diy loan mod kit

Do-It-Yourself GuideHome Workout Solutions for Consumers

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Do-It-Yourself GuideHome Workout Solutions for Consumers

Contents 2

Introduction 4

7 Types of Home Workouts 5

• Reinstatement 5 • RepaymentPlan 5 • LoanModification 5 • Forbearance 6 • ShortSale 6 • Deed-In-LieuofForeclosure 6 • Cash-For-Keys 7

How to decide which Workout Solution is right for you? 7

Lenders Application and Forms 8

What documents are required for each of the different solutions 9

• WageEarner/SelfEmployed/RetiredorOther • Reinstatement 9 • RepaymentPlan 10 • LoanModification 10 • Forbearance 11 • ShortSale 12 • Deed-In-LieuofForeclosure 13 • Cash-For-Keys 13

The Process 13

• Step1-CompletingtheFinancialForm(Application) 14 • BorrowerInformation 14 • Property&LoanInformation 14 • EmployerInformation 15 • Income 15 • LiabilitiesandExpenses 16 • Assets 17

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• Step2-WritingtheHardshipLetter 18

• Step3-AuthorizationandCertificationforms 19

• Step4-Gatheringandorganizingdocumentsforsubmission 20

• Step5-TheCoverLetter 20

• Step6-Submittingyourrequesttoyourlender 21

• Step7-Followingupwithyourlender 21

• Step8-Ireceivedananswerfrommylender:WhatdoIdonow? 22

• Step9-Whatifthelenderdeniesmyrequestsforassistance? 25

• Step10-ShortSaleandDeed-In-LieuofForeclosure 25

• Step11-Thelenderalreadyforeclosedonmyproperty:whatdoIdonow? 26

• AdditionalResources 28

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Introduction

Manyconsumerstodayareexperiencingavarietyoffinancialhardships.Hardshipsduetolossofjob,reductionofworkhours,increaseinmortgagepayment,oravarietyofotherfactors.Consumersaremotivatedtolookforwaystosavemoney.Someconsumerswillstoppayingforservicesthattheymaybeabletoprovidethemselves,whileotherswillplacebudgetsontheiroverallspending.Ifyoufindyourselfinthistypeofsituationandbelieveyoucannotaffordtopayforloanmodificationservices,thenthisdo-it-yourselfoptionmaybeforyou.

Do-it-YourselfHomeWorkoutforConsumersisacomprehensiveguidethatprovidesyouwithstep-by-stepinstructionsforpreparingandsubmittingahomeworkoutrequesttoyourlender.Youwilllearnthedifferenttypesofhomeworkoutsolutions,howtoanalyzeyoursituation,howtocompletethelendersapplicationandforms,andwhatdocumentsyouwillneedtosubmittothelenderforanalysis.Pursuingaloanworkoutisaverylengthyandtimeconsumingprocessthatwillrequirehoursuponhoursofphonecallsandcorrespondence,andanincredibleamountofpatienceandfortitude.

Lenderstodayarelesscapableofassistingthelargenumberofconsumersthathaveapproachedthemformodifications.Theyareunderstaffedandareunabletohandlethecallvolumeinareasonabletimeframe.Manyhaverestrictionsinplaceonthetypeofassistancethattheycanprovide.Somelenderswillnotassistaconsumerunlesstheconsumeris60dayslateonhismortgage,whileotherswillattemptassistanceeveniftheconsumeriscurrentwithhispayments.Eachindividuallenderwilldeemwhatisacceptableandwhatisnot.Butineachandeveryinstancethelenderhascertainrequirementsthathavetobemetforthemtoreviewanddecideonahomeretentionsolution.Someoftheserequirementsarelistedbelow.

• Theconsumermustknowiftheywanttostayintheirhome.

• Theconsumermusthavethecapacitytomakefullmodifiedpaymentsaftermodification.

• Thehardshipmustberesolvedoraplanforresolutionmustbeprovided.

• Theconsumermustfirsthelpthemselvesbycreatingafinancialbudgetthatworks.

• Theconsumermustshowthattheyhavecutoutnon-livingexpenses.

• Themodificationmustprovideabenefittotheconsumer.

• Alldebts,includingthemortgage,mustbereasonablecomparedtotheincome.

Rememberthatyouareaskingthelendertotightentheirbeltandreducetheirprofitbygivingyoumortgagerelief.Iftheydonotseethatyouarecuttingoutyourexpensesandarereadytosharetheresponsibilitythentheymaynotbewillingtoworkwithyou.

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7 Types of Home Workouts

Reinstatement-Withareinstatement,theconsumerpaystheentirepastdueamounttobringtheloanup-to-date.Thisincludesalllatechargesandanyfeesorcostsassociatedwithanyforeclosureaction.Reinstatementwillcureadefaultandwillre-establishapositivecredithistorywiththelender.Fundsfromtaxreturns,401Kaccounts,stocksandbonds,orproceedsfromthesaleofotherassetscanbeusedforreinstatement.Forthisoptiontobeacceptedbythelender,theconsumermustprovetheyhavethefinancialcapacitytocontinuemakingfullpaymentsinatimelymanner,andthehardshipthathaskeptthemfrommakingpaymentshasbeencured.Consumerswithenoughcashinhandcanapplyforareinstatement.Aconsumerwhodoesnothavethecapacityorwillingnesstomakealumpsumpaymentisineligibleforthisoption.

RepaymentPlan-Arepaymentplanallowstheconsumertomakeinstallmentpaymentstotheirlender,toeliminatethedelinquencyoveraperiodoftime.Theseplansoftenrequireaconsumertomaketheirnormalmonthlymortgagepaymentalongwithanadditionalpaymenttobeappliedtothedelinquentamount.Noadditionallatefeeswillbeaccrued,andderogatorycreditreportingwillcease.Anotheroptionmaybeforaconsumertomakeapaymenteverytwoweeksuntilthedelinquencyiscured.Forarepaymentplantotakeeffect,theconsumermustprovetheyhavethefinancialcapacitytocontinuemakingfullpaymentsinatimelymanner,andthehardshipthathaskeptthemfrommakingtimelypaymentshasbeencured.Consumersthathaveresolvedtheirhardshipsandhavethecapacitytokeepmakingfullpayments,butdon’thavetheentirepastdueamountinonelumpsum,canapplyforarepaymentplan.Aconsumerthatisnotabletocurethedelinquencywithmultiplepayments,orwhoseincomecannotsupporttheadditionalpayments,orcircumstancesleadinguptodelinquencyhavenotbeensolvedwillnotqualifyforthisoption.

LoanModification-Aloanmodificationisanagreementthatrestructuresthetermsoftheconsumerscurrentmortgagenote.Amodificationwillrequirethelendertoaddanypastdueamountsandfeestoyourbalancebeforemakingtheircalculationsformodification.Amodificationcanincludeanycombinationofadjustingtheinterestratelower,extendingthetermfrom30yearsto40years,deferringaportionoftheprincipalbalance,orpermanentprincipalwrite-down.Modificationoptionswillvaryfromlendertolender.Cautionmustbetakenbytheconsumerwhenapplyingforaloanmodification.Yourapplicationmustreflectyourexactcircumstanceandanyerrorincalculationorinformationmayjeopardizeyourchances.Youmustalsobefamiliarwith,andhavetheabilitytounderstandthefinancingoptionsthatthelendermayofferyou.Rememberthatthelenderisactingintheirbestinterestandnotyours.Thelenderwilldictateifthemodificationisatemporaryorpermanentsolutionfortheconsumer.Consumersthatdonothavealumpsumofcashtocuretheirdelinquency,andarenolongerabletomakeapaymentinfull,buthavethecapacitytomakealowerpayment,canapplyforamodification.Aconsumerthathasnotresolvedhishardshiphasabandonedhisproperty,orwhodoesnothavetheabilitytopayamodifiedpaymentmovingforwardwillnotqualifyforthisoption.Ifalenderinunabletoapprovealoanmodification,thentheywilltypicallyproceedwiththeforeclosureprocess.

