of America, LLC

A loan modification is a significant transaction. When handled successfully, it can solve a huge problem for you and your the owner of your mortgage. Negotiating a loan modification is a lengthy process. The time required to communicate with your mortgage service company is enormous. Keeping the loan modification on track requires patience, tenacity, consistency and a system. Our system makes it difficult for lenders to avoid ‘doing the right thing” for you.

• Fix mortgage payments
• Reduce interest rates
• Lower mortgage balances
• Refinance at 90% of the present value of the house

Using All Available Options
As a Florida correspondent lender, we are licensed to negotiate mortgages. Generally, our company is already a correspondent lender with your mortgage lender. This relationship makes it easier for us to communicate effectively with your lender. Negotiating effectively means using all the appropriate options which are available to you and found in:

• Freddie Mac Loss Mitigation Guidelines
• Fannie Mae Loss Mitigation Guidelines
• RESPA Section 6
• Fair Debt Collections Practices Act
• Home Affordable Mortgage Program
• The loss mitigation guidelines for your mortgage

Recognizing your hardship as one of the nine regulatory hardships is a powerful tool requiring lenders to respond quickly. A regulatory hardship combined with a ‘qualified written request’ means:

• The lender must respond in 20 business days
• Your file gets more focus

Loss Mitigation Guidelines require lenders to engage in meaningful loss mitigation activity before initiating a foreclosure. Generally, guidelines require foreclosure be initiated only when all loss mitigation options have been exhausted and the borrower does not want to remain in the home. For a lender to not engage in meaningful loss mitigation is for the lender to participate in an unfair trade practice.

Most loss mitigation guidelines require the mortgage to be delinquent before it can qualify for a loan modification.  A loan is delinquent when the payments have not been made or if partial payments were made.  When the loan is not paid on time it is delinquent.  In some cases, a loan may qualify for a modification without it being delinquent.  The loss mitigation guidelines for the mortgage will determine which mortgages can qualify while being current. 

Most lost mitigation guidelines provide several programs to help the borrower and the Lender workout a solution to get the loan back on track.

Repayment Plan
A repayment plan is an agreement that gives the borrower a fixed amount of time to bring delinquent mortgage payments current by paying the normal monthly payment plus an additional amount. A repayment plan can stand alone as a relief option or can be combined with short-term forbearance, long-term forbearance, or a partial reinstatement.
 

Short Term Forbearance
Short-term forbearance is a written agreement to temporarily let a borrower pay less than the full amount of the monthly mortgage payment, or pay nothing at all during the forbearance period. Payments may be suspended for up to three months or reduced for up to six months from the date of the agreement. At the end of this time, the borrower must bring the mortgage current through payment in full or begin a repayment plan or pay off the mortgage in full. To qualify, a borrower must meet the financial hardship criteria or have a signed sales contract for the sale of the home. Freddie Mac’s approval is not necessary.
 

Long-Term Forbearance
Long-term forbearance is an agreement to temporarily let a borrower pay less than the full amount of the mortgage payment, or pay nothing at all during the forbearance period of up to twelve months from the date of the agreement. At the end of the forbearance period, the borrower must either bring the mortgage current, begin a repayment plan or pay off the mortgage in full. Long-term forbearances are typically granted when
• the property was damaged by a disaster, causing financial hardship
• a borrower is waiting for an outstanding major medical claim, causing financial hardship
• a borrower is deceased and the estate is in probate
 

Loan Modification
A loan modification is a written agreement between your mortgage service company and the borrower that permanently changes one or more of the original terms of the mortgage note. Some modifications include:

• reducing the interest rate
• changing the term
• fixing interest rate
• changing the type of mortgage
• capitalizing the arrears
• permanent reduction of the unpaid principal balance is allowed.

To qualify for a loan modification, most guidelines require the Borrower to verify:

• financial hardship
• an allowable reason to warrant the modification
• stable income to support some level of monthly payment

Mortgage Assumption
A hardship mortgage assumption permits a qualified applicant to assume both the title to the property and the mortgage obligation from a borrower who is currently delinquent in the mortgage payments or in imminent danger of default. The current borrower must show financial hardship.
 

