The Intersection of Bankruptcy and Loan Modifications Aka Loss Mitigation

Is your house in foreclosure? Have you have been working with the mortgage company for months to try and get a loan modification which could solve the issue? Does the mortgage company seem to be dragging their feet, asking you for the same documents over and over and yet you do not seem any closer to actually accomplishing anything? Now seemingly out of the blue there has been a notice of Trustee/Sheriff’s sale. You panic. There is an option that will save your house and enable you to continue to work on obtaining a loan modification. That option is a chapter 13 bankruptcy. The chapter 13 will stop the sale now and give you a repayment plan which if you complete will put you right where you should be with your mortgage (your mortgage will become current). The filing of the chapter 13 does not mean that loan modifications are not possible, but if you had already started, you will likely have to begin again. This time, however, there will be no threat of losing your home. If on the other hand, you are surrendering the home, there are still option you should pursue while you are in the bankruptcy.

After you file the case and the sale is stopped, you can then restart the loan modification proceedings by requesting a loss mitigation package from the lender or servicer. When you do this they usually send out a “waterfall” package. This is an application that would check for eligibility for a HAMP loan modification, an in-house modification, eligibility for a shortsale, and eligibility for a deed-in-lieu of foreclosure, and possibly eligibility for a short payoff. This post will explore all of those options and additional loan mod options other than HAMP.

After you receive the loss mitigation package, it is important to make sure that you have all of the requested paperwork together prior to sending it to the mortgage company or servicer. They will generally ask you for 2-3 months of bank statements, a Dodd-Frank Certification signed and dated, copies of your most recent pay stubs for 2 pay periods to 3 months or longer, a form 4506-T form signed and dated with your phone number and filled out correctly, copies of your last two years of taxes, and a hardship letter. A number of those are self-explanatory, some of them are probably unfamiliar. The Dodd-Frank Certification just needs signed and dated, no big deal there. The 4506-T form has to be filled out perfectly or your loss mitigation application process will be delayed by months. You really need to check with your attorney to ensure that you are filing it out correctly. Generally, you need to fill out the top completely, select the type of transcripts that you want them to send the mortgage company, you need to list the years that you want them to send, it is generally 3 years and they generally want the date format to be 12/31/2012, 12/31/2013, 12/31/2014 for example. You then need to sign it, date it, and put your phone number next to the signature line. As for the hardship letter, it should indicate why you began to fall behind on your mortgage, and when or why that hardship is or has ended so that you will be able to make some payment in the future.

Part of the application process also requires you to fill out your household income and expenses. A common mistake that people make is to under report their income/ over report their expenses. Keep in mind that part of the process, if you are seeking to modify the loan, is that the modification review has to go through underwriting. That means that they will be checking to see if you will be able to afford the new payment that they can offer. If you cannot show that you will be able to make the payment, you will not be offered a loan modification.

The different types of loan modifications that the bank can or will offer will depend on if they have ever offered you a loan modification in the past. HAMP stands for Home Affordable Modification Program. It is a program that was set up in the aftermath of the subprime mortgage crisis. Generally you receive only one HAMP loan modification offer per loan. This is not a hard and fast rule, however, and I have seen HAMP modifications offered more than once per loan. HAMP modifications may reduce the principal balance, they may reduce the interest rate, they may reamortize the loan over a longer period of time (stretch your loan out), or they may do a number of these things to help you to get a lower loan payment. Offers that include a principal reduction will usually have certain benchmarks that you have to meet in order to ensure that the principal really is forgiven. If you fail to meet these benchmarks, the forgiven principal will return. Generally, you will need to ensure that the loan is in good standing on the first, second, and third anniversaries of the effective date of the trial period. The amount that the principal is reduced by will generally not be treated as taxable income. Speak to your tax attorney or accountant for more information on this. Another type of loan modification that your mortgage lender may provide is an in-house modification. For an in-house loan mod, the lenders are not bound to the requirements of HAMP. They can also offer these even if they determine that you are not eligible for HAMP. The results may not be as good but they should still be better than what you currently have. Unfortunately, you may find that the modification offer is not to your liking. Perhaps it doesn’t reduce the interest rate by much, or maybe it adds 10 years onto your loan and you don’t find that palatable. So long as you continue through your chapter 13 bankruptcy you will finish it with your original loan intact at the original terms and on time per the original payment schedule. (There are some small caveats to this you should ask your attorney about.)