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Forbearance-Forbearanceisanagreementbetweentheconsumerandlenderthatallowstheconsumeratemporaryreductioninpayments,orevenasuspensionofpaymentsforaspecifiedperiodoftime.Typically,thisoptionisusedwhenaconsumerhasatemporaryhardshipandcannotmakeafullpaymentuntilthehardshiphasbeenresolved.Theremustbeaforeseeableresolutiontothehardshipthatwilloccurinthecomingfewmonthsforalendertoofferthistypeofsolution.Sincethepaymentsaretemporarilyreducedorsuspended,theplanwillcontainaprovisionforeventuallycuringthedelinquencywhichmayincludeanincreaseinyouroriginalmonthlypayment.Ofallthehomeretentionoptions,forbearanceisthemostsubjectiveandrequiresthemostdocumentation.Consumersthatdonothavethelumpsumofcashtocuretheirdelinquency,andarenolongerabletomakeapaymentduetoatemporaryhardship,canapplyforforbearance.Ifthehardshiphasnoclearresolutiondate,thepropertyisabandoned,oriftheincomecannotsupporttherepaymentplan,theconsumerwillnotqualifyforthisoption.

Short-Sale-Ashort-saleisatransactionwherealenderagreestoallowaconsumer,whohasstatedthattheycannolongeraffordtheirmortgage,tosellthepropertyforanamountthatislessthanthetotalamountdue.

Whenyouaskthelenderforacceptanceofashort-sale,theywillwanttoverifythatyoufinanciallycannolongeraffordthepayment;oncethepropertyissoldthelenderacceptsthepaymentfromthesaleofthepropertyaspaymentinfull.Afterthesaleofthehome,thelenderwillsendyoua1099attheendoftheyear.The1099willbefortheamountthatwasnotcoveredbythesaleoftheproperty.AnexampleofthisisifIsoldmypropertyfor$100,000butowed$150,000tothelender,thelenderwouldsendmea1099fortheamountof$50,000astaxableincome.However,undertheMortgageDebtForgivenessReliefActof2007,ifyoushortsellyourprincipalresidencebetween2007and2012,youwillnotbetaxedonthedebtforgivenbyyourlender.

TheprocessrequirestheconsumertolistthehousewithaRealEstateprofessional,andtocommunicateanyandallofferstothelenderforapproval.Theprocesstakesanenormousamountoftimetocompleteinadownmarketsincemosthomesarediscountedalready.Itisextremelyimportanttorememberthatduringashort-saleprocessthelenderwillstillpursueforeclosuresincethereisnoguaranteethatyourhomewillbesold,andthatthelenderisnotobligatedtoacceptanyoffersthatarebelowthepayoffbalanceoftheloan.Whenanofferisreceivedbythelendertheywillanalyzethecostofforeclosureversusthelosstakenontheshort-sale.Ifthelosstakenontheshort-saleisgreaterthanforeclosuretheymaynotaccepttheofferandmayproceedwithforeclosure.Ifanofferisacceptedbythelender,thentheywillstoptheforeclosureprocess.Thisisprobablythelongestoftheprocessesbecauseitrequiresyoutosellyourhome.Typically,lenderswillnotacceptoracknowledgeashort-salenoticefromtheconsumerunlesstheyhaveapurchaseofferattachedtotheapplication.

Deed-in-lieuofForeclosure-TheDeed-In-lieuofForeclosureisanagreementinwhichaconsumer,whocannolongeraffordthehome,agreestodeed(giveback)thepropertybacktothelenderinexchangeforcancellationofthedebt.Thisactioneffectivelyendstheforeclosureprocessandisbetterforyourcreditratingthanaforeclosure.Manydeed-in-Iieuofforeclosurecandidateshavetriedtoshortselltheirpropertybuthavereceivednoacceptableoffers.Ifadeed-in-Iieuofforeclosureisacceptedbythelender,itisimperativethattheconsumerunderstandthelegaldocumentsthatwillbesenttothemforsignatures.Theconsumermustcautiouslyreviewalldocumentstoverifytheycontainlanguagetoensuretransferofpropertywithnoadditionalrecourseagainstthem.Ifthereisa2’dmortgagelienholderinthetransactionandtheydonotcooperatebyreleasingtheirlientoallowtransferoftitletothelender,thenthetransactionmayhavetogothroughforeclosure.

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CashforKeys-Thecashforkeysprogramisoneinwhichthehomeownerisgivenacashsettlementinexchangeforvacatingtheirforecloseduponhome.Thiscanbeusedasamethodforavoidingforeclosure.Theprogramwasdesignedtomotivateconsumerstovacateoftheirforeclosedhomesquickly,butrequiresthatthehousebeleftingoodcondition.Uponsigningtheagreement,theconsumerisgivenamoveoutdatethattheymustcomplywith,alongwithinstructionsontheconditionthatthehouseneedstobeleftin.Iftheseitemsarenotmet,thentheofferisrescindedandtheconsumerisremovedfromtheproperty,forcefullyifneeded,bythelocalSheriff’sDepartment.Thecash-for-keysoptionisnotalwaysavailablebuthasbecomemorepopularsinceitexpeditestheprocessofgettingthehousereadyforsale.

Formanyoftheserviceslistedabove,youmayfindahomeretentionspecialistmostvaluableinpreparingandprocessingyourrequest.Thespecialistwillnegotiate,analyze,explain,andrecommendthebestpossiblesolutionthatmeetsyourspecificneeds.Makesurethatyouunderstandthecompleteprocessandthedocumentsinvolvedbeforemovingforwardwithyourlender.Youhaveonlyoneshottogetitright.

How to decide which Workout Solution is right for you

Decidingonwhichofthevariousworkoutsolutionsisbestforyoucanbeadifficulttask.Youwillneedtorevieweachofoptionsagaintoseeifyoushouldapply,butfirstyouneedtobeginbyaskingyourselfsomebasicqualifyingquestions.

1. DoIwanttostayintheproperty? a. Ifyouwanttostayintheproperty,thenyoumayapplyforaReinstatement,Repayment Plan,loanModificationorForbearanceplanwiththelender. b. Ifyoudonotwanttostayinthepropertythenthemostsuitableoptionsmaybea Short-Sale,Deed-in-IieuofForeclosure,orCash-For-Keysnegotiation.

2. DoIhaveajob? a. Ifyouhaveajobandarecapableofmakingsomesortofpaymenttothelender,then youmayqualifyforaRepaymentPlan,loanModification,orForbearance. b. Ifyoudon’thaveajob,andcannotmakeanypaymenttothelender,thenyourbest optionsmaybeForbearance,Short-Sale,Deed-in-lieuofForeclosure,orCash-For-Keys.

3. Areyoucapableofmakinganypaymenttothelender? a. Ifyouarecapableofmakinganytypeofpaymenttothelender,thenaRepaymentPlan, loanModification,orForbearancemaybeanoptionforyou. b. Ifyouarenotcapableofmakinganytypeofpaymenttothelender,thenyouroptions maybelimitedtoForbearance,Short-Sale,Deed-in-IieuofForeclosure,orCash-For-Keys.