Deed In Lieu of Foreclosure
A deed in lieu of foreclosure is a workout option in which a borrower voluntarily conveys clear property title to the Lender in exchange for a complete discharge of the debt. The mortgage service company must determine that no other workout options are appropriate and the property has not significantly deteriorated.

Aside from relieving you from the time to maintain contact with lenders you can count on our support to let you know:

• the mortgage will qualify for a loan modification
• the mortgage restrictions for loan modification
• you will qualify for a loan modification

Impact on Credit Scores
Credit scores are a function of the number of on time payments over a period of time. While not paying a mortgage will lower a credit score, by itself it should not cause the credit score to plummet 300 or 400 points. When the on time mortgage payment resume, the credit scores should rebound.

Foreclosure
Most mortgage loss mitigation guidelines require the mortgage service company to initiate foreclosure within 90 to 120 days from the time the mortgage becomes delinquent. Receiving a foreclosure complaint can be an anxiety provoking experience but it need not be. It most cases, responding to the complaint will give the property owner time to conclude the loan modification. Generally, in judicial foreclosure states like Florida, receiving the foreclosure complaint is the first in a long series of steps before a property owner might be asked to leave the property. In the current judicial climate, the courts are more disposed to helping property owners keep their property.

It is best to respond to the foreclosure complaint and take advantage of every protection the law provides. Not responding gives all the power to the mortgage note holder. Responding gives the property owner power. Responding helps improve the property owner’s negotiating position with the mortgage service company.

The best defense is a strong offense. Knowing the rules can help the property owner create a stronger negotiating position for the property owner.

Partial Payments
It is better to make a partial payment than no payment. Making a partial payment is a clear way of showing the property owner is a willing and cooperative borrower. It is an indication of good faith showing the borrower is doing the best possible under a difficult situation.

Making no payment sends a negative message to the mortgage service company and the mortgage note owner. They may interpret non-payment as an attempt to ‘take advantage of the system’. Generally, many mortgage service company employees believe it is possible to pay something, even a small amount. Paying nothing may be understood as the borrower wanting the mortgage note owner to accept the complete burden for the borrower’s difficulties.

Application Fee
The application fee is due only after we have communicated with your mortgage service company and let you know the mortgage will qualify for a loan modification and you decide you want us to help you modify your mortgage. The $500 application fee is not refundable.
 

Mortgage Brokerage Fee
The mortgage brokerage fee is 1% of the existing mortgage. It is payable when your mortgage note owner agrees to payment plan for a loan modification. You will be able to pay the brokerage fee in 6 monthly payments.

Step 1 Determine available options
 

Getting your lender to communicate and negotiate with us is the first step. Your authorization will allow the lender to communicate with us. It will let us get the name of the investor for your mortgage and the available loss mitigation options. Once we know your lender is open to a short sale we will help you prepare a loan modification application. Generally, it takes 2 to 4 business days from the day we fax your authorization to your lenders before your lender can communicate with us about your mortgage.
 

Step 2 Prepare Application and Submit Application
 

The non-refundable $500 loan modification application fee is due only when your Lender confirms they are open to a modification for your mortgage. At that point we will begin helping you to prepare a loan modification application. It generally takes 20 business days from the time a Lender receives a complete application, to assign your application to a negotiator for review.

Application Preparation
An application must meet both regulatory requirements and lender loss mitigation guidelines. The guidelines vary from lender to lender and for individual mortgages. Lenders modify mortgages on a case by case basis and we will assist you in preparing a:

• detailed personal financial statement.
• hardship letter
• arms length sale certification
• short sale request
• seller’s estimate of value

Hardship Letter
There must be a hardship to qualify for a loan modification. A Borrower is considered to have an involuntary inability to pay if he or she does not have the ability to make the monthly payments. Hardships are based on an involuntary reduction of income due to:

• Business Failure
• Casualty Loss
• Unemployment
• Curtailment of Income
• Distant Employment Transfer
• Death in Family
• Death of Mortgagor
• Illness in Family
• Illness of Mortgagor
• Divorce or separation
• Military Service
• Interest Rate and Payment Adjustment
• Fraud

Feedback about your hardship letter is important. You can count on us to give you useful feedback in reviewing your hardship letter.

