Wanted: Loan Modification Nuggets

Got ?

I am in a synergy group of bank employees- some employed and some not :( I have just submitted the question below and I will post the results here. I am looking forward to sharing my findings as this becomes a mainstream issue and limited solutions including the $4000 "we'll try" offer.

If you or someone you know has a NUGGET to share feel free to post!

So here is my post to the Bankers "What an experienced group- You guys could gather tomorrow and have a functioning bank by Friday! So....in order to fully take advantage of my opportunities:) I am asking for a huge favor of sharing a couple stories, comments, advice, or "did you knows" on Loan Modification. I plan on offering weekly training sessions on this topic and I am trying to put together an accredited training course for Realtors."

Let me break the ice and be the first to this thread....

Did you know that a loan mod cannot be completed on a option arm unless they are severely delinquent or the loan has recast. Ernie from HOMEQ stated "we have a few investors but mainly Barclay's (Mortgage Backed Securities (MBS)) and that is the one things that we can't touch since the minimum payment is already an option. Sadly he stated that people are calling in stating they paid $3500 for a loan mod and nothing has happened only to find out nothing never will happen.

Help the drive for the 4.5!

Hello Everyone,

I have spent the last year working on assisting my Realtors close deals pertaining to short sales and learning and collecting as much information about that topic from every source known by man in this arena. The results have been that many people did a short sale and a loan modification could have been the answer instead.

As a result of these findings I have just completed a very thorough compilation of interviews, facts, findings, secrets, ingredients, loopholes, and strategies to educate a home owner on their options.

This is a "turn key" loan mod kit that is more complete then 90% of the loan modifications that are starting to pop up from the same slime balls who put the people in the "Prime America" friends/family loved ones loan at a 10.5% 30 yr fixed with a 5 year prepay! UUGGGHHH! Don't let the cancer continue. These people need solutions and tolls to educate themselves.

So if you are a Realtor that would like to be the subject matter expert in your area, a lender that is interested in doing what is right for the people or a person that just needs some help on their own transaction this could be for you.

I have prepared this for my local area and wondering who else would be interested in something like this to offer to their circle of clients, friends and family.

It's a complete turn key system that is EXACTLY what each investor/bank/lender needs to make a decision. I have a Powerpoint presentation together for Realtors that teach them the highlights of a loan mod. It can help educate the clients on their options and can even be used to assist them in a short sale situation in which all lenders require a form of a loan modification to be completed in order to successfully agree on acceptance.

The key components is:

Hardship- Samples and template with instructions to complete a hardship letter

Value- Instructions on finding a CURRENT value- (Secret of adding a couple legitimate repair quotes for repairs to reduce even more)

Income- Software that takes income - expenses = current debt and figures out options to make loan modification within benchmark guidelines (37% IS THE KEY)

Proposal Sample- "Mr. Lender- Based off the facts I have submitted I request my loan to be modified at __% of an interest rate, my last 6 months be added to the back of the loan, all my late fees to be forgiven and my first payment is due 30 days from mutual acceptance. * I can also make a $3000 payment upon receiving a successful fax that removes my late payment history with the creditors.

Accept this or take this!

Case studies- I have asked my local Realtors that are involved in the short sales to allow me to document the losses that each lender has encountered over a short sale or a foreclosure. So instead of using generic data I teach the client how to use specific area findings and documenting the losses of transaction when loan modifications were not successfully completed.

I teach how to show the difference between modify, short sale or foreclosure. When correctly addressed my clients are showing a minimal loss compared to 30-50% loss if the loan modification does not work. But the real issue is more of the big picture which is resulting in neighborhoods being effected, increased divorces, increased depression and the country slowly bleeding to death as a result.

I hope I can save one house at a time and offer as much support and education to each person in need. I will share more as I continue the fight. I am working with a law firm in order to legal issues on this and hope to be able to offer this as soon as possible. I look forward to improving this market one home at a time.

Bill Black CMP

360-326-8891

williamblack1@comcast.net

“What Every Investor Needs to Know About

Short Sale Investing During the Summer of 2008”

With the number of foreclosures and short sales on the rise, investors are doing more and more short sales out of need more than desire. The days of numerous sellers with loads of equity seem to be few. As we continue to invest through this declining market cycle, we must pull out our short sale tools, sharpen them and get to work creating equity.

In answering student questions, we find that so many hit the same roadblocks.

In this special report, you will learn tips to avoid some of the common pitfalls short sale investors fall into. As you work on short sale transactions, keep your focus on the overall picture – getting to closing.

To help you focus, read the following tips and immediately put them into practice.

