Difficult Bank of America Loan Modification Success Story

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Difficult Bank of America Loan Modification Success Story

January 2014

This video describes how the Law Offices of Michael Gaddis obtained a trial Bank of America Loan Modification for a homeowner who had many previous failed attempts. Bank of America is a lender who is traditionally difficult to modify through still, Michael Gaddis was able to reduce the client’s monthly payment over $800.00 a month. If you need help seeking a loan modification with Bank of America call for a free consultation 760.692.5950 or email contact@michaelgaddis.com for a preliminary case review.

Difficult Bank of America Loan Modification Success Story Video Transcript

**Video auto-transcribed by YouTube, please excuse any inconsistencies.

Hi I’m Michael Gaddis. My office recently obtained a trial loan modification  for a homeowner that had Bank of America in fact what I mean by reason is  little early today January 2013 doesn’t 14 so Bank of America  literally sent this to me just probably half an hour ago  this one made me extremely happy because when this owner came to me  and you tried several times like most my clients  and to obtain a loan modification US in chapter 13  he was paying an incredible amount of money  for this house his payment plan is  around thirty one hundred dollars plus because he was in a chapter 13  he had to pay a trustee payment the only reason he was in chapter 13  was to save his house so years ago  someone advise and that the only thing you can do to save his house was to file  chapter 13 he had no other debt  nothing else other than the house and so what he did is he file chapter 13  and continue to make the payments on the house plus the trustee payment so he was  paying  a lot of money to stay in this house so when he approached me  you know he said years he didn’t know how much longer he could  keep paying both this payment and the trustee payment any just was  wondering whether it wasn’t worth it for him to continue doing the chapter 13  he asked me if I can help them with a loan modification even though he was in  bankruptcy and I told them that I could  when I look at a situation and I could tell it was a little bit more  challenging because the self-employed and  you know self-employed people tend to have a little bit more difficult I’m and  others to try to get their loan modifications to but I had no doubt in  my mind that he should be able to obtain a loan modification  absolutely no doubt in my mind and I told him that I said I I am very sure  that I can get you a loan modification on your house  I am I mean every all the variables were there you know that he is a  bank deposits were reflecting good depositing good income sources  is on is value was low versus what he owed on the property  and everything was just looking really good is all payment was high  verses way is projected new payment would be all these things were  definitely  pointing in his favor so in I was sure is I could be  as someone can be that I could you know I had a great shot at getting a loan  modification  so we submitted a file and we ran into some obstacles  a course Bank of America is a very difficult bank in  it seems that their initial really responds to everything is to deny  deny fail net present value do this or do that  so you know if I never take their denials  her very seriously especially initially I  you know because I’m usually fairly certain that better I’m right and  they’re wrong  a I say that quietly but it’s true I’ll  so I challenge it I’m the first time we had a chance because they can run his  value  so I had to appeal it and appealed about you get some new comp the sport where I  thought the value should be an unhappy  rerun they took a long time during the appeal process and  and rewriting it wasn’t quite as easy as what a  are as a timely as I thought it would be and it kinda trickled into this new year  and what happened is after this the initial  after January 10th this year the CFPB consumer finance Protection Bureau  change the rules  which in turn I cause to Bank of America to change their decision in June in the way  that they generate approvals and denials  so what happen is even though the appeal was granted in in was  in process we had to wait so that the new decisioning engine kit run the  scenario through so patience pays off  and today I was on my weekly conference call at Bank of America and they told me  that this one had been approved for  a modification on a trial plan. The trial plan starts March 1st and is the payment is going be 2,374 dollars now this is a huge differences over eight hundred dollars a month less than  he was paying just for his payment alone  not including the trustee payment see now that he’s got a modification in the  only thing that revolved in this situation  are in the chapter 13 had to do with this house you just need to continue to  chapter 13 anymore so he can basically wrap up all of his problems in today s  and that payment difference between what he was out laying in cash before  and what he will now is significant I mean life changing  I mean he is East he is definitely in much better shape than he than he was  when he first saw me so  and he’s an extremely, extremely happy man  so and this is a great example as to what happens when you use patience persistence and knowledge  about how Bank of America works can benefit you and just keeping in touch in  and making things happen so my advice would be never give up  on your loan modification if you have any questions or comments or would like  to talk to me about your scenario please give me a call  is all tell you straight out whether I think I can do it or not if I don’t  think I cannot tell you  and I’ll tell you why I don’t think I can do it either but if I think I can  it’s it’s definitely worth your time before you give up before you say well  I’m gonna let the house to foreclosure on a short sale mejor de lo  before you do anything and ask to just please give me a call  if you live in the state of California it will definitely be worth your time  so thank you again for watching this video if you would like to get in touch  with me you can reach me  at 760 692 5950  760 692 5950  and are you can visit me in my web site www.californialoanmodificationattorney.com thank you so much.

