Gandolf's Loan Mod Tutorial

[Gandolf]

In this thread, I will share my knowledge and experience with loan modifications. I work for one of the major banks and for a number of years I worked several different roles within the collections and loss mitigation departments working directly with loan mods on a daily basis. It should be noted that there is no way to “guarantee” your mod will get approved. For example, if fell behind in your mortgage payments because you lost a 100k per year job and could only find employment as a fast food worker, you probably just won’t be able to afford any realistic payment the bank is willing to offer you. But, you can certainly use the approach I will outline in this thread and I believe you will strongly increase your chances as opposed to simply following the instructions from your bank. I have broken down the information into several different sections, as follows:

1.Background information-This will explain some of the inner workings behind the scenes at the banks and will give perspective on my actual techniques and help you understand why they work.

2.The basics-This section will break down some basic things you should keep in mind during the process. Much of these might seem obvious to you, but to many people they’re not.

3.Locating a person of authority within your bank-This is the whole premise of my technique. For reasons you will read about in section 1, you will probably not be successful obtaining a modification is you follow all the instructions given to you by the bank and go through the standard channels of calling the regular 1-800 numbers and dealing with regular phone reps. You need to get someone with actual authority to work with you. You might be clueless about how you would accomplish this but it’s easier than you might think.

4.Getting that person of authority to help you-Once you locate someone who has authority to get you some real help, you need to know what to say and how to say it. I will break it all down in this section.

5.Filling out your financial forms-This is very important. If your debt/income ratios and overall income aren’t what they’re looking for, you will be declined. Now obviously there are some limits here (i.e. you have to provide backup documentation for a lot of this and can’t outright lie), but many people do have some wiggle room to get their numbers where they need to be.

6.What to do if you get declined-If at first you don’t succeed…you know the rest. You can always resubmit your paperwork a 2nd time. For the HAMP modifications program, it is mandated that the banks have to tell you the specific reason you got declined. Once you know the reason, you might be able to make the changes to your finances OR be successful in showing different numbers to the bank to qualify.

[Gandolf]

It is important to understand a few things about the industry before getting started (If you’ve already started the process, that is OK too as this info will help you with future communications with the bank). Prior to about 2 years ago, there were very few programs in place to actually help borrowers in need. With recent events, mainly the recession and the bailouts, the banks have come under much more public and governmental scrutiny. You’ve probably seen some of those news specials on shows like 60 Minutes where they will show a delinquent borrower trying to negotiate a modification with their bank and chronical all the problems they encounter. Trust me, the banks are VERY nervous about any bad publicity. The last thing you’d ever want as one of the bank employees would be to personally be responsible for dropping the ball on a customer and having it get exposed like that on TV or other mediums where tons of people could find out. This also brings me to my next point…

Who you deal with at the bank makes all the difference in the world. There are some very marginal people working the rank and file jobs responsible for processing the loan modifications. As I’ve stated, I work for one of the biggest banks, and it is also one of the most reputable. Even still, the call center jobs for these collections and loss mitigation jobs are revolving doors. Many people come in, go through training, work a few months, and then leave. The help is often poorly trained, understaffed, and in a position where they have no real motivation to help you. For example, it helped us on our performance reviews to have a low average call time but there was NO benchmark in our evaluations for actually qualifying the caller for a workout option. The banks spend more time and effort training their staff on how to give ILLUSIONS of good customer care such as using words like “please” and “thank you” and using the customer’s name throughout the call than they do trying to evaluate the actual success rates of the calls and how many people obtain a modification. The people on the other end of the phone aren’t bad people (well, actually some are but they are a minority) but they are extremely unmotivated. They have a VERY stressful job where callers are routinely abusive to them and it fosters an “us against them” type of mentality at worst and just general apathy at best. We even had one employee who got arrested for a VERY serious crime and was incarcerated for over a year and yet the bank hired her back as soon as she got out! It would be an understatement to say that this person was terrible at her job and didn’t care at all about helping the caller. Again, this is an extreme example and not indicative of every rep, but I am just trying to make my point that there are some real losers in these collections departments (if you’ve already started the process of calling in to try and get your mod, you don’t need me to tell you any of this).

