Written By: Kristin Duff

As the market changes, once again, we see home prices going back up, slowely over time. The real estate market is an ever changing roller coaster of events. The homes on the market now are priced aggressively and they don’t tend to stay available long. Most of the bank owned properties available are short sales and foreclosures and they are priced to sell, not priced to stay on the market. Consequently, the homeowners not in distress who are selling their homes are pricing their homes aggressively just to keep with the tide. Prices today lead this market to the buyer’s advantage. A home that would have cost close to a million dollars three to five years ago are selling for close to half their cost these years later. So the question for all you investers out there is such: when is the market done falling? When is it right to invest? When will i get the best deal? Well, the answers to these questions lie in the statistics. Asking prices are going back up and the time to buy investment properties is now, before it’s too late to nab the good deals. Don’t be left saying “I Shoulda, I Coulda, If only I Woulda.” Don’t be left in the dust of the next turn on this roller coaster of a real estate market. Call your realtor before it’s too late!

 Written By: Kristin Duff

If you have recently pondered selling your home, you must know at this point that there have been many foreclosures and short sales in your area. These homes, priced aggressively, have a direct effect on your homes market value. When selling a home, the asking price is based on comparable homes in the area, to include recent short sales and foreclosures. Your house is not necessarily worth more just because you can continue to make your payments. As rediculous as this sounds, it’s a hard, sad truth that needs to be realized. The under cut prices of today’s market make it hard for anyone able to make their mortgage payments to sell their homes due to the deflation of the market. Homeowners with a $300,000 loan on their property are looking at selling for far less than their loan ammounts and are finding themselves upside down in this market. Unfortunatly, these bank owned homes have become a staple in the market and they are very competatively priced.They are your competition and you have to price your house for sale in accordance with the current market value for your community. Pricing is a very important part of trying to sell yuor home and if you do wish to sell in this economy, you will find it difficult to sell your home if the price you are asking is too steep in comparison to the other homes for sale in your community.

Written By: Kristin Duff

Many homeowners are discovering the hard way that though the idea of a loan modification seems like a miracle, it’s simply a band-aid. What I mean when I say band-aid is that it’ll cover the abraision temporarily, making the burn go down and helping to ease the pain, until you have to rip the sucker off, pulling the wound open once again. Most of the time, a loan modifiaction request can be a lenghty process during which the homeowner has to undergo the scruteny of the bank holding the loan. The bank requires proof that you, as the homeowner, are under duress and are unable to make your payments. The banks take their time reviewing their documents, causing some hownowners to fall behind even further, or worse, the bank requests a temporary payment, usually three months worth while the bank evaluates the homeowners ability to make payments then says they dont have enough information and they need another temporary payment of similar value. Then, the bank offers you a deal, with a length of time at a lower fixed interest rate. At this point, you’re thinking “i can make that kind of payment”, but the tricky part is lookiing beyond the now factor. As a homeowner seeking a loan modification you need to ask yourself “does this new loan modification actually fix my situation or when the length of time allowed for this fixed interest rate is up, am I going to end up making my situation worse?” In some instances the loan modification documents can even narrow your field of options, eliminating your chances to put your home on the maket via short sale, during which your home is sold at current market value and the rest of your mortgage debt can be forgiven. If you are considering applying for or accepting your banks offer for a loan modification, please take the time to seek advice from a Certified Distressed Property Expert or a trusted lender outside of your bank’s authority to ensure that you aren’t just “covering up” your wounds to deal with them at a later point in time. Falling behind on your payments during this economic crisis is nothing to be ashamed of as long as you seek the proper help to alleviate the situation.