Obstacles to Loan Modifications

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Every single day I get 10-12 phone calls from homeowners throughout the State of California asking me to review their loan modification scenario and determine if they truly have a chance at obtaining a loan modification.  During the past couple of weeks the scenarios that homeowners have been giving me are becoming more and more difficult.  The question is, what makes a loan modification scenario difficult?  Once I have the facts surrounding the homeowner’s scenario it does not take me long to determine the homeowner’s odds of success.  Some of the factors that make a loan modification application more challenging are as follows:

1.  Equity.  The bottom line is that equity is the enemy of loan modifications.  Loan modifications are not a right that a homeowner is entitled to, but rather a loss mitigation tool used by the investor owning the loan.  In other words the investor is in danger of losing money so the investor is looking for ways to minimize any potential losses.  So the investor weighs the risk of loss with the needs of the homeowner and determines whether the investor will lose more money by modifying the loan or foreclosing.  The problem with homeowner’s with equity is that the risk of loss to the investor is minimized if not extinguished all together.  When there is no danger of the investor losing money there is little incentive for the investor to agree to a modification and that homeowner will typically fail a loan modification review on the basis of Net Present Value (“NPV”) failure (for more information about NPV please click the following link   http://wp.me/p2NGF4-kT).  Homeowners also need to remember that the investor is only looking at what the investor is owed in relation to the first lien.  The investor could care less if there is a 2nd or 3rd lien on the property.  Since the first lien holder is in first position the first lien holder gets all of the proceeds from a sale to satisfy his lien, the junior liens only gets what is left, if anything.  Again, equity is the enemy of loan modifications.

2.  Self-Employed Homeowners.  From an underwriting perspective, self-employed homeowners are much more challenging than W-2 wage earners.  As such, self-employed homeowners have a very difficult time getting through the loan modification underwriting process.  The main reason is that there are many ways to present your self-employed income and the lenders have the discretion to independently determine what a homeowner’s self-employed income is.

3.  Multiple Houses.  Homeowners that own multiple properties also have a very difficult time obtaining a loan modification.  The primary reason for this is that owning multiple properties makes the underwriting process more involved.  The more involved the underwriting process the more difficult the loan modification review process.

4.  Loan Amounts Over $729,000.  Loans over $729,000 are not eligible for HAMP which limits the available programs.  Since loans over $729,000 are typically investor based modifications the level of scrutiny goes up as the loan amount increases.  High dollar loan modification reviews can be extremely lengthy and involve numerous document requests.

5.  Multiple Sources of Income:  Homeowners that have multiple sources of income including, but not limited to, room rental, family contributions, 2nd & 3rd jobs, mixtures of W-2 and self-employed income, disability, unemployment, etc. have a very difficult time presenting their financial situation to loan modification underwriters resulting in a more complicated review processes.

6. Negative Amortization Loans: Negative amortization loans are extremely problematic due to the fact that the minimum payment associated with the loan is usually very low.  Low scheduled payments create problems because the lender is typically looking for a solution that will provide the homeowner with a modified payment lower than their regularly scheduled payment.

These are just a few of the factors that can create a difficult loan modification scenario.  Most of these obstacles can be resolved if you know what you are doing.  However, if you do not know what you are doing, and 99% of homeowners and 3rd Parties do not, then you will merely get frustrated and end up giving up in the end. 