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o Reinstatement.Ifyouhavethepastduefundsavailableinonelumpsumtocureyour delinquency,thenthisoptionmaybetheonlyoneforyou.Ifyoudon’thavethefundsinone lumpsumthenmoveontothenextoption,RepaymentPlan.

o RepaymentPlan.Ifyoudonothavethefundsavailabletocureyourdelinquencyinonelump sum,butcanaffordtomakeadditionalpaymentsinadditiontoyournormalpayment,thenthe lendermayallowyouaRepaymentPlan.Thiswillspreadyourpaybackofthepastdueamount overaperiodoftime.Ifyouareunabletomakeadditionalpaymentstothelendereachmonth thenmoveontothenextoption,LoanModification.

o LoanModification.IfyoudidnothavethefundsavailableforaReinstatementoraRepayment Plan,thenaLoanModificationmaybetherightchoiceforyou.Thismayallowyoumortgage reliefinvariousformsasdescribedearlier.Ifyouarecurrentlyunabletomakepaymentsbut willbeabletointhenearfuture,thenmoveontothenextoption,Forbearance.

o Forbearance.Ifyouarenotcapableofmakingapaymentforashortperiodoftimebutwillbe abletointhenearfuture,thenForbearancemaybeanoptionforyou.Thelenderwillneedto bereinsuredthatyouarecapableofresumingthepaymentsinthenearfuture.

o Short-Sale.Ifyoudonothaveajobandcannotmakeanypaymentstothelender,orifaNotice ofDefaulthasbeenfiledandforeclosureisimminent,thenaShort-Saleoptionmaybetheright choiceforyou.

o Deed-in-lieuofForeclosure.IfyouaretryingtoShort-Sellyourhomeandhavenotreceivedany offerstopurchasetheproperty,youmaywanttodiscusswiththelenderaDeed-in-Iieuof Foreclosureoption.Thiswilleliminatetheneedforthelengthyandcostlyforeclosureprocess.

o Cash-For-Keys.Ifyourpropertyhasbeenforeclosedupon,orisabouttobe,andyouarestillin theproperty,youmaybeabletonegotiateaCash-For-Keyssettlement.

Lenders Application and Forms

Althoughapplicationsseemallthesame,eachlenderhasaspecificsetofforms,andwillwantyoutousethose.Makesurethatyouareusingthecorrectlendersapplicationtoinitiatetheprocess.Ifyouhavea1”and2’dmortgagewithtwoseparatelendersthenyouwillneedtwoseparateapplications.Eachlendermayhaveadifferentlistofformsthattheywillwantcompletedandsubmitted.Typicalformsareasfollows:

• Applicationform • Hardshipletter • Authorizationform • Verificationforms • Additionalformsasnecessary

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Which documents are required for each of the different solutions?

Nowthatyouhavemadethedecisiontopursuethisoptiononyourown,youwillneedguidanceateverystepoftheprocess.Belowisalistofthedocumentsthatthelenderwillneedinordertoanalyzeyoursituation.Thedocumentslistedareinadditiontothelendersapplicationandotherformsthatwillberequired.Somestepswilllistthesamedocumentsasothers.

MostlikelyyouwillbestartingyourrequestwitheitheraRepaymentPlanoraLoanModificationtohelpyoustayinthehome.IfyouhavereceivedaNoticeofDefault(NOD)oranauctiondateispending,youmaynothaveenoughtimetopursueaRepaymentPlanorLoanModification.Inthatscenario,therequestforShort-Sale,Deed-in-LieuofForeclosureorCash-for-Keysoptionwouldmorelikelybeyourpathtooff-settheforeclosure.Ifyoudon’tmovefast,youwillbefacedwithaforeclosureratingonyourcreditreport.

Becauseyouareaskingyourlenderfortheirhelp,itisimperativethatyouprovidethelenderwiththecorrectdocumentsthatwillallowthemtounderstandyoursituation.Itisimportanttorealizethateachlenderisdifferentinthewaytheyhandlehomeretentionsolutions,andmayaskforadditionalinformationotherthanwhatyouwillsubmit.Becauseofthelengthytimerequiredforalendertoreviewthefile,somedocumentsthatyousubmitmayhavetobere-updatedwithcurrentinformationandresenttothelenderforre-review.Documentstypicallyhaveanexpirationdateof90days.Ifyoufindthatyourfinancialsituationhaschangedafteryouhavesubmittedyourrequesttothelender,youmustnotifythelenderimmediatelyandprovidethemwithdocumentsorinformationthataddressesthechanges.

Let’sstartbydiscussingthedocumentsthatwilltypicallyberequiredbythelenderforeachofthedifferenthomeretentionsolutions,andclassificationsofconsumers.Thedocumentsapplytoallborrowersontheloan.

Reinstatement-Payingthepastdueamountsinonelumpsumtobringaccountcurrent.

Paystubscoveringonemonth•ofincometoincludeyear-to-dateincometotals.

2monthsofcompletebank•statements,includingallpages.Includechecking,savings,stocks,bonds,moneymarket,401Kandanyotherassets.

Hardshipletterexplaining•yourcircumstanceandhowitisbeingresolved.Supportingdocuments.

Mostrecentfederaltax•returnsandW-2s.Mustincludeallpagesandschedules.

Wage Earner

Year-to-dateProfitandLoss•statement.



Mostrecentfederaltax•returnsand1099s.Mustincludeallpagesandschedules.

Self Employed

SocialSecurityawardletter.•

Retirementawardletter.•



Mostrecentfederaltax•returnsand1099sorW-2s.Mustincludeallpagesandschedules.

Retired/Other

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RepaymentPlan-Payinganadditionalamounteachmonthtobringaccountcurrent.





Copiesofallstatementsof•liabilities.Includeallcreditcards,carloans,studentloans,otherinstallmentaccountsandrevolvingaccounts.

Wage Earner






Self Employed





Mostrecentfederaltax•returnsand1099’sorW-2s.Mustincludeallpagesandschedules.


Retired/Other

LoanModification- Requestforalowerpaymentbyrestructuringyourcurrentmortgageterms.



continued on next page...•

Wage Earner




Self Employed





Retired/Other

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LoanModification-continued




Wage Earner




Self Employed


Mostrecentfederaltax•returnsand1099’sorW-2s.Mustincludeallpagesandschedules.


Retired/Other

Forbearance-Arequestforatemporaryreductionofmortgagepaymentsoveralimitedperiodoftime.






Wage Earner






Self Employed







Retired/Other

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Forbearance-Continued.


Paymentplantoshowhow•soonyoucanpaybacktheamountsdue.

Wage Earner



Self Employed



Retired/Other

ShortSale-Anattempttosellyourpropertyformarketvalue,andrequestfordebtforgivenessofanybalanceduethelender.






Copyoflistingagreement.•

Wage Earner







Self Employed








Retired/Other

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Deed-In-LieuofForeclosure-Consumersurrendersthedeedtothelenderinsteadofforeclosure.






Copyofdeed.•

Wage Earner






Copyofdeed.•

Self Employed







Copyofdeed.•

Retired/Other

CashForKeys-Theconsumerisofferedcashforreturnofthekeystothehomeafterforeclosure.

Nodocumentsrequired.•

Wage Earner


Self Employed


Retired/Other

The Process

Inthissectionwewilldiscussthelendersapplicationandwhatinformationyouwillneedtoapply.Withanyapplications,notallboxesneedtobecompleted.Onlycompletetheareasthatpertaintoyou.

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StepI-CompletingtheFinancialForm(Application)

•BorrowerInformation

•Property&LoanInformation

•EmployerInformation

•MonthlyIncome

•MonthlyLiabilitiesandExpenses

•Assets

•BankruptcyStatus

Borrower Information

Theapplicationisverysimpleunliketheapplicationyoucompletedwhenyoufirstpurchasedyourhome.Itmaybejustoneortwopageslong,solet’sstartatthetopandworkourwaydowntheformsoyouwillunderstandwhatfieldsneedtobecompleted.