Pipeline – your pipeline must be filling up regularly. Your pipeline is what you fill with deals. You can never turn off your “finding” machine. As you continue to “find” deals, you will continue to fill your pipeline. As you work on them, by sheer statistics alone in this business, some will fall apart. When you only work a few, your chances of closing all of them are slim. That’s why it’s imperative to work smart. A proper pipeline has deals coming in, deals in transition and deals closing, all at the same time. A big investor mistake is stopping the finding process when they begin to work on just one deal. If that deal doesn’t close after a few weeks of attention, they must “find” all over again. This is a huge waste of time. Know your Target – what are your choice deals? For investors, short sales with motivated sellers who aren’t looking for sale proceeds and have a home in bad shape, along with other criteria pertaining to their loan, is the “target” short sale customer. Short sales other than those are a waste of time and will only fill your pipeline with “work” that produces little fruit. As investors looking for large equity spreads in order to create cash flow or profit on fix-up and resale, the deeper the short sale, the better. That’s tough to get on pretty homes, so unless there’s a specific reason for taking the pretty house as a short sale, we pass. It’s important to know your target seller, target buyer, etc. When you can target the appropriate audience, it saves time and that saves money.

Organized – organization is a must as you fill your pipeline and phones are ringing and paperwork is everywhere, especially when you work with staff or partners too. Keep your files labeled consistent with either all addresses or all client names (don’t do some one way and some another); be sure loan numbers are easily found, and whether the seller has one or two mortgages is clear. Use a phone log to keep track of every conversation you have with the lenders and sellers in each file. Anyone who picks up a file in your office should be able to handle the incoming call or question as to the next step. As tough as it sometimes is to actually get the loss mitigation representative on the phone, you don’t want to lose the chance to move a deal forward because the rep can only speak with one person in your office.

First payment default – Be sure to ask important questions to a short sale seller. Questions such as “Do you understand the short sale?” “When did you originally obtain the loan in question?” and “When did you make the last payment on this loan?” Many lenders are insured against first payment and first year defaulting loans. They are either made whole or able to give the loan back to its originator or note seller. That being said, it’s usually a waste of time to work on a short sale where the seller began missing payments in their very first year of the loan. It’s obvious that knowing this before starting on the deal will save you plenty of time.

Loan type – finding out what loan type the seller has is important also. Knowing this upfront gives you an edge on negotiations and offer price. Reviewing the seller’s loan documents is one way of finding out. Another is by calling the lender and asking. For example, if the loan is FHA insured, then you know upfront the lender will accept approximately 80% of today’s appraisal. If that discount won’t work for you, you save time by not even starting on the deal.

Loan insurance - some mortgages are insured by private mortgage insurance, called “PMI”. When you review your seller’s mortgage payment coupon or statement, you will usually see a line item for PMI, which is included in the seller’s monthly payment. You can also ask the lender if the loan has PMI. This insurance protects the lender from default. Again, the lender is insured to a certain percentage of the property’s value or loan amount. It’s your job to find out that percentage by inquiring with the lender. If that percentage will work for you, then proceed with your offer according to the insured percentage amount. If not, don’t get involved and save yourself time and work.

Knowing the loss mitigation representative – as you work on short sales, you’ll begin to work with sellers who share the same lenders. As you begin to develop working relationships with loss mitigation representatives, especially as your short sales close, you can request that specific rep on your next file. When the rep recognizes it’s you again, you can cut through so much of the paperwork right up front. The rep can tell you where the lender needs to be – price wise. This is a tremendous savings on your part. If you’re new to short sales but know investors who are already working with lenders, ask them for a referral introduction on the deals you are getting started with. This can save you a huge amount of time and work. Building a relationship – it’s imperative you build a great relationship with those who can help you get to closing quickly. When you close a short sale transaction with a lender, be sure to send a great Thank You to the loss mitigation representative that helped you get it closed. They normally receive bonuses for closing these but when you send a letter of recommendation, a thank you card or gift, they will remember you forever. That makes your next deal(s) even sweeter to work.

Lender’s short sale package – each time you work with a new lender on a short sale, they will either fax or mail you or the seller their short sale paperwork for completion. It’s important that you receive this package each time you work with a lender new to you. This expedites the process of putting your paperwork together with the seller. When the seller tells you that they have a loan with ABC Bank, you will already know that ABC Bank does short sales and will not have to wait 24 hours or more to receive their forms. You can keep files with the forms, requirements and contact numbers of each lender. This will be very helpful and appear professional to the seller. Some lenders require a notarized authorization form and have their own form too. You will have their form and be prepared with a notary.

