The Loan Modification System

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1 The Loan Modification System The Contact Information Before entering Loan Modification, be sure that you enter your client's information in the Contact Information on the left side of the main screen. Note that the data or information entered in the Contacts Information will be copied automatically into the Loan Modification area once the Loan Modification button is clicked. It is advised that you do not enter into the Loan Modification area until you have the information entered into the Contact Information area so you can save some time. Once the basic information for the client is filled in the Contact Information, click the Loan Modification button located on the bottom right of the main screen to go to the Loan Modification area. This is the freestyle area of the Loan Modification area. The RMA Application To understand how Loan Modification works, we first introduce the Request for Modification Affidavit (RMA) Application which is simpler to use. To begin, click the H.A.M.P. icon at the top of the screen.

2 Once the icon is clicked, several forms will be displayed in the screen. On the left side of the screen is the RMA form which is the letters for Request for Modification Affidavit. Below is the first page of the form. This is a short form that has to be filled-in by everybody that wants to apply for a loan modification with the bank after March While this form is pretty much self explanatory, you have instructions at the top left of the screen by clicking the button instructions on how to fill in instructions. Click there if you need assistance. Also, in order to facilitate fill-in the form, you can click the yellow bulb light icon at the right side of the form. This icon highlights the fields available to clearly see the fields that are needed to be filled-in. To turn the highlights off, click the same icon again. If the screen is a little too small for you to read the labels of the form, you can click the zoom in icon at the top of the screen to enlarge the screen. As a matter of fact, you can click it even twice and that will make it really large so it will be very easy to read. To put it back to its original size, click the zoom out icon on the left side of the zoom in icon.

3 The first thing that you would do is fill-in the RMA form given special attention to the second page where we have the Income and Expenses for Household Assets. Note that the second page of the form is for a whole household. If both spouses contribute to the income of the house then both should be considered and consolidated in the form. Below is the second page of the RMA Application Form. The different entries are pretty much self-explanatory. Also, note the first column in the Income and Expenses for Household form is for the gross income and not the net income of the household so be sure that you don t deduct your taxes from this column. In the second column where you have the monthly household expenses and debts, the credit card and installment loans to be entered are only the total payment per month and not the total debt.

4 Also, in the first page of the RMP Form, note that the client must have a Hardship Affidavit in order to qualify for the program. The Loan Information To the right of the screen under the calculator, you will find a section where you can enter the loan information for the 1 st, 2 nd, and 3 rd mortgage. Once the RMA Form is filled, the information for the loan can now be fill-in. Only the first mortgage is important because only the first mortgage can be modified at least on the H.A.M.P. In the first column of the 1 st mortgage loan information, there are several fields that needs to be filled-in such as the unpaid balance, remaining term, rate, monthly tax, monthly insurance + escrow, and the monthly payment with principal interest. On the rate field, the rate is written in decimal form. The field will convert the decimal number automatically as a percentage. For instance, in order to enter 10% you need to type 0.1 and in order to 5% you need to enter 0.05, the field will convert that automatically and will display the number as a percentage. If you enter 5 for 5%, what you will have is 500%.

5 On the PI monthly payment field, the amount can also be entered manually. This is useful when the monthly payment with principal interest is different from the one calculated by the program. That is possible in some cases when the paid balance is not exactly what you enter into the program, maybe the remaining term is approximate. In this case, the calculation of the program will be perfect but it is not the desired result. In that case, the monthly payment with principal interest should be entered manually in the PI monthly payment field in without taking in consideration taxes and insurance. In the second column of the loan information is the information data about the loan. The fields in this column include the loan number, the loan service company which is usually the bank that gave you the loan. Note that it may not necessarily be a bank. You can select from the list a different company if you know the name of your loan servicer, but you cannot add in this area. If you want to enter a name of a service that doesn t exist, you need to go the previous screen by clicking the back button at the top. Other fields also include the address, the loan servicer contact, the phone number, fax number and the loan servicer . Below is another field called the current property value also known as Soft Appraisal or Broker Price Opinion. Once you click the CHECK BPO button, the system will take you to If you have entered the property address correctly, Zillow will try to find a BPO for you automatically. Note that you can make some changes based on your department number in Zillow. Once you have the basic data for the loan, the BPO property and the income expense fields which is the page number 2 of the RMA form, you are ready to click the pink button that says click to calculate the eligibility of the prospect.

