Are you Short Selling a house that could do a loan mod??

An agent asked me the other day,  how we were having so much success in Short Sales.  It is very simple.  We decided to give back.  Several months ago my partner,  Charles,  and I knew several people who were struggling with a Loan Mod.   Each one had been turned down or given a run around by their lender.  When we talked with them,  we found out that most of them had no clue how to help themselves through the process.  This was also about the time when a series of slime balls lawyers and real estate agents were taking  up to $3000 upfront to help people with the loan mods.  What they had failed to disclose was that they either didn’t know how to do loan mods or that they were simply scam artists taking the people’s money.  Both the Dept. of Real Estate and the Bar association responded quickly and made it illegal to take upfront money.  Not surprisingly,  the bad guys disappeared.  I read that the DA and the Dept are going after more than 450 of them.

So,  we decided to offer FREE loan mods.  We felt that worst case,  we would help some people and if they were denied,  who better to help them through the maze called a short sale, than us?   The result is that we have been able to help several people save their house.  How great is that?  Yes,  we lost a Short Sale commission but our clients love us.  And,  when they come in thinking loan mod,  many realize that a Short Sale makes the most sense.  (if you have no prospect of a job, had a stroke and can’t work,  getting a divorce, etc, etc,  Loan Mod is not an option.  And,  if you try for the loan mod and the lender won’t play,  no matter what you do,  the best option is usually a Short Sale.

So,  what are the ways to increase your clients success rate for a Loan Mod?  There are a couple of key points:

1.      Complete Documentation:  Lenders typically have a short list of items they ask for when you request a load mod.  Unfortunately,  when you package arrives,  they then request some other information,  which gets lost in the process.  One of my clients did this dance for over 6 months, with them asking for one document after another. The secret is to provide ALL of the documents in the initial package.  Provide copies and backup docs for every major item of income, liability and Assets. It also matters how you write your Hardship letter.  More on that later.

2.      Packaging:  I know that the negotiators are over-loaded.  Imagine having 200 or more loan packages on your desk.  Even if your package is complete (200 pages or more if self employed), if it is disorganized or difficult for the negotiator to find things,  I think they set it aside and move on to the next package.  Remember,  most of them work on an incentive plan, so they are looking for the easiest ones. So, make it easy.  Here is the secret

a.      Put your last name and loan # on each page. This can be done by putting a slip on your copier and running the docs through.

b.      Create an index by Identifing each document and it’s evidence backup with a number on each page.  For example,  Bank account info might be #7 and #7a would be a copy of the last 2 months of your Bank of America account and #7b might be your Savings account.

c.      Put a blank piece of paper between each item and identify what is behind it,  if you are faxing the package