Mostapplicationsbeginbyaskingfortheloannumberalongwiththepropertyaddress.AgoodtiptorememberIstoalwaysplaceyourloannumberatthetopofeachandeveryformthatyousendtothelender.Thiswillallowthemtoeasilyidentifytheaccounttowhichtheformsbelongto.Nextisyourcontactinformation.Goaheadandcompletethefullname,mailingaddress,socialsecuritynumberanddateofbirth,homeandworkphonenumbersasrequired,foreachapplicant.

Property and Loan Information

Onceyouhaveyourcontactinformationlisted,theformasksforsomepropertyinformation,whichwillincludethemortgageliensandthecurrentstatus.

1. Doyoustilloccupytheproperty?

2. Isthepropertyarentalproperty?Ifso,howmuchistherent?

3. Haveyoufiledforbankruptcy?Ifso,whatchapter?7or13?

4. Arethereanyotherliensontheproperty?Howmanyandwhatisbalancedue?

5. Areyoulateontheotherliens?Howmanymonthsandhowmuchmoneybehind?

6. Doyouwanttostayintheproperty?

Thiswillallowthelendertounderstandwhathasoccurredandwhattheintentionsoftheconsumerare.Ifyouhavealreadyfiledforbankruptcyprotection,thelendercanstilltrytohelp.Ifyouhavevacatedtheproperty,thenthelenderwillnotallowamodification,butmayofferotherassistancetohelpyoudisposeoftheproperty.

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Employer Information

Someoftheapplicationsmayaskforyouremployerinformationsuchasthecompanyname,address,andphonenumber.Thelendermaycontactyouremployertoverifyyouremploymentposition,salaryandprobabilityofcontinuedemployment.Makesureyougivethemthenumbertothepersonthatcananswertheirquestions.TypicallyifyouworkforalargecompanytheHumanResourcesdepartmentwouldneedtohandlethesequestions.Ifyouareinasmallercompany,thenyoursupervisorormanagerwouldbethepersontheywillconfirmyourinformationwith.

Income

Thenextstepintheapplicationisprovidingthelenderwiththeincomeinformationforbothyouandyourspouse.Makesurethatwhenyouenterinyourgrosswagesand/ornetwagesthatyouenterthemonthlyamountnottheyearlyamountyouearn.Yourincomecanincludeanyalimony,childsupport,rentalincome,parttimeworkincome,oranyotherincomethatisverifiable.

OtherIncomesources: • Parttimework • Familymembermovesinandcontributes • eBaysales • Addedaroommate

Justrememberthatanyincomeyouclaimhastobeconsistentandmustberealistic.Thegoalhereistoprovidethelenderwithanhonestlookatyourincome,astheywilluseitasabasisfortheirdecision.Iftheincomeisincorrect,thenthemodificationwillprobablynotbesuccessful.

Tocalculategrossmonthlyincome:(wagesbeforetaxesarededucted)

TakeyourW-2stotalwagesforthatyearanddividethenumberby12.

For example, if you earned $45,397 in 2009, per your W-2, then you would divide the $45,397 by12 months. The total gross monthly income would be $3783.08 per month.

Tocalculatenetmonthlyincome:(wagesaftertaxeshavebeendeducted)

Netmonthlyincomeistheamountofyourpaycheckafterthenormaldeductions.Aneasywaytocalculateyournetmonthlyincomeistoaddtogethereachofyourpaychecksforaonemonthperiod.Thetotalisyournetmonthlyincome.

Or,anothermethodistotakeyourcurrentpaystubsandfindtheyeartodatetotalamountearned.Dividetheamountbythenumberofmonthstheincometotalrepresents.

For example, if my current pay period ended on the 1st of May but my payday is the 15th then Iwould look on my paycheck and find my year-to-date earnings and divide the number by 4months (January, February, March, April). If my year-to-date earnings totaled $22,840, then Iwould divide this by 4 to get my monthly income amount. $22,840 divided by 4 = $5,710 permonth income.

Makesureyoucalculatethecorrectamount.Ifyouareunsure,youshouldcontactyouremployerforassistanceonthecorrectnumbers.

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LiabilitiesandExpenses

Thelenderneedsyoutoprovidethemwithasnapshotofyourmonthlyliabilitiesandexpenses.Theywillaskforthebalanceandminimumpaymentforeachaccount.Makesureyouusetheminimummonthlypaymentshowingonyourstatementoryourcalculationswillbeoff.Ifyouhavealoanthatisdeferred,suchasastudentloan,youmuststilladdwhatthepaymentwillbeafterthedefermentperiodends.Ifyoudonothaveanexactamount,youcanuse3%ofthebalanceasaminimumpaymentdue.Monthlyliabilitiesincludebutarenotlimitedto:

• RevolvingAccounts

o Visa/ MasterCard credit card payments

o Department Store accounts

o Gas Cards

o Other cards

• InstallmentAccounts

o Car loans

o Jewelry/Furnishing loans

o Recreationalvehicleloans

o Student loans

o Personal loans

o Boat loans

o Other loans

Makesurethatyoudonotduplicateexpensesthatmaybeincludedelsewhere.Anexampleofthisiswhereyoustateonyourapplicationthatyoupay$XX.XXpermonthformedicalbenefitswhenitisalreadydeductedfromyourgrassincome.Thisisacommonmistakethatcancostyoualotoftimeandeffort.

Othermonthlyexpensesareanotherareawherethelenderwillneeddetailedinformation.Monthlyexpensesinclude,butarenotlimitedto:

• Food

• Utilities

• CellPhone/Cable/Internet

• Religious/CharitableContributions

• Transportation(Bus/Train/Taxi,etc.)

• AutoInsurance

• HealthInsurance

• LifeInsurance

• ChildSupport16

• Alimony

• ChildCare

• Tuition

Lendersuseadebt-to-income(DTI)calculationtofigureouthowmuchofyourincomeisusedfordebtsandliabilities.Thisnumberisrepresentedasapercentage.SomelenderswillrequireyourDTItobeamaximumof55%.Thismeansthatnomorethan55%ofyourincomecanbespentondebtsandliabilities.TheequationforcalculationofDTIisasfollows:

Debts÷Income=Debt-to-incomeratio

TocalculateyourDTI,followthe3stepprocessbelow:

Step1-Calculateyourgrossmonthlyhouseholdincome

Step2-Calculateyourtotalminimummonthlypaymentsonallofyourdebts

Step3-Divideyourtotalminimummonthlypaymentsbyyourgrossmonthlyhouseholdincome

Hereisanexampleofhowthisworks:

John and Jane have calculated their combined gross income to be $5375 per month. They have amortgage payment of$1867 per month which includes principal, interest, taxes and insurance. Theyhave a car payment of $328 and 3 Visa credit cards with combined minimum payments of $150 permonth. Additionally, John pays child support to his ex-wife in the amount of $690 per month. Their totalamount of monthly debts, (add up $1876 +$328 +$150 +$690), total $3044.

$3044 ÷ $5375 = .56 or 56%

56% of John and Jane’s income is spent on monthly liabilities.

Assets

Alackofliquidassetsisthenumberonereasonwhyconsumersdefaultontheirmortgage.Manyconsumersdonothavethenecessaryemergencyfundsinreserverequiredtosustaincontinuedmortgagepaymentsincaseofhardshiporemergency.Duringthesetimestheconsumerhasnothingtofallbackon;hencetheystarttodefaultontheirpaymentstothelender.

