How long does it typically take to get a modification done?
The average modification takes 90 days.  We have done modifications in as little as 18 days, but this rare.  It will sometimes seem like nothing is happening because the weekly updates will continue to be the same.  However, once a negotiator is assigned the process will move a little faster, but investor approvals can slow it down once again. 

What happens to a file when it’s with a Team 72 Processor?
The Team 72 Processor will first submit the Limited Power of Attorney (LPOA) to the client’s bank.  They will check back with the lender in 3 days to verify receipt of the LPOA.  During those three days (or more if necessary) they will be reviewing the client’s budget and hardship explanation to develop the strategy that they will present to the lender for modification. This takes a thorough analysis of the client’s financials and how they fit with the client’s particular hardship.  Once they’ve submitted a package for review by the bank, they are tracking the progress of the file while with the lender.

What happens to a file once it’s submitted to the lender?
Once the lender has received the file, it will be entered into their computer systems.  All banks vary on the timeline here, whether they assign it immediately to a negotiator or whether the file makes its way through the many levels of review before actually being assigned to a negotiator.  Either way, there is not much decisive activity until it reaches a negotiator and is analyzed by them.  They will review the file in depth, they will most likely pull credit, if it wasn’t done already, they will request some kind of property report, but only in extreme cases will they actually order an appraisal.  They will note in the file if more documentation is needed, but they will rarely contact you or anyone else. It is up to the Processor to maintain consistent contact with the bank to make sure the file is being reviewed and to follow up if any further documentation is needed.

What if my client asks me if they should make a payment?
We never recommend a client miss a payment. However, some lenders will only work on loan modifications if a mortgage is behind.

If my client doesn’t make a payment, or is already behind on payments, what will the bank do?
The bank will contact the client regularly, asking for payment.  If Team 72 is working on their file, it is best that the client refrain from talking with the bank and refer the calls to us.  Once the loan has gone unpaid for a certain amount of time, a Notice of Default or Breach Notice is sent to the client.  Every bank is different

when they issue their Notice, some will do it at 34 days, then again at 65 days, others wait until the standard of 90 days, and yet others put it off even further.  Some banks will put it off indefinitely if an “active loss mitigation” (aka: loan modification) is taking place. 

 What happens after the Notice of Default is issued?
Once a Notice of Default has been issued, the client will officially be in pre-foreclosure, which means that they will also now be incurring attorney’s fees on top of the late charges and other admin fees that banks charge.  We usually recommend to all clients that if they can make a payment to stay out of pre-foreclosure, they do so.  The Notice will be recorded with the County, with an expiration date.  Once it expires, the lender prepares for full foreclosure, and soon thereafter a Notice of Trustee Sale will be issued. 

What is a Notice of Trustee Sale (NOTS) and what happens when one is issued?
An NOTS records an official auction date with the county in which the property is located, it tells you where and when the home will be sold at auction, which is typically on the steps of the county courthouse.  This is where modification becomes more difficult; now the ticking of the clock has become very loud and noticeable.  Your client will be very nervous at this stage and it is perfectly understandable.  We have had dates of sale postponed, some over and over again.  If we have a package turned in, we can typically push for postponement, but there is no guarantee, which is why we recommend that if a client can stay out of the Notice of Default range, it is in their best interest.

What if they are already in the foreclosure process when they come to us?
The legal process of foreclosure does not slow down just because the client has decided to do something about their mortgage situation.  We will need their immediate cooperation and we will work as expediently as possible, but they do need to be prepared for the truth that they may lose their home.  Depending on how far behind the client is on payments the lender will want some kind of good faith payment, or even reduced consecutive payments and a lump sum good faith payment prior to approval of a modification. We’ve seen lenders ask for a single payment, up to 30% of the unpaid balance plus fees.  At some point, the default may be too great and the bank will ask for the entire balance due.   We believe that it is always worth it to submit a loan for some kind of modification, no matter how far behind the client is.  Anything is better than foreclosure. 