Another option if the modification will not work is to ask for a short payoff. Essentially, you are asking the lender/servicer to settle the remaining balance for something less than is owed. I have seen short payoffs between 10% and 33% so some incredible options are out there if your lender determines that you qualify. You would need to speak to your tax attorney/accountant to see if you will have to pay income tax on the forgiven debt.

Short-Sale, Deed-in-lieu – What if you decide that you don’t really want the property any longer? In that case, you have a couple of options. Simply surrendering the property in a bankruptcy is not enough. If you simply surrender the property in the bankruptcy and then the mortgage creditor sits on their rights and doesn’t move to complete the foreclosure process, you will be stuck with liability on the property if anyone were to get injured or for housing code violations. To avoid this, you can attempt to do a short sale. A short sale is potentially available where you are underwater on the home. If there is only one lien on the property you are much more likely to accomplish a short sale. The more liens there are, the more parties have to be satisfied with the sale offer. The same goes for a deed-in-lieu. A deed-in-lieu, short for deed-in-lieu of foreclosure is where you sign the property over to the mortgage creditor in exchange for them not foreclosing on the property. This can potentially save the banks lots of money and has the benefit to you of getting rid of any liability from continued home ownership.

If this sounds like you, just know that there is help out there. Contact a local bankruptcy attorney with experience in this field to help you out.

Best of Luck,

How to Apply for a Small Business Loan: Tips to Help You Increase Your Chances of Getting Approved

In order to get your business off the ground, or to continue operating, you must be able to obtain the financing you need. It’s not easy to get that money – especially if you lack business experience and don’t have a very good credit score. There are things you can do to increase your chances of getting approved. Here are a few tips on how to apply for a small business loan:

• Write a detailed business plan that explains why exactly you need the funding, how you’re planning to spend the money, and what you are going to do in order to pay it back. The last part is especially important, as you must demonstrate that you will be capable of gaining profits, and that through those profits you’ll be able to repay the lender with interest.

• Research the different types of loans and determine which would be the best one for you to send the application to. The SBA loans are backed by the US Small Business Administration, but they typically have strict eligibility requirements. There are term loans that are offered by financial institutions such as credit unions and banks, and can range from short-term to long-term solutions. Other options include lines of credit, merchant cash advance, microloans, crowdfunding, etc.

• At some point when you learn how to apply for a small business loan you should take the time to review your credit history and score. If your business has been around for less than three years, you probably won’t have much of a business credit history. You might have to use your personal credit history, and if it isn’t very good, you might have some problems getting approved. Review the credit reports and consider working with a credit repair agency that will help you remove any potential errors and clear some issues up.

More Tips About How to Apply for a Small Business Loan

• Compare different offers and terms. Pick at least 3 lenders that seem to offer the ideal terms and conditions for you. If you don’t take the time to review multiple options, you might miss out on a lower interest rate. Don’t apply for TOO many loans, however, since it could hurt your credit score.

• Read reviews about each lender you are considering to see what other businesses of similar size of yours are saying about them. Which lender seems to have a good rating with companies in your industry? Which ones are in solid financial standing?

Now that you know how to apply for a small business loan, start getting all of your credit info and reports ready, and create a good business plan. Start with a company like US Business Funding, which has an A+ rating with the BBB.

Pay day Loans from Loan Companies

If you think you’re the only one experiencing cash emergencies, you’re wrong. People face this situation more frequently than you think. Sometimes, the problem is confounded by the lack of cash options. When funds are exhausted and money sources dry up, people turn to pay day loans, such as those offered by a loan company.

Who are good companies?

Paydayloan companies are financial services providers operating in the United States. Pay day loans are just one of their many financial products. They have branches in five states – California, Colorado, Idaho, Nevada and Washington. Its first branch opened in 1983 in Renton, Washington.

How do I qualify for a pay day loan?

When you apply for a pay day loan with this company, you will be asked to provide certain information regarding your employment details and source(s) of income. You also need to have a checking account in order for your pay day loan to be approved. Pay day loans with laon companies are essentially unsecured and are only backed up by your postdated checks, so you will need to be able to issue those in order to qualify.

How much can I possibly expect to borrow with a pay day loan?

They operate following the strict regulations of the particular state they are in. Since most states regulate how much money you can loan, the loan company will ensure that regulations are followed while giving you the best service they possibly can.