Youwillberequiredtoincludeallofyourcurrentassetsonthelendersapplication.Thisincludesallcheckingandsavingsaccounts,moneymarketaccounts,CDs,401K,IRA,stocksandbonds.Alsoincludeanylandorrealestatethatyoumayown,andotherinvestmentsnotlisted.

Thelenderwillthoroughlyreviewyourassetsandnotapproveyourrequestiftheyfeelyouhaveenoughassetstocoverthepastdueamount.Thelenderwantsyoutotrytohelpyourselffirstbyusingyourassets.

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Completetheassetssectionwithinformationtakendirectlyfromyourmostrecentaccountstatementstoensuretheinformationmatches.Thesewillbethesamestatementsthatyouwillbesendingthelender.

Step2-WritingtheHardshipletter

Foranyassistancetobeofferedbyalender,theconsumermustfirsthaveahardshipthathaskeptoriskeepingthemfrommakingapayment.Withoutahardshipthelenderwillnotbewillingtoassistyou.Thelenderwillaskforahardshipletterwhichwillexplaintothem,inyourownwords,thecircumstancessurroundingyoursituation.Youmuststartbyaddressinghowandwhenthehardshipoccurred.Then,proceedwithwhatyouaredoingorhavedonetoresolvethehardship.Ifthehardshipinstillpending,thenyouwillneedtoprovidethelenderwithaplanoutlininghowyouwillovercomethehardship.Ifthehardshipisaforeseeableone,makesurethelenderunderstandsthattoo,andexplainhowyouwillbehandlingthesituation.(ProvidethelenderwithanydocumentationthataddressesthehardshipsuchasaDoctor’sletter,divorcedecree,deathcertificate,lay-offnotice,oranythingthatpertainstoyoursituation.)Nowthatyouhaveexplainedtothemwhathashappened,andwhatyouhavedoneoraredoingtoresolvetheissue,youwillneedtoaskthemforspecificassistance.ProvidethelenderwithanydocumentationthataddressesthehardshipsuchasaDoctor’sletter,divorcedecree,deathcertificate,lay-offnotice,oranythingthatpertainstoyoursituation.Yourhardshiplettermustbeeasilyreadbythelenderandhastobeclearandconcise.Makesurethatyouplaceyouraccountnumberandthepropertyaddressonthetopoftheform.

Hereisoneexampleofahardshipletter:

Ref:Acct#009847234JohnM.&JaneS.Smith2342N.7thStreetSacramento,CA95811

DearWellsFargoBank,

Iamwritingthisletter,inreferencetomyaccountnumber#009847234andpropertylocatedat2342N.7thStreet,Sacramento,CA95811,toexplainarecenthardshipthatmywifeandIhaveexperiencedthathaskeptmefrommakingmymonthlymortgagepaymentsinatimelymanner.In2003,mywifeandIpurchasedourhomewithhopesofstartingafamily.Wehaveputallofoureffortsintomaintainingthehomeasresponsiblehomeowners.Ourhomepurchaseisalifetimeinvestmentforusandwedonotwanttoleave.

December1stof2009,IwaslaidofffrommyjobwiththeAcmeGroup.Sincethattime,wehavebeenusingoursavings,whichnowhasazerobalance,tooffsetmylossofincome.Wehavealsocutoutallofouradditionalexpensessuchascable,diningout,vacation,hobbies,andahostofotheritems.AsofJune15,2010,Iwillbestartinganewjobwithanothercompany.Ihaveattachedacopyofthecommitmentletterfrommynewemployerforyourrecords.Althoughthepayisalittleless,withthisincome,alongwiththechangeswehavemadetoourlivingexpenses,Iamveryclosetomeetingmyobligationsbutstillneedassistance.

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Irespectfullyrequestassistanceintheformofaloanmodificationforaperiodof5yearsataninterestrateof3.000%.Afterthefiveyeartermisover,Iwouldliketohavemyrateresetto5.000%fixedfortheremainderofmymortgageterm.

Currently,mymortgageinterestrateisat7.250%andhasapaymentof$1765permonth.Withareductionofmyinterestrateto3.000%andanewpaymentof$1234permonthIwouldbeabletomeetmycurrentobligationsandbeabletohaveasmallamountleftoverforemergencies.

Withthismodificationinplacewewillensureyourpaymentwillbemailedinatimelymannereachmonth.

Ifyouhaveanyquestions,concerns,orotheroptions,pleasecontactmeatyourearliestconveniencetodiscussthismatterfurther.Icanbereachedat916-555-1234,orviacorrespondenceatthepropertyaddress.

Sincerely,John SmithJane Smith

Step3-Authorization&CertificationForms

Thelenderwillhaveafewauthorizationtypeformsthatyouwillneedtoreviewandsign.Theseformsallowthelendertogatherorvalidateinformationaboutyoufromoutsidesourcessuchasyouremployer,yourbanker,orevenyourcreditreport.ThreeformsinparticularthatyouwillusuallyseearetheLender’sAuthorizationForm,CertificationFormandIRSForm4506-T.SometimesthelenderwillcombinetheAuthorizationandCertificationformsintooneforconvenience.

• AuthorizationForm o Allowsthelendertogatherorvalidateinformationaboutyoufromotheroutside sourcessuchasyouremployer,bankaccounts,creditreports,etc. o Signanddateattheappropriatespot.

• CertificationForm o Certifiestothelenderthattheapplicationyouaresubmittingtothemisasaccurateas possibleandthatyouhavenotfalsifiedanyoftheinformation. o Certifiestothelenderthatthesupportingincomeandassetdocumentsthatyouare sendingthemarecopiesoftheoriginalsandyouhavenotalteredthedata. o Signanddateattheappropriatespot.

• IRSForm4506-T o Thisformisanauthorizationreleaseformforthelender.Itallowsthelendertorequest atranscriptofyourcurrenttaxreturnsfromtheIRS. o Allowsthelendertocomparethetaxreturnsyousubmittedtothemwiththetax returnsyousenttotheIRS.Thisensuresallofthenumbersarethesameandthatnone oftheinformationhasbeenaltered. o Readtheinstructionstocompletetheform. o Eachborrowermustsignanddateattheappropriatespot.

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Step4-Gatheringandorganizingdocumentsforsubmission

NowthatyouhavecompletedthelendersFinancialWorksheet,HardshipLetter,AuthorizationandCertificationforms,andtheIRS4506-Tform,youarereadytogathertherestofthedocumentsandprepareyourrequestforthelender.

Mostlender’sapplicationswillprovideyouwithwhatiscalleda“submissionsheet”whichwillincludeinformationonwheretosendorfaxthedocumentsforreview.Theformwillusuallytellyouwhatordertheywouldlikethedocumentsin.Forinstance,thelendermightwantthefirstpageoftheloanpackagetobeyourFinancialFormorApplication,andthentheymayaskfortheHardshipLettertobeplacedbehindit.BehindtheHardshipLettertheymayneedyourbankstatements,andthentaxreturns,etc.

Makesureyoufollowanydirectionsfromthelender.Ifyoudon’t,itmaydisqualifyyourapplicationandyoucouldlosevaluabletime.

Step5-Thecoverletter

Everyapplicationsenttothelendershouldincludeacoverletterwhichaddressesmanyimportantitems.Thecoverletterwillidentifyyouandyouraccountnumber,propertyaddress,andmustprovidethelenderwithlanguagethatclearlystateswhatyouareaskingfor.