If you would like to take advantage of a free consultation with me please contact me at 888-242-2272 and I will review your situation and let you know my thoughts.



Net Present Value NPV: If You Have Been Denied For A Loan Modification…Don’t Give Up!

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Net Present Value NPV

Every day thousands of homeowners receive loan modification (net present value npv) denial letters from their lenders.  Many decide to give up and pursue alternatives such as short sales or deed in lieu of foreclosures.  The reality is that many of these homeowners should not have been denied or were denied based on errors.  Unfortunately, these homeowners have no idea that they should not have been denied or, at the least, should have had an opportunity to be reconsidered for a loan modification with proper data in place.  Another unfortunate reality is that many homeowners have used 3rd parties that they relied on to provide them guidance that either 1) are simply not qualified to detect any potential issues or errors made by the lender 2) are not overly motivated to really try and obtain a loan modification especially when the 3rd party pressures the homeowner upon denial to use their short sale services or 3) do not have the ability to push the lender to properly reconsider the homeowner’s loan modification request.  These particular homeowner’s typically acquiesce and resolve themselves to short sale their home.

The first thing a homeowner needs to realize is that the lenders are NOT their friends.  No matter what a lender tells you, the lender is not there to HELP a homeowner.  Lenders are for-profit businesses and they service loans for investors.  Investors are not in the business of “helping” homeowners.  Investors are in the business of maximizing their profits and/or minimizing their loses.  For a lender to tell a homeowner that they are there to help them is ludicrous.  What they should say is that they are there to help themselves.  What they really want to do is obtain all of your documentation and financial situation so that they can assess how the investor will lose less money.  In other words, based upon what you give them and what they calculate, will the investor lose less money by modifying your loan or will the investor lose less money by foreclosing.  Period.  There is no philanthropic intent or motiviation to a lender’s loan modification analysis.  So the key to obtaining a loan modification is to make sure that you present your information as accurately as possible and present it in such a way as to give you the best chance at passing their loan modification testing matrix.  Lenders are diligent in their pursuit of this information because attempting to mitigate their damages is necessary to protect their investors’ financial investments as well as to protect the lender from any potential liability arising from their failure to diligently pursue mitigation.

There are many reasons why a homeowner could be denied for a loan modification including, but not limited to, net present value NPV failure, presenting documentation or information that does not meet investor guidelines, failure of the lender’s underwriter to properly follow their investor guidelines, not presenting income accurately or in accord with investor guidelines, missing documents or submitting an incomplete package, if current, failure to meet Imminent Default Department hardship guidelines, borrowers with excessive equity via net present value NPV failure, submitting an otherwise modifiable loan modification package too close to a Trustee Sale date or very stringent investor guidelines.  All of these are reasons why someone might fail a loan modification analysis.

Not all of these reasons for denial are able to be overcome and homeowners denied for valid reasons or reasons beyond their control will have no choice but to 1) bring their loan current 2) attempt to obtain a repayment plan for the past due amount 3) continue trying to make the payments on their existing note no matter how difficult 4) if the homeowner is behind and unable to bring the loan current, by filing a Chapter 13 bankruptcy which will result in the homeowner having to make the existing payment on their note PLUS a trustee payment or 5) short selling their home.  The reality is that not every homeowner will be able to obtain a loan modification.

With that being said, many of the aforementioned reasons, ARE able to be overcome if the homeowner is assisted by a person or entity that 1) has the homeowner’s best interest at heart and 2) has the experience, knowledge and connections within the lender to address and resolve any potential issues.  For the lucky few, obtaining a loan modification is easy because the presentation of their loan modification package just so happens to fix the box that the lender has established for loan modification approvals and no errors were made by the lender during the process.  For the rest of the homeowners, obtaining a loan modification is extremely difficult, time consuming and stressful.  It is these homeowners that need to seek the advice of a competent 3rd party to help them.