Written By: Kristin Duff

We’ve all seen today’s adds about the housing market. As listing agents become more desperate for buyers, they have come up with colorful ways to say “it’s really not as bad as it looks!” but the question on all of our minds begging to be asked is “is it really worth my time and effort?” some listing agents have taken it too far and their creative verbiage, meant to strike curiosity in the viewers, has become an outright lie. There is a difference between a home needing a little TLC and a home needing extensive repairs. Some Realtors have even gone so far as posting old pictures of their listings in which the house was in a better condition. THIS IS A LIE! And it is blatantly unacceptable. Let looks at a particularly popular phrase “A diamond in the rough”. A diamond in the rough folks, is a lump of coal. Phrases which truthfully display a mental picture of a property for the buyer while optimistically trying to display the positive aspect of the property can be a very good opportunity for those who naturally can’t see the potential, but when does pointing out the ups outweigh the need to disclose the downs? The right answer? Never. But the honest answer is that it’s happening everyday to more people than can possibly be ethical. The sad truth is that a lot of potential buyers are looking for a deal and they are finding that some of the neglected, abandoned bank owned properties on the market are way beyond the normal person’s ability to fix. The cost of renovations could very easily exceed the price of the “steal of a deal” home they had hoped to purchase. This is not to say that all agents have been using creative verbiage to sell houses that were beyond the capability of the buyer to fix, or that all bank owned properties aren’t worth the trouble of trying to fix, but the predicament that some of these buyers have been put into still exists. Let’s be honest with our buyers. If a bulldozer would be a mercy killing then saying “needs a little TLC” is an understatement.  Let’s call it for what it is …Land value only.

What is a Certified Distressed Property Expert

Written by Noel Padilla

http://activerain.com/np1000

Before we can define what a Certified Distressed Property Expert is, we need to define what a distressed property is. A property can become distressed for a variety of reasons but the most common is a foreclosure. Any situation that has caused a property owner to have difficulty making mortgage payments or even selling the property is said to be in a distressed state. Basically any property which has foreclosure looming.

Now that we have defined a distressed property, what is a Certified Distressed Property Expert (CDPE)? This is not only a designation earned by a licensed Realtor but it is also an acronym that signals to the public that the person displaying it has gone through extensive training to successfully mitigate a foreclosure. This can be done by negotiating mortgage terms, helping to negotiate a refinance or the most likely-help sell the property.

Sometimes these properties have lost significant value either by physical damage, changes in the zoning, lack of curb appeal or host of other factors one of which occurring today is market conditions. If the value of the property drops below what one could sell the property for then the property is said to be short and any sale would be considered a “Short Sale“, which has become very common lately. Negotiating a short sale is where a CDPE really shines.

These transactions are extensively time consuming and tedious. They require diligent follow-up, tons of paperwork and detailed analysis. Not to mention all the work that goes into drafting market reports and gathering all the information to convince the bank to accept a sales amount that will net them less. Not an easy task. Some of these sales can take anywhere from 3 to 12 months to close, depending on the complexity of the transaction.

All this is done in addition to the normal marketing efforts required to sell the property. You can see why less than 1% of Realtors nationwide have the training and knowledge to successfully negotiate a short sale. I am one of those in the less than 1% that has dedicated my time, effort and finances to educate myself in this sector of the market.

In March of 2008 50% of all homes sold were in some sort of distressed state…….Half! If you have a distressed property you can’t chance your home sale on someone who doesn’t have the tools to get things done. This market is going to be here for sometime. Experts predict 2 to 3 years, I predict closer to 10 years which began in 2006 so we are 2 years in to the 10 year cycle.

Buyers are not immune to the phenomenon. They are getting great deals on these distressed properties but guess what, if they are dealing with someone who doesn’t know the mechanics of a short sale, the deal will fall apart after waiting months. It is equally important to buyers and sellers of distressed property to use a person who can get these transactions to the closing table.

Thank you Noel Padilla for allowing me to post this on my webpage.

Written By: Kristin Duff

A Certified Distressed Property Expert® (CDPE) is a real estate professional with specific understanding of the complex issues confronting the real estate industry. Through comprehensive training and experience, CDPEs are able to provide solutions for homeowners facing hardships in today’s market.

The prospect of foreclosure can be financially and emotionally devastating, and often homeowners proceed without guidance of any kind. The developers of the CDPE Designation believe that in almost all cases, the best course of action for a homeowner in distress is to speak with a well-informed, licensed real estate professional. They have the tools needed to help homeowners find the best solution for their situation.

While enduring financial difficulties is challenging for any family, the process of finding a qualified real estate professional should not be. Selecting an agent with the CDPE Designation ensures you are dealing with a professional trained to address your specific needs. For more information, contact a CDPE in your area.