Hereisanexampleofacoverletter:

5/26/09

Re:Loan#0009586743BOOTH,JoanandRobert1432NorthStreetSacramento,CA95687

DearABCLender,

Pleaseacceptthisapplicationasrequestforreliefonmyexistingmortgage.IoutlinedmydiresituationindetailonthehardshipletterthatIhaveattached,andhaveincludedallofmyfinancialinformationasevidence.

Irespectfullyrequestaloanmodificationintheformofareductionininterestrateto3%for5years,fullyamortizedovera40yearterm.Uponconclusionoftheinitial5yearterm,Iwouldbeagreeabletoanincreasetoa5%interestrateamortizedovertheremaining35yearterm.Thisreductioninmyrateandtermwillallowmetheabilitytomakecurrentmonthlypayments.

Iamavailabletodiscussmysituationatanytime.Pleasecontactmeat(916)555-1234assoonaspossibleformoreinformation.

Thankyouinadvanceforyourassistance.

Sincerely,

Joan&RobertBooth20

Step6-Submittingyourrequesttoyourlender

NowthatyouhavecompletedthelendersFinancialStatement,application,andauthorizationforms,andhavegatheredalloftherequiredbankstatementsandtaxreturnsetc.,itistimetosendthefiletothelenderforreview.

o Makesurethatyougooverthefileonceagaintoensureyouhavecompletedallofthe informationrequired.

o Doublecheckyourincome,assetandliabilitiestoensureaccuracy.

o Makesurethatyouhavesignedanddatedalloftheforms.

o Makesureyousignanddateyourhardshipletter.

o Makesurethatyoudonotsendthelenderanyoriginalbanksstatements,W-2’sortaxreturns. Sendcopiesonly.

o Makesurethatyourloanpackageisintheorderthelenderrequires.

o Makesurethateachandeveryformthatyousubmittothelenderhasyournameandthe lendersaccountnumberclearlystatedonthetop.

o Makesurethatyoumakeacopypackageofalloftheformsthatyouaresigning.Alltoooften thelenderwillmisplaceyourdocumentsandyouwillhavetoresubmitaduplicatepackage.

Nowsubmitthefiletothelenderforreviewviafax,emailorUSMail.

Step7-FollowingUpWithYourlender

Nowthatyouhavesentyourloanpackagetothelender,youneedtoensurethattheyreceivedtheinformationandthateverythingisinorder.Callthelenderandverifythatthefilewasreceived.

Thefollowupwithyourlenderisgoingtobeoneofthemosttediousandtimeconsumingprocessesthatyouwilleverhavetoendure.Thisprocesswilltakeweeksifnotmonthstoaccomplish.Bepersistentandkeepmakingthecalls.

Somelendersarenotoriousforhavingablackholeintheirofficethateatsfilesandswallowsfaxes.Ifyoucontactyourlenderaftersubmission,andaretoldthattheyhavenorecordofyourrequest,don’tgetupset.Bepro-activeandsendthemanothercopyoftheoriginal.Consumershavereportedthatthiscanhappenmultipletimesonthesametransaction.Justrememberthatthelendersareoverwhelmedwithrequestsforassistanceandthattheysometimesdoloseinformation.

Ifthelenderconfirmsreceiptofyourloanpackage,asktherepresentativewhentheyexpecttoreviewyourrequest.Theyshouldbeabletogiveyouanestimatedtimeframeastohowlongitwilltakethemtoprocessandreviewyourrequest.Alsoaskiftheyhavehadachancetolookoverthefiletoensurealloftherequiredinformationhasbeenreceived.Theyshouldreviewtheinformationonthefilewithyoutoconfirmincome,assetsandliabilities.Theymayevenwanttoreviewyourhardshipandconfirmthereasonwhyyouneedassistance.Beopenandhonestwiththem.Onceyouhavepassedthisinitialinterviewprocess,yourfilewillbesentupforreviewbyaLossMitigationSpecialist.

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Eachandeveryweekyouwillwanttofollowupwiththelendertoaskforstatus.Callthenumberlistedontheirforms.Makesureyoutalktothepersonthatishandlingyourcase.Askthemforstatusonthefileonceagain,andhowlonguntilyourcasewillbereviewed.Astheweeksgobyandturnintomonths,youwillhavetokeepupthephonecallstoensureyourcasewillbereviewed.Justremembertheoldsaying,“outofsight,outofmind”.Ifyouarenotconsistentwithyourweeklycallstothelender,andpushthemtomakethisapriority,thenyourfilemaynotbelookedatforsometime.The“squeakywheelusuallygetsthegrease”.

Step8-IReceivedAnAnswerFromMyLender:WhatDoIDoNow?

Gettingananswerfromyourlenderisoneofthehardestpartsoftheprocess.Nowthatyouhavegottenthisfarandhavereceivedaresponseback,let’sdiscussthedifferentscenariosthatthelendermayrespondwithandwhatyouneedtodo.

Thelenderwillrespondbackwithoneofthreedifferentanswers.

• ApprovedAsSubmitted

• CounterOffer

• Declined

Approved as Submittediswhenthelenderhasapprovedyourrequestwiththetermsthatyououtlinedinyourloansubmission.ThelenderwillthencontactyouviathephoneorU.S.Mailtoconfirmthatyourrequestwasacceptedandwillreviewthetermswithyou.Theywillsendyouamodifiedloanpackagetoreviewandsignthatwillincludeallofthenecessarylegaldocumentsoutliningthenewtermsofthetransaction.Thelenderwilltypicallyaskthatyouincludeyourfirstpaymentwhenyousignandreturntheloanpackagetothem.Anotarymayberequiredtoacknowledgeyoursignatureonthedocuments.

NOTE:Aswithanylegaldocument,interpretationoftheinformationshouldbedonebyaprofessional.Makesureyouunderstandthedocument(s)thatyouaresigningandthatthetermsarewhatyouagreedto.Ifyouareunsureastothelanguageofthedocuments,thendonotsignthemuntilyouhavesomeonewhoisqualifiedtoreviewthemforyou.Ifyouarecomfortablewiththelanguageofthedocumentsandthetermsofthetransaction,thenproceedandsigntheformsrequiredbythelender.Justrememberthatonceyouagreetothetermsyouhavenorecourseandcannotchangeyourmind.

Nowthattheformshavebeensignedperthelender’sinstructions,makeacompletecopyforyourrecords.Thiswillensurethatifthefileislostyouhavearecordoftheinformation.Afteryouhavemadeacopy,sendtheoriginalformsbacktothelenderforreview.Oncetheyreceivetheformstheywillreviewthefiletoensureeverythingisinorder.Ifeverythingisinorder,theywillrecordthenewtransactionandyouwillbenotifiedbythemthatthenewloanhastakeneffectandyouwillbegiveninstructionsonwhenandhowtomakethenewpayments.Congratulations!Youhavesucceededingettingyourrequestapprovedandareontheroadtofinancialrecovery.

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Counter Offerisanofferbythelenderthatisdifferentthanyouroriginalproposal.Anexampleofacounterofferisifyouaskthelenderfora3%interestrateandtheyofferyou4%.Thisisconsideredacounterofferbythelender.

Ifyouhavereceivedacounterofferbythelender,itisagoodsignthatthelenderwantstoworkwithyou.Youwillneedtoreviewtheircounteroffertoensureyouunderstandthetermsofthetransaction.Ifyouareunsureastothetermsthenyouwillwanttocallthelenderforanexplanationorseekprofessionaladvice.

NOTE:Aswithanylegaldocument,interpretationoftheinformationshouldbedonebyaprofessional.Makesureyouunderstandthedocument(s)thatyouaresigningandthatthetermsarewhatyouagreedto.Ifyouareunsureastothelanguageofthedocuments,thendonotsignthemuntilyouhavesomeonewhoisqualifiedtoreviewthemforyou.

