Step 3: Working with your bank What you must know first before you initiate contact with them

When dealing with your lender in the process of applying for a loan modification it is essential for you to understand who it is you are dealing with and what they are going to require of you prior to granting a loan modification.

First and foremost: The bank is a debt collector and will be recording your conversations. Anything you say can and will be used to facilitate the collection of the debt.

How to talk with your lender:

Read this report before talking with your bank:

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•You will have to provide a complete loan modification application including the following;
•A hardship statement explaining the reason you are no longer able to make the mortgage payments. This would include your loss of income, the increase in expenses, and circumstances that brought your to this point.
•A financial worksheet that details your income, expenses, assets and liabilities. They will use this to determine if you fit into the qualification guidelines discussed  in the “Do I Qualify” page.
•Documentation of your income in the form of your past two months bank statements.
•Bank Statements for the past two months.
•Tax returns for the past two years.

The bank will send you a short sale application which may take two to 4 weeks and multiple calls and hours of hold time to receive.  All lenders require the same information so you can short cut this process by completing this application and having it ready BEFORE contacting the bank.

Download the Loan Modification Application:

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The banks are professional debt collectors and their system has been set up with only one objective: reduce the banks financial losses.  Your experience will likely include many of the following:

• Very long hold times each time you call. Some of your calls will end up at full voice mail boxes, dead ends, or in endless phone system loops that take you in circles.
• Every time you call you will have to go through a litany of repetitive recitations of who you are, your account number, social security number and so on.
• Changing personnel as you move through their system. New contacts will claim not to know what was said by the previous person and dismiss any progress made with them out of hand.
• Conflicting representations and policies depending on who you are talking with.
• Lost documentation. Your application may have to be sent in repeatedly before they acknowledge receipt.
• Different departments calling you with different agendas at the same time. The retention department may be processing your application while at the same time the collections department is harassing you for immediate payment. Each will make different claims about your status.

The system is designed to wear you down to the point where you just want it over and will accept whatever they offer. Sound frustrating? That the intent! How do you counter these and the many other tactics they employ?

1.Remain patient and persistent at all times! This cannot be over stated.
2.Keep records of who you talk to, their position, direct line, email, direct fax number and what was said.
3.We’re not telling you this to dissuade you from attempting you to get a loan modification but to prepare you for what lies ahead and to maximize your chances of SUCCESS!
I designed the following download to make this much easier, with all of your records and information in one place.
Dowload the Homeowner Loan Modification Kit

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The banks will use a variety of professional negotiation tactics, here are a few do’s and don’ts when engaged in the negotiation. Negotiation? Absolutely, you are negotiating to modify the terms of a legal contract and you are proposing the bank take less than what you owe. They have no intention of making this easy!

The Trial Period

If you have missed a payment the banks, in most cases, are going to require that you enter into a trial period where you will be required to make 3 consecutive monthly payments on time before your loan modification will be seriously considered.  This is consistent with the guidelines set out by the Treasury Department and adopted by Fannie Mae and Freddie Mac through the Making Home Affordable program.

 Understanding the Trial Period

The Home Affordable Modification Program requires borrowers to enter into a Trial Period Plan before receiving a permanent Home Affordable Modification. During this period, borrowers must submit trial payments and all required forms and documents.

Important Notice for Borrowers Who Received a Trial Period PlanYou must make sure that your mortgage servicer receives all of the forms and documents they need to verify your eligibility and offer you a permanent modification before your Trial Period Plan expires. Your trial period plan notice will indicate your document due date.

If you believe that you have sent all of the required forms and documents, contact your mortgage servicer to confirm that they have everything they need to make a decision.

Step 4: Working with a loan modification Company