CDPEs don’t merely assist in selling properties, they serve and help save their clients in need.                     

http://www.cdpe.com/what-is-a-cdpe.html

The Fine Line between Good Negotiating and Bluffing

Written By: Kristin Duff

In the past, claiming to have multiple offers on a property was a realistic claim in the real estate market, but after the market crashed, this was a sad dream of what used to be. As the market starts picking back up, however, it is becoming more prevalent again. Now, the problem with this is that some realtors are using this fact to their bargaining advantage, bluffing to try to get more from the buyer. Unfortunately, this tactic sometimes drives prospective buyers away leaving the house vacant longer with the seller accruing more debt, or it prevents the seller from moving on to their new home. Another “game” currently being played in the real estate market is the game of submitting offers that don’t go through. This damages both the buyer and the seller. First of all, submitting offers that the buyer isn’t committed to takes the house off the active market for others to buy. Now, having multiple offers on a property is probable if the house is priced well and in good condition, but once an offer is accepted, all other offers go into standby mode and the house is basically taken off the market until the offer fails. Some agents are known for telling their buyers it’s ok to write up an offer if you aren’t really sure you want the house.the problem in this is that most other realtors don’t like to work with them because they have “earned” their bad reputation.  The only way to prevent this is to research well before you commit yourself to a realtor. If your realtor has been in the “game” for a substantial period of time, then he/she should have plenty of knowledge as far as how each other “player” plays the game. Not to mention the fact that most experienced realtors have numerous contacts and one of them has most likely worked with any prospective realtor in the area. Weather your realtor is accepting offers on your behalf as a seller or negotiating your offer as a buyer, you are placing your trust 100% in your realtor to do what’s best for you.  If you do not have a good standing relationship with your realtor with a good open dialogue can you really be sure that they aren’t “gambling away” your money?

Article written by Kristin Duff

Financially challenged property owners have become a huge target for scam artists and loan modifications can be especially risky. If your Realtor doesn’t have the proper training to assist you, you may find that, in some cases, the advice given isn’t up to par. It is legal for a Realtor to give you advice about loan modification, Short Sales, and Foreclosure, but as the number of people seeking this advice grows, the active number of real estate agents able and willing to give this advice becomes sparring. Loan Modification Assistance is a very risky business for any licensed real estate agent or broker, simply because it has not been a part of the realtors job description until now, and even now it only applies to those certified to take on the responsibility. Most agents and brokers are not trained or skilled in loan modification and giving advice on the topic may violate the scope of their license. The structure of a loan and the servicing required to complete a loan modification is very detailed and has to be very precise. Before the Real Estate Market crashed due to the economic crisis in our country, in order to seek advice about loan modification, one would have to speak directly to a loan officer. With so many people losing their homes, most realtors have had to pick up at least a few hardship cases. The opportunities for these people to keep their homes or at least reduce their home debts have multiplied. Given that fact, some agents have become comfortable giving loan modification advice. Without the proper training on this avenue, this can be a very dangerous situation for the homeowner. A vast majority of agents have to send a prospective home buyer to a loan officer for a simple price range pre-qualification. The scary thing is that some of those same agents have become omfortable with giving homeowners in mortgage distress loan modification advice. In the Realtors Code of Ethics it specifically states that “REALTORS^® shall not undertake to provide specialized professional services concerning a type of property or service that is outside their field of competence.” Given this factor, make sure that the person you seek advice from on loan modification is certified to give this advice. A Certified Distressed Property Expert is guaranteed to know more about the subject than an average real estate agent.

If you have any questions or concerns regarding your ability to keep your house during this economic crisis, please feel free to contact Pearl Ahlquist at (916) 708-3851. She is a Certified Distressed Property Expert.

In our continuing efforts to keep you up-to-date on the latest developments on the Stimulus Package and how it will affect homeowners, we are now providing you the highlights of the latest guidelines on loan modifications.  There are actually more details than we are providing in this edition of “Success Tips” but these provide the basic components to help determine if a distressed homeowner is eligible.  This is a Governmental trial program and will be reevaluated in 90 days. 

The trial loan modifications consistent with these guidelines may be offered to homeowners as of March 4, 2009 and may be considered for acceptance into the Home Affordable Modification Program with other conditions upon completion of the trial period.  These guidelines, however, do not constitute a contract offer binding on the Department of the Treasury.

PROGRAM ELEMENTS DESCRIBED IN GUIDELINES:

Monthly Payment Reduction Cost Share:  The Treasury will partner with the financial institutions to reduce the homeowners’ monthly mortgage payments.  The lender will have to first reduce payments on mortgages to no greater than a 38%.