If a modification doesn’t work, what are the next steps for the client?
If we are unable to achieve any kind of modification, or the client still cannot meet the terms of the modification, the next step will be a short sale.  The process is very similar to the modification process, except that the package of documentation submitted to the bank must include a listing agreement, an offer and an approval letter for the purchaser.  Once the package is submitted it will go through the negotiation process similarly to the modification process, and again, the legal process does not stop so you could still be fighting a NOTS.  If a short sale is not possible, then the client can submit for a deed-in-lieu of foreclosure, again the process is similar.  Some lenders will require that the client at least tried to sell the home before they apply for the deed-in-lieu.  The last step and the most extreme is foreclosure.

How does this process affect the client’s credit?
Once a client has stopped making payments, or is making haphazard payments, their credit will be affected.  Some banks report immediately after a payment has gone late, some give a longer grace period.  With all the
files that lenders are faced with these days, it would seem that credit reporting is not their top priority, but their credit rating will definitely decrease from any missed payments.  We often tell clients that are concerned about their credit scores, that credit can be fixed; they need to decide which is their priority, their credit or their home. All the steps listed in the previous answer will show as paid as agreed on the client’s credit, except for foreclosure. 

Are there any files that you won’t accept?
We accept all files; we believe that everyone deserves a chance to save their home.  However, if we think a file has questionable chances of success, we will review the file and advise you of what we find.  If the client still wishes for us to proceed, we will only do so with their express consent.  Typically the files that we have trouble getting finished are the ones in which the client is uncooperative, undecided or uncommitted to the process. 

What are some of the key ingredients to a successful modification?
The most important thing for a loan modification in terms of success is thinking outside the box.  The lenders really do not want the houses, if you can give them a compelling enough reason to offer a loan modification, they will do it.  The Processors are constantly working to review the file and find the best approach to present to the lender.  If one scenario doesn’t work, they find another, which is another key ingredient, persistence.  Continued contact with the lender ensures that the file is looked at, which is the number one thing that most people trying to do a loan modification on their own do not do.  Cooperation and commitment from the client are also essential, it does no good if the Processor put together a fantastic package and the client decides they cannot meet the obligations necessary to save their home. 

How can I best help my client?
Your client is obviously going through a very difficult time and they will need your support as well as your strength and honesty to help them.  The Team 72 Processor will give you the information that you need to present to your client, sometimes it will be difficult news for them to hear, but in the long run they will appreciate your forthright approach.  They do need your empathy and understanding, but they will have to stand strong and so they will need you to be standing right there with them.

What is the difference between a modification and a short sale – in the process?
A short sale should be considered after a modification attempt.  If a modification is not possible then a short sale of the property is the next logical step.  A modification gathers all the same paperwork and goes through the same procedures at the bank, except that a listing agreement, offer for purchase and an approval for the purchaser should also be submitted.  The same timelines all still apply so the short sale process needs to happen very quickly after a modification is denied, if the home is already in foreclosure. 

What if the client has increased their other debt?
Many of our clients have increased their revolving debt as a result of subsidizing their income to make mortgage payments. When a person faces financial difficulties they will look for income anyplace they can find it. They turn to the easiest form of income and that is CREDIT CARDS. This is a small problem when trying to modify their mortgage because it can push them out of budget thus disqualifying them. When we do a proposed budget for the client we will make recommendation on how to handle the unsecured debt.

Does it matter if the client’s credit is good or bad?
No, it is not the same as a refinance or purchase; they do not have to have good credit to qualify for a modification.  However, the lenders do check credit so see if there is debt that is not being reported by the client and to verify the debt to income ratio is enough to cover the modified payment.

How does modification affect credit?
Being late or behind on the mortgage will affect the client’s credit more than just about anything else, short of a foreclosure.  Getting a modification that allows them to get back on track with payments will actually increase their credit scores eventually. 

How long does it take and why that long?
The modification process typically takes 90 days, sometimes longer because the banks are so backed up with applications for modification. 

What if the home is in the husband and wife’s name and they’re getting a divorced?
We can only work with the person whose name is on title and the mortgage.

Why would I pay someone when I can get it done for free at a non-profit?
The non-profits are actually paid by the banks.  If you do choose to have a non-profit assist in a loan modification, you are asking someone to go to bat for you against the entity that is paying their bills.  When you have an outside, for-profit loan modification company represents you, you can be sure that they will represent you to the best of their ability against the lender. 