As stated earlier, the stakes are high for management to help you, but at present they just don’t have the resources to have good help for the huge number of calls they are getting. You need to have your file escalated to someone higher up than the ones you will get when you call the general 1-800 numbers. At my bank, we have spe******ts who get put in charge of certain files. If someone gets jerked around and calls their Congressman and the Congressman calls us, we assign one of these spe******ts to the file. The spe******ts are usually VERY on the ball and are given authority to do whatever is necessary (to a certain point) to make the customer happy and basically make the problem go away. I use the case of someone calling their Congressman because it is a prime example of how to get in touch with a higher-up, but it’s certainly not the only way. Usually once you reach a high level manager and let them know you are having difficulty working with the bank and that you are documenting your calls and all your efforts and who you speak to, they will make sure to get someone with a brain assigned to help you as they don’t want to be responsible if you end up on 60 Minutes telling your story.

So now that you know a little bit about the banks and how they operate, you need to start the process if you have not done so already. Stay tuned for part 2!

[Gandolf]

It is important to go over a few things before getting into the “meat and potatoes” of my strategy.

-Document everything you do. You want to take notes about every call you make and keep copies of anything you send in. Write down all the important stuff, when you called, who you spoke to, what was discussed, ect. This will help you down the line if and when you speak to someone higher up at the company and need to explain to them that you’ve gone through the proper channels to get help, it’s not working, and thus, you need THEIR help getting things done.

-Don’t lose your temper or get overly frustrated if you hit a road block or get some jerk on the phone. As you should already know by now, there is a very high chance that at one point or another you will end up talking to someone who might lie to you and contradict what others have said, get belligerent or downright offensive with you, or perhaps just not feel like helping you and thus the call will be a waste of time. While this is VERY frustrating and might literally make your blood boil, I can’t stress the point enough that there is no reason to ever “return the favor” with one of these bad employees as it will NOT increase your chance of getting a modification and might actually hinder it. In case you didn’t know, all the calls are documented by the mortgage company. And while the reps are supposed to only summarize the relevant facts, it’s not uncommon for them to get personal with it and write down some of the offensive things you say if you lose your temper and start yelling and cursing. I will admit, in my time in collections, I would sometimes make a point to make disparaging remarks in the notes about rude and abusive callers and put them in as a priority note (basically meaning that it would be the first thing that would pop up on the screen when anyone opened the file). When the next rep at the bank opens your file and sees the note with the derogatory things you said, it WILL taint their opinion of you and they will assume they have a jerk on the line and will be less inclined to try to help you. Trust me, if you are at the point where you’re thinking about yelling, cursing or being abusive to the rep, OR if they are talking to you in this manner, you’re much better off just ending the call and calling back to hopefully get someone better on the next attempt.

-Be meticulous when you fill any of the financial forms out. You need to make such everything is neat and legible, filled out correctly, and complete with everything they ask of you. Make sure your loan number or some other type of identifiable information is on every page you send in. I have seen files get declined for some trivial reasons and you don’t want to give them any reason to decline yours. These departments are understaffed and overworked and they’d rather find some lame reason to decline your file and to take the time to help you.

-Make sure anything you send to the bank is received. When you fax/mail in your financial paperwork for the modifications, it is very important to make sure it is actually received and scanned into the computer in your file. It is a very large amount of paperwork that does not make it into the computer. The best way to verify is to call back and ask the rep if they received it. If they say yes, don’t stop there. I recommend asking them a specific question about the information contained in your file and if they can’t answer, you should assume that they don’t have your paperwork and you should resend just to be safe. I saw many people go into foreclosure because they faxed in their paperwork, assumed we had it and things were in progress, only to call back a month later and find out we didn’t have it. Whether or not the bank is responsible for losing the paperwork is besides the point. Just know that this happens a LOT and you should be prepared to fax things in multiple times before you are able to confirm that they are received.

More to come tomorrow!

[Anne Tyler]

After two years I finally got a loan modification offer. I was late sending it back because I couldn't get any answers about what some of the figures were/how they got them, etc. I finally sent it in because the interest saving will be make up for the discrepancy (but I still want answers).