6 Note that you cannot click this button unless you have filled-in all the fields indicated above. This pink button will calculate the eligibility of the prospect. If the prospect is eligible, conditions will be displayed in the area below the pink button. However if the prospect is not eligible, possible reason may include too much income or zero income. To print the RMA Application (if the prospect is eligible), you can click the print button at the top of the RMA Application area. To go to the budget center, click the Budget Center icon at the top of the RMA Application area. In the Budget Center Area, enter the living expenses of the client so the net surplus will be between 150 and 300. The Amortization Tables Area To go to the Amortization Tables area, click the Amortization Tables icon at the top of the RMA Application area. In the Amortization Tables area, the table for this particular modification loan will be displayed. In that area, you can see how the payments change over time such as 10 years or 30 years later as it should based on the H.A.M.P guidelines. Note that when you close the Amortization Tables area by clicking the Back icon, the advance screen will be displayed. This advance screen contains all the numbers that are relevant for the guidelines.

7 The advance screen from amortization tables area In the advance screen area, it is not necessary to fill-in all the fields. However, you can review and learn how this client has been eligible or not especially if you want payment attention to the NPV loss in the column of Foreclosure Scenario and its counterpart NPV Loss Interest Forgiven Debt under the Loan Modification Scenario. These are very important fields because the NPV Loss Interest Forgiven Debt has to be lower than the NPV loss in order to be approved. Also, you can check the area below the loan modification scenario an affordable front and DTI level which should be 31% and below the payment which doesn t include tax or insurance. At the top left of the screen is a field that when you click on it, it will show several articles such as The New H.A.M. Law in a nutshell, How to know if your loan is with Fannie Mae or Freddie Mac?, Basic Qualifying Questions to Ask, What basic information you need from your client?, and Basic Facts you need to know. To go to a particular article, click the View it button. To go back to the RMA application area click the H.A.M. icon at the top right of the screen. You can still go back to the advance area by clicking the H.A.M. icon with the Advance label in the RMA application area. To go back to the freestyle area or the Loan Modification area click the Back icon at the top right of the RMA application area.

8 In the case where the client or the prospect is not eligible for the H.A.M. Program, the freestyle area is recommended. HOW THE FREESTYLE/LOAN MODIFICATION WORKS A. Information Area This is the area in Loan Modification where you can see the borrower s data, the coborrower s data and the templates that you have in the templates manager. B. Central Area Private Notes Section This is the section under the central area where you can enter notes that are supposed to be only for you and your team. In other words, they will not be seen by your clients. Status Report Section This section is where you can enter information and to your client at a later time. To do this, click the envelope icon. This is useful way to be updated to your client.

9 Main Tabs Section This section is where you can put notes, history, documents, s, invoices and progress with your client. Progress Tab is a special area where you can enter information that you want to share with your client on the internet. To do that, you need to click the FTP button. Before doing that, you need to setup the connection to the internet. You need to setup your File Transfer Protocol coordinates in the Program. C. Bottom Area This is usually where the freestyle works. Mortgages Section In freestyle, you are going to evaluate what (depending on the bank policies) would be the acceptable DTI percentage that particular bank would accept.