What do you do that non-profits don’t do?
We will develop a game plan to determine exactly what the client needs to save their home. We set a proposed budget to send to the bank so the chances of success are greater.  We also maintain all of the contact with the lender thus reducing stress and confusion for the client. We take care of the process from start to finish including reviewing the final paperwork to ensure the client got exactly what the lender promised. We have absolutely no comparison to the non-profit because we only represent the client and have no allegiance to the lenders. Think about it this, way: you would not want the lawyer of a person suing you to represent you in the lawsuit, why would you want a company being paid by the banks to represent you in dealing with the banks. If you need a lawyer would you want a public defender for free or would you rather have Johnny Cochran standing in front of the jury?

What happens if they’ve already got a NOD and are 6 months behind on payments?
If you’ve already received an NOD, any modification attempt will have to be done as efficiently as possible with an eye on the clock.  Keeping in mind that the Trustee Sale date will most likely be set while the modification is in process, you will also have to push for a postponement of that date. 

Can they get a principal balance reduction if their house has dropped in value?
It is possible, but it depends on the bank and the investor.  If the bank is still originating loans, they are more likely to reduce the principal balance owed, especially if the value has dropped significantly.

Does everybody qualify?
Not everyone will qualify for a modification.  It is your job to preview the documents to see if the client can afford the home with a modification. This is all part of the Game Plan you need to complete with the client.  The budget is truly the single most important piece of the puzzle.

What if they don’t have a job?
The client doesn’t necessarily have to have a job to get a loan modification, but they will have to show some source of income that is at least close to covering monthly expenses.  They can be collecting unemployment, renting rooms in their home, or collect “other” income, as long as they have some way to show proof. 

What if the house is a mobile home?
It depends on the investor. Not all investors want to keep mobile homes on their investment books. We have found unless the home is FHA secured, most banks do not want to do a modification. With that being said it is not impossible just more difficult.

What if the property is an investment property?
Investment properties can be modified with most lenders, as long as the budget shows that they are capable, with the help of a modification to maintain the properties.  The lender doesn’t really want the homes back, whether the properties are primary or secondary.

Can you do modifications on commercial properties?
Some lenders will do modifications on commercial property. It all depends on the lender, investor and their guidelines. We take commercial property modification on a case-by-case basis.

What happens if the lender has gone out of business?
Not much of anything happens when the lender goes out of business. The money is still owed and the lender will still attempt to collect it.  A note may be sold to another servicing agent which only means that the payments will be sent to a new company.

What happens if they can’t afford the modified payment?
Then you have to help the client find another solution.  Short sale would be the next step, but you could also rent the home and find another rental that is less expensive.  There are other solutions and we’re happy to make suggestions, but staying out of foreclosure is critical.  

What if they have been turned down for a mortgage modification?
We can still work with clients that have been turned down for a modification on their own or with one of the non-profits.  Very few people have success trying to get a modification on their own or with a non-profit.  The statistics show about 85% people fail on their own because the lenders guidelines are strict.  Many times the lender will not tell you what the guidelines are so you submit a doomed package.  That is why we spend so much time going over the budget and getting it right.  We have saved hundreds of homes for people that have been previously denied.

What if the lender denied the modification because income was too low?
We will go over the budget and the other income documentation to verify what income actually is.  We also identify other avenues of income generation, given their situation and occupations.  We really do work to find solutions for the clients from all aspects to give them the best shot at a successful modification.

What if they have a first and second  mortgage?
We need to look at both mortgages to determine the best Game Plan. We may suggest a modification of one or both, it all depends on the lenders and your situation.
 
Are they required to modify both loans?
No, they do not have to modify both mortgages.  If you are not able to determine if they should modify both loans, we will assist you once we have received the file(s).

What happens if they don’t want the house anymore and want to walk away?
Walking away from their home means that they are letting their home be foreclosed on. Fannie Mae and Freddie Mac have both released statements noting they will penalize people that just walk way from their mortgages with trying to workout their situation.  We have seen a client walk away from their home based on advise from their realtor, without doing a short sale.  They allowed their home to be foreclosed on and three months later they were handed a judgment of over $75,000.  You need to be very careful walking this line. And remember, the client did take out the loan so they do have the obligation of doing the right thing.  Most lenders understand when people are having financial difficulties and they want to give you every opportunity to succeed.  When people do not make any attempt to stand by their obligations the lender has no problem coming after them.  If they cannot afford the home at all or simply just want to walk away the best solution is to do a short sale.