Ifyouagreetothecounteroffertermsthatthelenderhasofferedyou,youwillneedtonotifythelenderthatyouaccepttheiroffer.Nowthatyouwillacceptthetermsofthenewloan,thelenderwillforwardyoualoanpackagetosignandreturntothem.Makesurethatifanotaryisrequired,youhavetheformsnotarizedwhenyousignthem.Makeacopypackageforyourrecordsandreturntheoriginalstothelender.Donotsignthemwithoutanotarypresentorthelendermaynotaccepttheloanpackage.

Ifyoudonotagreetothecounteroffer,thenyouwillneedtosubmittothelenderacounteroffertotheircounterofferwithtermsthataremoreacceptabletoyou.Makesuretodocumentthereasonswhyyouareaskingthemtoreviewthiswithmorefavorableterms.Atthispointthelenderwilleitheracceptthecounterofferyousubmitted,orwillcounteragainwithanothercounteroffer.Youwillhavetodecideifthecounterofferisacceptableifthelenderdoesn’tacceptyourlastoffer.

Ifthefinalcounterofferisunacceptablebyeitherpartythenchancesareyouwillnotbeabletoaffordthehomeformuchlonger.Youmayhavetodisposeofthepropertyifforeclosureproceedingsarestarted.

Declinediswhenthelenderdeniesyourrequestforassistance.Thelendermaydenyyourrequestforoneormorereasons.Theymaynotifyyouverballyorviamailwiththeirresponse.Whenyoureceivetheirdecision,makesureyougoovertheinformationtofindoutwhytheywillnotapproveyourrequest.Ifyouareunsureastotheinformation,callthemandasksomeonetogoovertheinformationwithyou.Keepinmindthatlendersdomakemistakesandmisplaceinformation.Ifyoufindtheinformationthattheyusedindeterminingyoureligibilityisincorrect,makesuretopointitouttothelenderandprovidethemwiththecorrectedinformation.Thenaskthemtoanalyzeyoursituationoncemore.

Whywouldthelenderdenyyourrequest?

• InsufficientIncome

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• Nohardship

• Lackoffinancialplanningandbudgeting

• Incompleteapplication/missingdocuments

• Incorrectapplicationinformation

Ifthelenderhasdeniedyourrequestduetoinsufficientincome,youwillneedtoprovidethemwithadditionalsourcesofincomethatmayhavebeenoverlooked.Othertypesofincomecanbefromanyvalidsource.Didyouincludeyourtaxreturnrefundasincomeinyourmonthlyincomecalculations?Howaboutanyalimony,childsupport,separatemaintenancepayments?Anotherwayoflookingatthisistoreduceyourmonthlyliabilities.CanyoureduceoreliminateanyadditionalmonthlyexpenseslikecableTV,internet,diningout,extracellphone,gasolineetc.Gooveryourbudgetagainandseewhatyoucando.

Ifthelenderhasdeemedthatyoudonothavearealhardship,youwillneedtomakesuretheyunderstandyoursituationinmoredetail.Re-submitahardshipletterwithmoredetailsastohowyourhardshipisaffectingyouandyourfamily.Don’tgeneralize,beveryspecific.

Ifthelenderhasdeniedyourrequestduetolackoffinancialplanningorbudgeting,thenyouwillneedtogooveryourfinancesagaintocreateabetterbudgetandgetabettergameplantogether.Onceyouhavecompletedthisstepagain,youwillneedtoresubmityourapplicationwiththecorrectedinformationforthelendertoreview.

Sometimesthelenderwilldenyyourrequestbecauseofanincompleteapplicationormissingdocuments.Ifthisisthecase,thenyouwillneedtogatherthecorrectdocumentsandresubmityourcompletedapplicationtothelenderforreview.Makesuretousethelenderschecklistwhichidentifiestheitemsyouarerequiredtosendthemtoanalyzeyoursituation.Makesureallformsaredatedandsignedwhenappropriate.Ifthelenderasksforadocumentthatyoudonothave,youwilleitherhavetoordertheinformationorprovidealternativedocumentsthatareacceptable.

Anotherreasonalendermaydeclineyourrequestisduetoincorrectapplicationinformation.Itiseasytomakeamistakeonanapplication.Youhavetobepreciseincalculatingyourincome,assetsandahostofotheritems.Ifamistakeismadeandthenumbersdon’tmatchup,thelenderwilldeclineyourrequest.Ifthishappens,thenyouwillhavetofindoutfromthelenderwheretheyarehavingdifficultywiththeinformation.Youwillhavetoresubmitanewapplicationwiththecorrectinformation.Iftheerrorisminoranddoesnotaffectanything,thenthelendermayallowit.Butifyourincomeorothertypesofinformationisinerror,thentheapplicationwillneedtoberesubmitted.

Ifyoufindthatthelenderwillnotapproveyourrequestatall,nomatterhowmanychangesyouhavemadetomakeitwork,thenyouwillhavetomakesometoughdecisionsonwhatyouwanttodonext.Youcantrytostaythereuntilthelenderforeclosesonthepropertyandthenevictsyou,oryoucanbe

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proactiveandtrysomeoftheotherdispositionoptionsthatmayhelpyoursituation.Inthenextchapterwewilldiscusstheseoptionsindetail.

Step9-Whatifthelenderdeniesmyrequestsforassistance?

Therearesituationswherethelenderwillbeunabletoassistyouwithmodifyingyourmortgage.Theytypicallyproceedwiththeforeclosureprocessifyouarebehindinyourpayments.Whenthisoccurs,theconsumerisleftwithhavingtomakesometoughdecisionsonwhattodonext.Someconsumerswilltrytoprotectthemselvesbyfilingforbankruptcyprotection,butthereisnoguaranteeacourtappointedjudgewillbeabletosavetheirhome.Someconsumersdonothingatallfeelingthattheydonothaveanychoicesandthatthelenderisgoingtodowhattheywant.Somewillabandontheirhomes.

Ifyoufindyourselfinthissituation,thereareactionsthatyoucantakethatwilllessentheimpactthattheforeclosurewillhaveonyourcreditreport.Short-SaleandDeed-in-LieuofForeclosurearetwodispositionoptionsthataconsumermaybeallowed.

Step10-Short-SaleandDeed-in-LieuofForeclosure

AShort-Saleisasaleofyourhomeforlessthanwhatisowedonthenotethatisacceptedbythelender.Anexampleofashort-saleisiflowedthelender$200,000onmyhome,butmyhomeisonlyworth$150,000.Ashort-saleallowsmetosellthehomeformarketvalue($150,000)andthelenderwilltaketheshortpay-offaspaymentfortheamountyouowethem.Thishelpstheconsumerbyeliminatingtheforeclosureprocessandtheplacementoftheword“FORECLOSURE”ontheircreditreport.Italsohelpsthelenderbecauseiteliminatesthecostlyandtimeconsumingforeclosureprocessandplacesthehomewithaconsumermorecapableofmaintainingpayments.

Youwillhavetoaskthelenderforauthorizationforashort-sale.MakesureyouhavespokenwithaRealtorthatyouwanttoworkwithfirsttogetanideaofwhatthecurrentpricesareinthearea.Beawarethatyourlenderwillexerciseitsowndiscretionindeterminingwhetherandonwhattermstheywillallowyoutosellyourhomeshortofwhatyouowe.Iftheydeterminethatyouhaveacacheoffundssomewhere,orthatyourhardshipisnototherwiseasyoudescribeit,theyarewithintheirrightstorefusetoallowtheshortsaletoproceedwithoutyoupayingthetaxesorotherwisechippingintoalleviatethedeficit.