I missed one payment and then had 3 months forbearance and then a 6 month "trial" modification and those people will drive you nuts. You are right to advise taking notes and be sure to document each call as you will probably get passed around from number to number and back again. Anybody getting a modification paid for it in blood, sweat and tears for sure. I didn't get any principle reduction but a reduced interest rate which starts out really good for five years but then starts climbing but in 17 years if I live that long it will be paid off. I have a question about a figure added on to the end of the note and nobody can explain it to me, it makes no sense (despite their COMMITMENT TO CLARITY DOCUMENT). The phone number they list to call if you have questions is just another number to start you getting passed from one rep to another.

I don't think my being late signing will affect my eligibility because they sent a mobile notary to my house and so it seems like that would be an acceptance on their part of my late signing plus I should be able to argue against (that is if I could actually talk to someone) any problem because they didn't provide a number to call to get questions answered at least not one that worked.

BTW, my payment is not any lower but near as I can tell it includes taxes and insurance which I was paying on my own before.

Also, as to your note about escalating to someone more helpful, I did get a slot on a local TV network who came to my house and right after that I got a call from someone who said he was going to "escalate" my filing. It still was a long drawn out procedure (that was about last April or May) but it may have helped, can't really say how it would have gone without that "escalation".

You are right about blood boiling episodes. These people pass you from one to the next and sometimes back where you started AFTER YOU GIVE THEM all the yada yada about who you are, address, phone and so forth. Then you'll get transferred to numbers that either cut you off or a recording saying "no longer a working number". I couldn't make my payment on line, i had to call in to do so and I felt like I needed some sort of "nerve" medicine before calling to brace myself for a long arduous and daunting task just finding someone who would PLEASE take my money.

Maybe you can give me some insight into what this add-on number is. I will have to get the exact wording as its not available to me right now. But it starts out saying something about "because we advanced something" (its not about taxes or insurance, that is being added to the principal) and the only rep I got hold of who said she'd find out what it was or tried to tell me what it was said that because I continued to make my trial mod payments after the 3 month trial mod period was up that was where the figure came from. But that doesn't make sense to ADD another payment on the end because I kept paying instead of not paying after the trial mod. Then she said something about "there's only one form to use and its the wrong one so they had to use it and its for people who quit paying after the trial mod but because I didn't quit paying that I should 'trust them' it will all come out in the laundry.

Lemme tell ya I don't trust BOA at all after what they put me through. I've seen lots of people voicing resentment about any modifications going through because they have the mistaken idea that we are getting part of the principal balance written off and that isn't whats happening. No one is paying my loan for me, I just got a reduced interest rate but now my principal is right back up there like I hadn't paid anything for the last 3 years or so because of the taxes being paid and some other stuff but I have still been paying my insurance.

Isn't the final payment supposed to include taxes and insurance? I've paid the insurance monthly and haven't heard anything about them taking it over and if they don't then i'm saving maybe $25 a month after going through HELL to get where I am with a modification.

My home is a modest home in a struggling neighborhood and the payments are small COMPARED to some I've seen where its been like a $3,000 house payment, mine are around $600 but like I said, its not a fancy house but its comfortable and home and I've done a lot to it. Part of the reason it was cheaper is because the area its in has lost major employment sources like an Air Force Base and a government contract.

Before all this stuff happened with the meltdown I had about $40,000 equity but now I'd be doing good to just walk away, which I want because I invested a lot in this house. Having been the victim of a home invasion and theft about a month ago has left me feeling not as good about this place as before but I think that can happen anywhere, its just another setback, one after the other to think your home has been gone through by thieves. And the fact I was home when it happened but outside most of the time until right before they left through the same window they came in.

Things like that wear you down. And thats something BOA doesn't realize, or anybody, that maybe they are not the only people F'ing with you.

I did lose it online once, I was trying to make a payment and just getting transferred all over and then starting over for the tenth time with my acct number blah blah and I lost it. Then the rep said he didn't have to listen to that kind of talk and if I didn't stop he would hang up which ticked me off because part of the problem was that I'd been disconnected a couple of times just trying to get to him. I told him 'you people screw us over for an hour or more and then you think when we finally get to you that we are going to be happy"?

Anyway, I don't like losing it but there was other stuff going on and so yeah, I lost it.

Edited October 3, 2010 by Anne Tyler