

Before signing the Forbearance or Loan Modification Agreement it is a very good idea to have it reviewed by an attorney. Keep in mind that your agreement is more than just a document modifying the terms of your loan; it is also an attempt to collect a debt. The Forbearance Agreement may ask you to waive certain legal rights to which you are entitled and it may contain other provisions, the consequences of which you should understand. If you do consult with an

 attorney, show the attorney all of your notes taken throughout the process. It will help your attorney grasp the intended spirit of the Forbearance or Loan Modification Agreement as he reviews the agreement document itself.

Know the Terminology

Make a real effort to understand the common terms relating to mortgages from the following Glossary of Terms.

  BENEFICIARY – The beneficiary in a foreclosure context is generally the mortgage lender. Frequently referred to as the “benny”.

CREDIT COUNSELING – Under the new bankruptcy law which took effect in October 2005, those wishing to file bankruptcy must complete an approved credit counseling course within the six (6) moths prior to filing.

DEED IN LIEU OF FORECLOSURE – The voluntary surrender of property by an owner/borrower to a lien holder that eliminates the need to continue foreclosure action by the lien holder. The lien holder can refuse to accept the Deed in Lieu and file a Non Acceptance with the County Recorder.

DISCOUNTED PAYOFF – The payoff of a mortgage loan where the lender accepts an amount less than the actual amount owed to pay off the loan.

EQUITY DEFICIENT – A property is Equity Deficient when, if sold, sales proceeds would not fully pay off existing mortgage debt.

 FORBEARANCE AGREEMENT – An agreement between a mortgage holder and a borrower that lays out a specific loan payment plan and often puts a stop on the foreclosure action so long as the borrower meets the terms of the agreement. The payment plan includes provisions for repayment to the mortgage holder of all delinquent interest and fees and could include extending the life of the mortgage beyond the original terms. A Forbearance Agreement is a tool that allows the borrower to keep the property.

JUDICIAL FORECLOSURE – A foreclosure action conducted through the courts instead of through a foreclosure trustee. Judicial Foreclosures are very uncommon in California, particularly on residential properties. Should a lender elect to pursue and deficiency judgment, it would be through a Deficiency Foreclosure.

JUNIOR LIENS – A lien, usually a mortgage loan that is subordinate to a Senior Lien, usually a first mortgage. Lien priority is usually established by recordation. NOTE: if you refinance a 1^st mortgage on a property with a 2^nd mortgage already in place the new 1^st mortgage holder will require a subordination agreement from the Junior Lien 

IMPORTANT CONSIDERATIONS FOR FORBEARANCE AGREEMENTS AND LOAN MODIFICATIONS

Be Realistic

Be realistic about your finances. Before you go through the process of pursuing either a Forbearance Agreement of Loan Modification, ask yourself if this is the right course for you and your financial circumstances. If you are not in a position to make an absolute commitment to your mortgage once the terms have been adjusted, a Forbearance Agreement or Loan Modification may not be the best option for you.

Getting a Forbearance Agreement of Loan Modification approved will require time and effort on your part. You will be asked to provide the information and documentation needed to show that once your loan terms are adjusted you will be able to meet your mortgage obligation going forward. Some of the questions you will be expected to answer may touch on difficult and personal issues. Take an honest look at your financial situation. If you are working on a Forbearance Agreement, are you truly back on solid financial ground? If not, a Forbearance Agreement is probably not your best option. A forbearance Agreement is a fabulous to help those

 who have experience a temporary financial upset that led to a mortgage delinquency. A Forbearance Agreement is not a good option for those see more financial instability in the foreseeable future. If you are requesting a Loan Modification, make sure that you can reasonably afford the monthly payment that you will have if the lender approves your request. After all, what’s the point of going through the process of getting a Loan Modification approved if you end up with a new payment you can’t afford?

When requesting a Loan Modification, know what you can afford to pay for your mortgage – and ask for it. Your lender may be unwilling to make the adjustment you need, but that doesn’t change what you can afford. You need to request an adjustment that puts your payment at a number you can afford every month.

Both Forbearance Agreements and Loan Modifications are important tools to help lenders and homeowners get through the current mortgage delinquency program Families and communities benefit tremendously from the stability that homeownership provides. These agreements help preserve ownership for many who need assistance at a critical time. Just keep in mind that Forbearance Agreements and Loan Modifications are not the right answer for everyone.

Hardship Letter

A hardship letter is your opportunity to outline for the lender the situation or circumstances that make it necessary for you to request assistance. A good hardship letter not only lays out the facts of the hardship, but also includes a compelling personal element.

Bring your situation to life by sharing some of the details of your hardship. Your hardship letter will be reviewed by a living, breathing person, give your letter a real feel – without going overboard. Support your hardship letter with documents, letters, notices and such that help the lender see and feel what you are going through. Letters from the doctors, layoff notices, notices of cancellation of auto or medical insurance, anything that legitimately contributes to an understanding of what you are up against should be included.

For those seeking a Forbearance Agreement, your hardship letter will focus on three things:

A.  The problem or circumstance was beyond your control.

B.  The temporary nature of your hardship.

C.  The fact that you have recovered and are back on your feet.

 Note: When you go through the process of evaluating your financial situation to determine what sort of Loan Modification you will need, take a hard look at personal expenses. Be prepared to make adjustments to your spending habits to reduce your “discretionary” expenses. You will be asking your mortgage lender to forgo monies to which they are entitled; you should be willing to make some personal adjustments as well.

Pearl Ahlquist
Short Sale Specialist
Saving one Home Owner at a Time.
homes4keep@yahoo.com
www.realtydoctor.us
Who do you know that’s in trouble and needs a helping hand.

The best way the communicate with us and our staff is by e-mail

Pearl’s Ahlquist e-mail homes4keep@yahoo.com

Lora’s Kephart e-mail lorak56@yahoo.com

Barbara Farley’s, Pearl’s assistant e-mail gorealtyfirst@comcast.net