Front-End Debt-to-Income (DTI) ratio.  The Treasury will match further reductions in monthly payments dollar-for-dollar with the lender/investor, down to a 31% Front-End DTI ratio for the borrower.

Servicer Incentive and Pay for Success Fees:  Servicers will receive an up-front Servicer Incentive Payment of $1,000 for each eligible modification meeting guidelines established under this initiative. Servicers will also receive Pay for Success Payments for as long as the borrower stays in the program, with further incentives up to $1,000 each year for up to three years.  Similar incentives will be paid for Hope for Homeowner refinances which should motivate lenders who have been reluctant to participate in this program before now.

Borrower Pay-for-Performance Success Payments: Borrowers are eligible to receive a Pay-for-Performance Success Payment that goes straight towards reducing the principal balance on the mortgage loan as long as the borrower is current on his or her monthly payments.  Borrowers can receive up to $1,000 for Pay-for-Performance Success Payments each year for up to five years.

Current Borrower One-Time Bonus Incentive: One-time bonus incentive payments of $1,500 to lender/investors and $500 to servicers will be provided for modifications made while a borrower is still current on mortgage payments.  The servicer will be required to maintain records and documentation evidencing that the Trial Period payment arrangements were agreed to while the borrower was less than 30 days delinquent.  The servicer must comply with any express pooling and servicing contractual restrictions for modifying current loans.

Program Payment Conditions:  No payments under the program to the lender/investor, servicer, or borrower will be made unless and until the servicer has entered into the program agreements with the Treasury’s financial agent.  Servicers must enter into the program agreements with the Treasury’s financial agent no later than December 31, 2009.

ELIGIBILITY REQUIREMENTS:

Pooling and Servicing Agreements: The program guidelines reflect usual and customary industry standards for mortgage loan modifications contained in typical servicing agreements, including pooling and servicing agreements (PSA’s) governing private label securitizations.  Participating servicers are required to consider all eligible loans under the program guidelines unless prohibited by the rules of the applicable PSA and/or other investor servicing agreements.  Particular servicers are required to use reasonable efforts to remove any prohibitions and obtain waivers or approvals from all necessary parties.

Origination Date of Loan Subject to Modification:  The mortgage to be modified must have been originated on or before January 1, 2009.

Program Expiration:  New borrowers will be accepted until December 31, 2012.  Program payments will be made for up to five years after the date of entry into a Home Affordable Modification.  Monitoring will continue through the life of the program.

Qualification Terms:

• The home must be owner-occupied, single family 1-4 unit property including condominium, cooperative and manufactured home affixed to a foundation and treated as real property under state law.
• The home must be a PRIMARY RESIDENCE verified with tax returns, credit reports, and other documentation such as a utility bill.
• The property may NOT be investor-owned.
• The home may not be vacant or condemned.
• Borrowers in bankruptcy are not automatically eliminated from consideration for a modification.
• Borrowers in active litigation regarding the mortgage loan can qualify for a modification without waiving their legal rights.
• First lien loans must have an unpaid principal balance (prior to capitalization of arrearages) equal to or less than $729,750 for one unit, $934,200 for two units, $1,129,250 for three units and $1,403,400 for four units.

In Foreclosure Process:  Any foreclosure action will be temporarily suspended during the trial period, or while the borrowers are considered for alternative foreclosure prevention options.  In the event that the Home Affordable Modification or alternative foreclosure prevention options fail, the foreclosure may be resumed.

Current Loan-to-Value (LTV) Ratio:  There is no maximum or minimum LTV ratio for eligibility purposes.

Loan Type Exclusions: Loans can only be modified under the Home Affordable Modification program once and only once.

Subordinate Financing: Subordinate liens are not included in the Front-End DTI calculation, but they are included in the back-end DTI Calculation.

Solicitation to Borrowers/Incoming Inquiries: Service Providers should follow any existing express contractual restrictions with respect to solicitation of borrowers for modifications.

UNDERWRITING ANALYSIS:

Front-End DTI Target: Front-End DTI is the ratio of PITIA to Monthly Gross Income.  PITIA is defined as principal, interest, taxes, insurance (including homeowners insurance and flood & hazard insurance) and Homeowner Association Fees.  Any monthly mortgage insurance premiums are excluded from the PITIA calculation.  The Front-End DTI target is 31%.  The Standard Waterfall step that results in a Front-End closest to 31% without going below 31% will satisfy the Front-End DTI target.  There is no restriction on reducing Front-End DTI below 31%, however any portion of the reduction below 31% will not be covered by the Payment Reduction Cost Share.

