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Loan Modification

Loan modification is a change in the loan contract terms, such as the loan amount or interest rate, agreed to by the lender and the borrower. The common modifications right now are those made to reduce the loan amount to offset the depreciation in the home value and to reduce the payment burden on borrowers faced with impending interest rate increases that will make monthly payments unaffordable. Almost all lenders are willing to negotiate, in order to avoid the expensive fees which incur when lenders foreclose on a borrower.

Here is an example list of hardships that lenders consider during the loan workout process:

• Adjustable Rate Mortgage Reset- Payment Shock
• Illness
• Loss of Job
• Reduced Income
• Failed Business
• Job Relocation
• Death of Spouse or CO-Borrower
• Death
• Incarceration
• Divorce
• Marital Separation
• Military Duty
• Medical Bills
• Damage to Property (natural disaster or unnatural)
• Modifications are made when borrowers can no longer meet the financial requirements to make their monthly mortgage payments. The burden of proof is placed on the borrower. Lenders typically need a brief explanation of your circumstances. This is sometimes also referred to as a hardship letter.

Things lenders typically need:

• Recent income documents (such as Pay stubs; Benefit Statements from Social Security, Disability, Unemployment, Retirement, or Public Assistance. If you are Self-employed, have your tax returns or a Year-to-date Profit and Loss Statement available for reference)
• List of household expenses.
• Depending on your lender's requirements and requests, we may need different forms filled out by you throughout the process.
• Loan Account number.

What We Do To Effect a Loan Modification

This information takes you through our process in the documentation we prepare for the lender. We take our modifications from the perspective of making them financially feasible to the lender. That is why we are so successful.

We will handle every aspect of your negotiation and prepare a comprehensive loan modification package for the Lender, including but not limited to:

Financial Prospectus Workout. Detailed and documented to include all income, assets and payments made, from your mortgage payment to your dry cleaning bill. This allows a realistic view of your financial abilities to be sure you can continue to make your mortgage payments for years to come once the loan is restructured.

Letter of Hardship. We will take your reasons for financial hardship and insert it into a package that is easy to navigate through so the lender better understands why you need financial relief.

Cost Benefit Analysis for the Lender. We will document exactly what the lender stands to lose if they do not modify your mortgage. We will document the costs associated with the Pre-Foreclosure, Foreclosure and Bankruptcy Process. The costs associated with missed Property Tax and Home Owner's Insurance. The costs associated with Attorney Fees for the Foreclosure, Bankruptcy and Eviction Proceedings. The lender will then attempt to auction the property. It will fail because they are seeking much more than the property is worth. It will then become a REO (Real Estate Owned)property. We will then assess the costs associated with selling the property: Rehabilitation Costs, Realtor Fees and Holding Costs. We show a loss to the lender between 20% to 70% on first mortgages and 120% on second and third mortgages.

Financial Analysis verifying payments your can afford. We will document what your financial situation will be based on your new, lower monthly payments. CMA. We will do a Comparative Market Analysis on the property. We DO NOT pull comps on properties that have sold 6 to 12 months ago because those prices do not apply to today's market.

Loan Restructuring Proposals. We will write 2 new loan scenarios that makes financial sense to both the lender and to you. We will then do a profit forecast documenting how much the lender stands to make after year 1, 5, 15 and 30.

Cross Cost Analysis. We will do a side by side comparison to the lender based on the figures we derive from the Cost Benefit Analysis and the Loan Restructuring Proposals. It comes down to basic mathematics, What Is Better? To take a loss of $150,000 by not doing a modification or make a profit of $15,000 by accepting our terms for a loan modification.

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