Application Submission
Once your application has been prepared, it will be sent to your lender. Every page on the application will be identified with your loan number and name. Two important tasks remain after the application package has been sent to your lender.

Confirm receipt of the application
Lenders often lose or misplace documentation. Follow up calls are made to the Lender requesting verification they have received the documentation and have included the documentation in their file. Missing documentation is resubmitted and reconfirmed. Often, several calls must be made until we get confirmation your documentation was received.

Verify completeness
As loan modifications are approved on a case by case basis we will confirm the completeness of the application with your Lender. Should additional documentation be required, we will help assemble it, transmit it and verify it has been received.

Transaction log
Every interaction with the lender is logged into our system. A detailed record of the date, time and contact person is maintained for application. The log prevents your lender from fostering misinformation while allowing us to enforce the lender’s commitments. It prevents lost time from conflicting directives and information by individual lender employees.
 

Step 3 Getting the lender to focus on the file
 

Lenders are overwhelmed with loan modification requests. Lenders are dealing with almost 8,000 foreclosures a day. The total number of requests for loan modifications is much higher. Many loss mitigation departments have to deal with more than 10,000 fax messages a day. Getting the lender to focus on your specific file is a vital part of the short sale process. Two techniques to get your lender to focus on your file are the Qualified Written Request and a forensic audit of the mortgage.

Qualified Written Request
The Real Estate Settlement Procedures Act provides for a privileged communication between you and your lender. It requires the lender to respond within 20 days of the receipt of your request. Used in conjunction with a regulatory hardship, a qualified written request can:

• Force the lender to accept an application for loan modification

• Force the lender to focus on a application for loan modification

• Suspend, delay or stop foreclosure activity

• Suspend the requirement of the borrower to make mortgage payments

Forensic Audit
Often, there are TILA and RESPA violations in your closing documents. Making the lender aware of the violations helps to create focus for a loan modification application.
 

Step 4 Application Acceptance
 

The next step in the process is to get the Lender to accept the application for a loan modification.   Generally, it takes up to 20 business days from the time the application is accepted for review for the Lender to decide if a borrower and mortgage qualify for a modification. Often, with the acceptance of a modification application, a lender may suspend foreclosure activities. This removes the threat of foreclosure and allows the borrower time to complete the modification without the threat of foreclosure.
 

Step 5 The Modification
 

Pre-Modification Payment Plan

For most mortgage guidelines, qualifying for a loan modification requires the mortgage to be current and a current on time payment history for the loan. This is accomplished by using a special forbearance plan. It will allow the loan to become current and create an on time payment history for the mortgage. The forbearance plan has two features:
• A monthly payment the borrower can afford.
• Four to six payments.
• A balloon payment for the balance of the arrears.
The monthly payments create the necessary on time payment history. The balloon payment brings the mortgage current. A second payment plan may follow the first payment plan. The second plan generally has a monthly payment very close to the payment in the modified mortgage.

Mortgage Modification Agreement

Everyone knows ‘it’s not over ‘until it’s over’. Expect our support to continue until the final modification is signed. Lenders are plagued with confusion and mismanagement even at the close. Count on our help to be certain the final mortgage terms are consistent with prior agreement and understanding.
 

Modification Review
Hidden, new and additional lender fees sometimes find their way to a loan modification. Making certain the modification is consistent with the commitment the lender has given us will protect you.
 

Lender's Modification Fee
Some final agreements may include a Lender processing fee.  Generally, the processing is between $300 to $500.