Property Value: The service provider may use, at its discretion, either one of the government sponsored enterprises (GSE’s) automated valuation model (AVM) provided that the AVM renders a reliable confidence score or a Broker Price Opinion (BPO).  The consensus is that in most cases the servicers will be utilizing BPO’s most often.  With whatever pricing model that the servicer uses in the modification, the valuation may not be more than 60 days old.

Income and Asset Validation:  The borrower’s income will be verified by requiring a signed Form 4506-T (Request for Transcript of Tax Return) and obtaining the most recent tax return on file for each borrower on the note.  For wage earners, the two most recent pay stubs for each wage earner on the note will also be required.  For self-employed borrowers or for non-wage income, the borrower’s income will be verified by obtaining other third-party documents that provide reasonably reliable evidence of income.  Borrowers must also represent and warrant that they do not have sufficient liquid assets to make their monthly mortgage payments.  The Hardship (SAD) letter will be very important here.

Monthly Gross Income:  The borrower’s Monthly Gross Income is the amount before any payroll deductions includes wages and salaries, overtime pay, commissions, fees, tips, bonuses, housing allowances, other compensation for personal services, Social Security payments, including Social Security received by adults on behalf of minors or by minors intended for their own support, annuities, insurance policies, retirement funds, pensions, disability or death benefits, unemployment benefits, rental income and other income.  Monthly net income can be used for preliminary screening and qualification.  If used, the servicer will need to multiply net income by 1.25 to get an estimate of the Monthly Gross Income.

Back-End DTI:  The Back-End DTI is the ratio of the borrower’s total monthly debt payments (such as Front-End PITIA, any mortgage insurance premiums, payments on all installment debts, monthly payments on subordinate liens on the property, spousal/child-support payments, car lease payments, aggregate negative net rental income from all investment properties owned, and monthly mortgage payments for second homes) to the borrower’s Monthly Gross Income.  The servicer must validate monthly installment, revolving debt and secondary mortgage debt by pulling a credit report for each borrower or a joint report for a married couple.  The servicer must also consider information obtained from the borrower orally or in writing concerning incremental monthly obligations.

Borrowers who otherwise qualify for a modification under this program, but who would have a post-modification Back-End DTI greater than or equal to 55%, will be provided with a letter stating that they are required to work with a HUD-approved counselor and the modification will not take effect until they provide a signed statement indicating that they will obtain counseling.

Reasonably Foreseeable/Imminent Default: Every potentially eligible borrower who calls or writes to their service provider in reference to a modification must be screened for hardship.  This screen must ascertain whether the borrower has had a change in circumstances that causes financial hardship, or is facing a recent or imminent increase in the payment that is likely to create a financial hardship (Payment Shock).  If the borrower reports a material change in circumstances, the sevicer must ask about current income and assets, and current expenses as well as the specific circumstances relating to the claimed financial hardship.  Each of these elements must be verified through documentation.  Again the Hardship (Sad) Letter will be very critical in this process.

If the servicer determines that a non-defaulted borrower facing a financial hardship is in Imminent Default and will be unable to make his or her mortgage payments in the immediate future, the servicer must apply the NPV Test (Net Present Value).

A standard NPV Test will be required on each loan that is in Imminent Default or is at least 60 days delinquent under the MBA (Mortgage Bankers Association) delinquency calculation.  This NPV Test will compare the net present value (NPV) of the cash flows expected from the modification to the net present value of the cash flows expected in the absence of modification.  If the NPV of the modification scenario is greater, the NPV result is deemed positive.  If the NPV Test result is negative and Home Affordable Modification is not pursued, the lender/investor must seek other foreclosure prevention alternatives, including alternative modification programs, deed-in-lieu of sales and short sales programs.

COMMENTS & CONCLUSIONS:

There is much more information available on this program which you can find by going on www.hud.gov.  What you can conclude is that this program has placed a much greater emphasis on such instruments as a Broker Price Opinion and the Hardship (SAD) Letter.  This has also placed a greater emphasis on your role as a Consultant to your client. 

Good Luck & please let us know how we can help you.

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

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