However, you do need to be able to complete the requirements. The loan company will also look at your ability to pay back your loan amount based on your income. The more capable you are of paying back your loan, the higher your loan amount.

How much interest and what type of fees can I expect with a pay day loan?

The interest rates and fees differ, depending on the state you’re living in. Since most state laws regulate these fees, the loan company ensures that they operate within the set limits. However, you can be sure that the loan company will charge a standard rate and offer the best possible rates for your loan.

Will they check my credit history?

the loan company will not review your credit rating because their pay day loans are not dependent on your credit record. They also will not require that you provide a security deposit. They will, however, base their loan approval and your final pay day loan amount on your income and ability to pay back your loan.

Do I need to have a contract with them?

The loan company will ask you to sign the Loan Agreement and Disclosure Statement. This is your contract for the particular business transaction you are about to participate in and will outline the terms of your pay day loan, including the annual percentage rate, fees and the pay day loan amount. This is a very simple document to consider and sign to make sure that you know and understand the loan terms completely.

How do I apply for a pay day loan with the loan company?

Online: Obtain a copy of their pay day loan application form from their website and fill it out. You can either fax this form or scan a copy to send as an e-mail to the loan company. A customer service representative will then review your application. You can expect a call from them within one hour to inform you if your loan has been approved, as long as you submitted the form during business hours. If not, you can expect their customer service representative to get in touch with you within an hour of the next business day.

Through phone: If you prefer to transact on a person-to-person basis, simply call up their customer service representatives and have your loan application processed over the phone. You will need to complete your paperwork and have your documents ready when you go to visit their branch.

I’ve transacted with a loan company before. Can I still do business even if I’m already living in a different state?

Loan companies have branches operate using a centralized client database. Whatever information you provided during your first transaction with them will be easily accessed and used for reference the next time you do business with them. The quality of service is also maintained in all branches.

Where do I find a loan company branch?

If you wish to obtain a pay day loan from a loan company, simply find a branch in your location by doing a Google search for the nearest loan company in your area.

Can a Down Payment of $500 Get You An Auto Loan?

Down Payment is an essential element of your auto loan that determines loan terms and interest rates. You may have come across dealership advertisements that suggest that you can avail an auto loan with little or no down payment. However, is it possible to avail an auto loan with a minimal down payment of $500? Understanding the importance of certain elements can help you answer if $500 can work as a down payment or not.

$500 or More: How much Down Payment is good enough for your New Car?

The following factors will give you a clear understanding on down payment and if $500 is enough for putting money down or not.

1) Credit Score

Lenders and dealerships play an important role in determining the amount of down payment. Many dealerships want to help you to build a good credit score. Bad credit auto loans are a great way to build good credit, especially when your credit score is not perfect. Therefore, you will find dealerships that will provide you with bad credit auto loans on a down payment of $500. However, if you wish to obtain an auto loan from a dealership, you may have to opt for captive financing and you can lose out on other attractive deals in the market. So, it is essential that you check the auto loan contract in detail to find out whether it suits your needs or not.

2) Bad Credit Car Buyers

A low down payment amount is risky for bad credit auto buyers. You should aim for a high down payment if the FICO score is less than 670. Lenders view a down payment as a means to analyze your creditworthiness. Additionally, more the down payment, less the negative equity you carry. As the loan amount reduces with a big down payment, your monthly payments will become affordable. This will ensure regular payments and thus improve your credit score.

3) The Right Amount

Putting $500 of money down may get you approved, but it will not take you far. You will be faced with a big loan amount. The appropriate amount of down payment will differ from lender to lender. However, you should at least put down $1000 or 20% of the car’s value. A decent credit history can make $500 of down payment work. However, if you are dealing with bad credit, it is best to try for more. If there is no way in which you can make a big down payment, you can opt for no money down auto loans. The auto financing program will enable you to seek loan approval without a down payment. Before submitting your loan application, make sure your lender offers no down payment financing options.

Down Payment on Your Next Car: Do the Best you can

A hefty down payment will reduce the overall amount that you borrow from the lender. This will help you to make lower monthly payments and you will be able to enjoy a reduced loan term. Additionally, the interest rates will go down because of your creditworthiness. Save money for a couple of months so that you can put money down easily. There are many benefits to making a down payment, but if you cannot manage it, do not worry. It doesn’t make sense to make a down payment by putting your financial condition at risk. Seek no money down auto loan and buy your new car.