StartbycontactingyourRealtorandletthemunderstandyoursituationandwhatyouwouldliketodo.Theymayormaynotbeabletoassistyou.Iftheycannot,thenaskthemforareferraltoashort-salespecialistinyourarea.OnceyouhavedecidedonwhichRealtorwilllistyourhome,youwillneedtoprovidethemwithsomeofyourpersonalinformationsuchasincome,assetsandliabilities.Theyneedtohaveafullunderstandingofyoursituation.

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Thelenderwillhavealistofitemsthattheywillneedfromyouragent.Forwardthelisttoyouragent.Theywillcompletetheinformationandformulatetheirpriceopinionforthelender.Theywillalsoprovidecurrentmarketdataasproofofthevalueorlistingprice.Makesurethatthelenderreceivesthelistingagreement,andanysigneddocumentsrelatedtothetransaction.Ifyougetanofferonthehome,youwillneedtosubmittheoffertothelenderforimmediateconsideration.Theconsiderationprocessisasquickas30daysorcantakeupto3monthsforapproval.Youwillhavetobepatientduringthistime.(Oneofthebiggestissuesbuyershaveisthattheyareincapableofwaitingforsolongtogetananswerfromlendersespeciallyifittakes1-3months.)Yourgoalwillbetogetasmanyoffersaspossiblesubmittedtothelender.Thelenderwilldecideonwhichoffertotake.

Itisimportanttorememberthatthelenderwillnotstoptheforeclosureprocessifyouaretryingtoshort-sellyourhome.Thereisnoguaranteethatyouwillfindabuyerwithanacceptableoffer.Ifyoufindabuyerandthelenderacceptstheiroffertopurchase,thenyouhavesuccessfullyeliminatedtheword“FORECLOSURE”fromyourcreditreport.Ifyouhavenotfoundabuyerandforeclosureispendingthenyouhaveonemoreopportunitytohelpyoueliminatetheforeclosureprocess;Deed-in-lieuofForeclosure.

ADeed-In-LieuofForeclosureiswhenyouvoluntarilyturnthedeedtoyourpropertybackovertothelender.Thiseliminatestheforeclosureproceedingaltogether.YouwillneedtocontactthelenderandrequestaDeed-in-LieuofForeclosure.Thiswillallowthemtosetatimeanddateforsurrenderofthedeedandthekeystothehome.Althoughthisisnotaforeclosureinthesensethatthelendertookyourpropertyawaywithoutyourapproval,itisstillaforeclosureandwillreflectsoonyourcreditreportasvoluntary.

Youwillstillneedtoqualifyforthisprocess.Youwillneedtoprovidethelenderwithahardshipalongwithfinancialdocumentsshowingyourinabilitytocontinuemakingpayments.

Step11-Thelenderalreadyforeclosedonmyproperty,whatdoIdonow?

Ifthelenderhasalreadyforeclosedonyourpropertythenyouwillneedtomakearrangementstomoveoutofthehomeverysoon.Thenewownerwillwanttotakepossessionoftheirpropertyassoonaspossible.Thiscanbeabigproblemforyouifyoudonothaveanywhereelsetogo.Whatdoyoudo?

Atthisstageintheprocessyouhaveonly4choicestochoosefrom:

1. Donothingandwaittogetevicted.

2. Callthenewownertoaskifyoucanrentfromthem.

3. Packupyourthingsandmoveoutquietly.

4. AskforCash-For-Keys.

Ifyoudonothingandwaittogetevicted,theownerwillhavetofileevictionpaperswiththelocalcountySheriff’sofficetogetthemtopostanevictionlettertoyourdoorgivingyouonlysomuchtimeto

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vacatethepremises.Onthedateofeviction,ifyouarestillinthehome,theSheriffwillforcefullyremoveyoufromtheproperty,alongwithallofyourpersonalbelongings.Ifyoudonotleavequietly,youcanbearrested,andyourpersonalitemswillbeleftonthedrivewayforyoutopickupatanothertime.Additionally,youmaybeliableforanydamagestothepropertyifyoureturnwithoutpermission.TheSheriffwillnotberesponsibleforanytheftofyouritemsthatwereremovedfromtheproperty.

Secondly,youcanalwayscallthenewownerandasktorenttheproperty.Youmayfindthatthenewownermaybelookingforrenters.Ortheymaybeabletoworkwithyouonanextendeddateandtimetomoveout.

Youcanalwayspackupyourthingsandmoveoutasyoudowithanyotherhouse.Thisisthesimplestofalloptionsandallowsthebuyeraccesstotheirpropertyimmediatelyandeliminateseviction.

AnotheroptionthatisgainingmorepopularityistheCash-For-Keysrequest.Cash-For-Keysisjustthat,cashfromthelenderwhenyouturninyourkeysbacktothem.Theprogramallowsthatifyourhousehasbeenforecloseduponandthelenderneedstogetyououtofthepropertysotheycanresellit,theymayofferyouacashincentivetomoveoutonacertaindateandtoensurethatthepropertyisnotdamageduponleaving.TheytypicallyhavetheRealEstateAgentwhowillbelistingthehome,handlethetransactionforthem.AnexampleofaCash-For-Keystransactionisasfollows:

ABCBankhasforeclosedonHarold’shomeandwouldliketotakepossessionimmediately.AlthoughHaroldisveryangryaboutthesituation,heunderstandswhatthelenderneedstodoandthatheneedstomove.HaroldcallsthelenderandasksiftheycanprovidehimwithaCash-For-Keysofferforvacatingthepropertyearly.Consideringthetimeandcostoftheevictionprocess,thiswillbeinthebestinterestofthelender.ThelenderwillofferHaroldafeeforvacatingthepropertyearlyandforkeepingthepropertycleanforthenewowner.TheywillagreeastothetimeanddatethatHaroldwillmove.Uponmoving,theRealtorwhowilllistthehousewillcomebyandinspecttheproperty.Ifthereisanydamageorifthepropertyisdirtyandneedstobecleaned,Haroldwillnotbegivenacheckforvacatingthepropertyandwillberemovedimmediately.Ifthereisnodamageandthepropertyisinmove-inconditionthenHaroldwillbegivenacheckwhenheturnsoverhishousekeystotheRealtor.JustrememberthatthemoreyouworkwiththelenderandRealtor,youwillhaveabetterchanceofgettingCash-For-Keys.Wehaveseencashincentivesofupto$3000.Asalways,thisisnegotiablebetweenyouandtheagent.Thisoptionmayormaynotbeavailablefromyourlender.Itneverhurtstoask.

Nowyouhavetheknowledgeandguidancetoperformyourownsuccessfulloanretentionorhomedispositionwithyourlender.Alwaysrememberthatifyouareunsureoftheprocessorthedocuments,seekthehelpofaprofessional.

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ADDITIONALRESOURCESIncludingFREEandNon-ProfitAgencies

HopeforHomeowners http://www.hud.gov/hopeforhomeowners/

HopeNow 888.995.HOPE http://www.hopenow.com/

MakingHomeAffordable http://makinghomeaffordable.gov/

FreddieMac http://www.freddiemac.com/

FannieMae http://www.fanniemae.com/index.jhtml

FHA/HUDCounselors 800.569.4287 http://portal.hud.gov

VA http://www.va.gov/

DebtCollectionsInformation 877.FTC.HELP http://ftc.gov

ConsumerCreditCounseling 77.337.6363 204MarshAve,3rdFl,Reno

NevadaAttorneyGeneral 775.684.1100 http://ag.state.nv.us/

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