The important thing is not to lose hope.  If you really desire to keep your home then keep fighting and attempt to find someone that you trust to help you.  However, you should keep an eye out for some warning signs that a 3rd party might not be the right choice for you.  In analyzing your situation a 3rd party should consider all of the information surrounding your situation.  If a 3rd party seems more preoccupied with talking to you about how much they charge for their services or discussing your payment options without first performing an in depth analysis you should be concerned.  If a 3rd party tells you that you qualify for a loan modification based purely off your oral representations of your situation you should be concerned.  A proper analysis of your situation should entail a thorough review of your financial documentation and should not be based only on a homeonwer’s statement as to their financial situation.  If a 3rd party tells you that you have a 100% chance of success you should be concerned.  No one should be able to look you into the eye and tell you that you have a 100% chance of success.

While it is important not to lose hope it is also important to not be gullible.  Do not let your hope turn into desperation.  Many loan modification companies consist of ex-real estate agents and mortgage originators, car salesmen and even cell phone sales people.  Remember, that they are very good at selling.  Sometimes they will attempt to sell you dreams consisting of leprechauns and unicorns.  It is important to remain grounded.  If you get a bad feeling about a particular 3rd party then you should look for another one.  One more piece of advice.  If you are working with a law office or law center you should be able to speak directly with the attorney that is supposed to be assisting you, not the attorney’s assistant or paralegal.  If you are unable to speak directly with the attorney you should find a different attorney that you are able to speak with directly.

The bottom line is don’t lose hope!



Loan Modification Denial: Net Present Value NPV Results

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One of the most frequent reasons for denying a loan modification application is net present value NPV.  Net present value NPV is a computer program that analyzes numerous factors and determines whether the proposed loan modification is in the best interests of the investor that owns the loan.  In other words, if the proposed terms of the loan modification are such that the investor would lose less money by foreclosing on a homeowner the loan modification application will be fail net present value NPV and the application will be denied.  If the proposed terms of the loan modification are such that the investor will less money by modifying the loan modification application will be approved and the homeowner will be placed on a trial modification.

If a homeowner is denied a loan modification based upon net present value NPV failure the lender will typically send a denial letter to the homeowner along with a NPV Input Values Chart (“NPV Chart”).  The net present value NPV Chart is an extremely important document that sets forth the fields and values used by the lender in analyzing your loan modification application.  A homeowner who receives a net present value NPV denial has 30 days from the date the homeowner receives the denial letter to file an appeal of the net present value NPV test based on an error(s) in the net present value NPV Chart.

For a professional that knows how to read and interpret the data on the net present value NPV Chart the information is extremely valuable.  This data is a window into how the bank interpreted a homeowner’s loan modification application and what values they used for fields such as credit score, property value, property valuation type, data collection date, etc.  The net present value NPV chart typically has around 34 fields populated with data used in the net present value NPV analysis.  The fields include data collection date, imminent default flag, investor code, unpaid principal balance at origination , first payment date at origination, product at origination, next adjustable rate mortgage (ARM) reset Rate, unpaid principal balance before modification, principal and interest payment before modification, monthly property tax payment, monthly hazard insurance payment, proposed principal and interest payment, proposed amortization term, proposed interest rate, proposed principal reduction, proposed principal deferment, etc.  Every field is equally important in analyzing whether or not the net present value NPV denial is accurate.

Appealing net present value NPV results can be difficult for a homeowner because lenders presume that the data collection and net present value NPV are correct.  Additionally, the lenders’ internal appeal process is typically not run efficiently.  Usually, a homeowner can only communicate through a CRM and not the individual at the lender that input the data into the net present value NPV test.  However, if a homeowner believes that an error exists on their net present value NPV results time is of the essence.  The homeowner should either file for an appeal or consult with someone familiar with loan modification  underwriting guidelines and net present value NPV tests.

It is not uncommon for a net present value NPV Chart to have one or more errors in it.  Whether or not the errors are material enough to have changed the final decision is a more difficult analysis.  Some errors are trivial in nature while others are more substantive.  Either way it is important to determine the accuracy of the values used to populate the net present value NPV fields.

The best advice is to find a competent 3rd party (not yourself and not the lender) and get an expert opinion on the net present value NPV denial.