Challenging the BPO– many lenders today are ordering two and three BPO’s per short sale. A BPO is a broker’s price opinion. When you submit a short sale, the lender hires a real estate agent, broker or appraiser (depending on loan type) to see the property and give their expert opinion of value. This opinion helps the bank determine their acceptance of the short sale. Many lenders won’t re-order a BPO just because you didn’t like it until about five or six months later. If the property hasn’t gone to foreclosure yet, you still have a chance to wait it out and hope for a more realistic BPO. You can also challenge the BPO by having your agents prepare a BPO or by hiring your own appraiser. When time is of the essence, you may have to spend a few bucks to make your point.

Work smart – no matter how you slice it, it all boils down to working smart rather than working hard. As you close deal after deal, you will become more and more organized as well as experienced. With your experience, you can train others to assist you – make them partners or employees. It’s easy when you don’t try to re-invent the wheel where proven systems have already been created. That’s really working smart.

Don’t wait to get started with short sale investing. Now is the time to buy and smart, savvy investors are doing just that. Sellers and banks are motivated so you should be too. Short sales are a great way to create equity where none seems to exist. We wish you the best in creating your equity and growing your wealth.

Bill C. Black, CMP

Mortgage Planner/Short Sale Financing Expert

America One Finance

If you are looking to do a loan modification on your own this may help... if you need professional support feel free to email me-

Bill Black

What Banks Look For

"Remember, the guy who writes the bank's advertisements is not the same guy who approves your loan." — Anonymous

Whether you are applying to a bank for a line of home equity credit, a line of credit for business working capital, a commercial short-term loan, an equipment loan, real estate financing, or some other type of commercial or consumer loan, many of the same basic lending principles apply. The most fundamental characteristics a prospective lender will want to examine are:

• credit history of the borrower
• cash flow history and projections for the business
• collateral that is available to secure the loan
• character of the borrower
• loan documentation that includes business and personal financial statements, income tax returns, and frequently a business plan, and that essentially sums up and provides evidence for the first four items listed

The first three of these criteria are largely objective data (although interpretation of the numbers can be subjective). The fourth item, the borrower's character, allows the lender to make a more subjective assessment of the business's market appeal and the business savvy of its operators. In assessing whether to finance a small business, lenders are often willing to consider individual factors that represent strengths or weaknesses for a loan. Also consider our discussion of how banks judge your application.

Bank Loan Documentation

The process of applying for a loan involves the collection and submission of a large amount of documentation about your business and yourself. The documents required usually depends upon the purpose of the loan, and whether your business is a startup or an already-existing company.

For startups. A bank will typically request, at a minimum, the following documentation for a startup business:

• a personal financial statement (usually lender's own form) and personal federal income tax returns (one to three years)
• projected startup cost estimates
• projected balance sheets and income statements for at least two years
• projected cash flow statement for at least the first 12 months
• evidence of ownership interests in assets (e.g., leases, contracts) and collateral
• a business plan that includes a narrative explaining the specific use for the requested funds, how the money will assist the business, and how the borrowed funds will be repaid (repayment sources and duration of repayment period). Any assumptions used in developing your projected financial statements should also be identified. A personal resume, or at least an written explanation of your relevant past business experience, is often submitted with, or in addition to, the business plan. Letters of reference recommending you as a reputable and reliable business person may also help your chances for a loan approval.


How Banks Judge Your Application

Traditionally, banks focused more upon collateral than any other factor in making loans; however bankers now claim that lending competition has forced them to focus more on a business's ability to repay the debt as it comes due, rather than the collateral securing the loan.

For short-term debt, the cash flow statement and projected income and balance sheets will be most relevant. The institution will want to know what the funds are being used for and whether the business's earnings will be sufficient to repay the loan. Banks do not want to enforce their rights to foreclosure or repossess collateral, and such actions merely highlight a poor lending decision. Nevertheless, banks still place considerable emphasis upon collateral, especially when the projected cash flow of the debtor is as fragile as it often seems to be in a small business.

The lender will dictate the repayment terms of your loan, but your explanation of the source of the funds for repayment and how you will manage your overall debt will be crucial to the lender.

Some lenders rely heavily upon certain financial ratios, such as debt-to-equity, quick ratio, current ratio, etc., in assessing the creditworthiness of a prospective borrower. With many small businesses, however, these ratios may misrepresent the overall value of the enterprise. The most important assets of a small business are often the experience of the owners, the potential value of prospective customers, and other non-balance sheet items. In addition, because of tax or strategic business purposes, some entrepreneurs may choose not to list assets on personal statements or they may list important assets on the financial statements of different businesses that they own. In these situations, the financial ratios of the borrowing company may be understated.

Bill BlackCMP

Certified Mortgage Planner

360-910-3290C 360-326-8891 O

www.aofdowntown.com