Course Outline

Lesson 1: The Basics 

1. What is Loan Modification?
2. Loan Modification Challenges
3. Why Are So Many Loan Modifications Going Bad?
   • Toxic Terms
   • Other Debt
   • Negative Equity
   • Overextended Borrowers
   • Moral Hazard
   • Job Loss
4. The Obama Plan: "Making Home Affordable"
   • What is the Obama Administration's Plan?
   • Who will benefit?
   • Who won't benefit?
   • Borrower requirements
   • Lender guidelines

Lesson 2: Overview of the Loan Modification Process

1. Determine if You Are a Good Candidate for a Loan Modification
   • Borrowers with an Adjustable Rate Mortgage (ARM)
   • Borrowers in a Subprime Mortgage
   • Borrowers in an Option ARM Mortgage
   • Borrowers Who Have Suffered a Temporary Job Loss or Other Hardship
2. Should You Modify Your Own Loan?
   • Are you perseverant?
   • Do you have a relatively straightforward situation with a bank that is easy to work with?
3. If You Hire a Pro
   • Check references
   • Check them out with the Better Business Bureau
   • Law firms
   • Loan modification companies
4. Potential Outcomes
   • Temporary Interest Rate Reduction
   • Conversion to a Fixed Rate
   • Principle Reduction
   • Borrower Beware: Avoid Predatory Loan Modification Schemes!
5. Loan Servicers
   • Loan Servicer Motivations
   • Lender vs. Servicer: The Good Old Days
   • Lender vs. Servicer: The Problem of "Securitization"
   • Lender vs. Servicer: The Challenges

Lesson 3: Preparation

1. Gather Your Original Loan Documents from Your Files AND Your Lender
2. Order Loan Docs from Lender
3. Were There Lender Violations?
4. If There Were Lender Violations
5. What is a "Forensic Mortgage Audit"?
6. Should You Get a "Forensic Mortgage Audit"?
7. Assemble the Documents You Need to Submit to Lender
8. Additional Documentation You May Need
9. The Repayment Plan: Is It a Trap?
10. Avoiding Pitfalls
    • Don't accept a higher payment!
    • Negative Equity
    • Don't agree to unacceptable or predatory terms
    • Don't accept the first offer!
    • Don't let the process intimidate you
    • Don't fall victim to a predatory loan modification company.

Lesson 4: Your Finances

1. Doing a Budget Analysis
2. Calculating Your Debt-to-Income (DTI) Ratio
3. Investor Guidelines
4. Getting Creative with Your Income?
   • Earn more income!
   • Lower your expenses
   • How to Document "Undocumented" Income

Lesson 5: The Loan Modification Proposal

1. Write a Compelling Hardship Letter
2. Valid Reasons for a Hardship
   • Unemployment
   • Reduced Income
   • Job Relocation
   • Divorce
   • Separation
   • Medical Bills
   • Reset of an Adjustable Rate Mortgage or increase in payment
   • Death of my Spouse
   • Death of a family member
   • Illness
   • Property damage
   • Military Service
   • Business Failure
   • Over-indebtedness
3. Are You in the Military?
   • Governmental Protections for American Military Personnel
4. Calculating Different Mortgage Scenarios
5. Format for a Hardship Letter
   • Paragraph 1: Explain the purpose of the letter
   • Paragraph 2: Explain the circumstances that led to your delinquency
   • Paragraph 3: Explain whether the situation is temporary or permanent and why the modification will enable you to stay current on your mortgage.
   • Paragraph 4: Thank them and reiterate how much you want to stay in your home
   • Paragraph 5: Let them know how/where you'd like to be contacted.
6. Write the Modification Proposal
   • Confirm Investor Guidelines
   • Ask for a Fixed Rate Mortgage
   • Submit the Proposal

Lesson 6: The Negotiation

1. Awaiting the Bank's Offer
2. You Got the Offer: Now What?
   • The Graduated Payment Scheme
   • The Repayment Plan
   • Be Persistent and Persuasive
   • Don't Sign Away Your Legal Rights
3. What to Do If You're Denied
   • Find Out Why Your Application Was Rejected
     • Incomplete Application
     • Not Showing Enough Income
     • Not Convincing Them You Weren't Going to Default Again
   • Appeal the Decision

Lesson 7: The End of the Road

1. Options to Keep your Home
   • Get a Forensic Audit
   • Hire a Professional
   • Special Forbearance
   • Family
   • Bankruptcy
2. Options if Decide to Leave Your Home
   • Short Sale
   • Deed in Lieu of Foreclosure
   • The Unthinkable - Foreclosure
3. Conclusion