10 In the Proposed Deal column, the PITI or the principal interest tax and insurance is calculated. Other fields under the Proposed Deal column include; the monthly payment, the LTV or the Loan To Value which is related to the sale price, the CLTV or the Combined Loan To Value that includes not only the first mortgage but also the 2 nd and 3 rd mortgage, the DTI or Daniel Thomas Italy which is the relation between the income and the debt, the PTI or the front-end DTI which is the relation between the payment and the income. The closer that you have the PTI to 31%, the more chance that you are approve with the lender. Then we have the net surplus field that is related to the income and expenses. The income and expenses here in the freestyle is different to the income and expenses in the H.A.M.P. To go the Income and Expenses area using freestyle, click the Income & Expenses button right beside the mortgages column. Once Income & Expenses is clicked, the income, expenses and assets for the borrower and co borrower and their net surplus are displayed. This net surplus will be copied to the main loan modification screen and will be entered in the net surplus field. To copy the date from the Current Deal column to the Proposed Deal column, click the Copy Current to Proposed button. This is a fast way to copy everything from one column to the other and modify those proposed deal to adapt to you client s needs. To the right of the proposed deal is where you select the lender. If the lender is not in the list of the lenders we provide, you can add a lender by adding a lender to the add lender list in the lenders area by clicking the Lender List button. Note that you can add unlimited lender and/or modify the information on them.

11 Once you select the lender that you want to use, click the blue arrow to copy the data. You can also do the same for the other mortgages since they have different lenders. The Income and Expenses In this section are several fields and buttons: the CHECK BPO button works the same way in the previous step in the RMA, the Shortsale field calculates based on the percentage that you select, the Purchase Price is for information purposes only, the Total Income that comes from the income and expenses, Property Type, Property Units, Property Use, ARM/Fixed which is used to select if the loan is arm or fixed, and the current monthly payment. Note that this current monthly payment includes the 3 mortgages: 1 st, 2 nd, and 3 rd mortgage. To consider the first mortgage, just look at the current monthly payment under the current mortgage tab.

12 The Task Manager This task manager is explained in another article. It is the same task manager in the main screen. The Forms Menu The forms in the Forms Menu are needed for freestyle modifications. All the forms can only be opened once their particular GO buttons are clicked. You can also print, or efax any of the forms by clicking icons on its left side.

13 1. Application Form Once the Go button of this form is clicked, some of the data from the Loan Modification Area will be copied to the Application Form area. 2. Check List In the Check List area are the things that your client will need to add some other options than the ones suggested in the form. Note that you can only edit this form by clicking the Edit Form button in the Check List area. You can only modify it for only one client, the current client and for all future clients. All your changes will be used and will be the default of future clients if you save it as default. Or you can edit the form only for the current client and leave it the way it was for future clients. 3. Letter of Hardship The Letter of Hardship form is where the letter of hardship is displayed. It can also be modified using the Edit Form button. 4. Authorization Form The Authorization Form can only be edited partially. You can edit at the bottom where a text area is located and edit which agents can be authorized to handle you client s case. Usually, the mortgages agents are entered in the text area. Also, you can display the lean holder for the 1st 2nd or 3rd mortgage. In some cases, you will need authorization for the 1st 2nd 3rd mortgage lean holder. 5. Client s Responsibilities This form is modifiable. Note that the buttons on the second column of the Client s Responsibilities form are used to enter the symbols that will be replaced by the correct data when you print or the form. 6. Working Agreement Form You can modify it to suit your particular intentions or to comply with your state laws. Note that you need to be sure that this is reviewed by your attorney, correct and is applicable to your company. If you click the Edit Form button, there is a symbol for your company. This is a short name for your company (maybe initials) that will be entered to your company setup of the program.

14 7. Power of attorney This form is also modifiable and in which you can enter some fields. 8. Attorney Retainer Contract This form is only applicable for your attorney. 9. Lenders Benefit Analysis This is an interesting form because it will calculate or suggest what the lender is going to take if it goes to foreclosure. It is a way to show to the lender how much they are going to close if they go foreclosure. This form is not editable. 10. Client Benefits Analysis In this form, you can include all mortgages proposal to show to the client how much money they are going to save if they you go into modification as suppose to going foreclosure. This is the opposite of the Lenders Benefit Analysis. 11. Client Proposal This is a modifiable form is basically the proposal from the client to the bank. While the system works automatically and based on the data that you have in either the 1 st, 2 nd, or 3 rd mortgage, it is going to present those numbers in this form. 12. The 4506-T and 1021 Forms These are modifiable forms displayed in PDF format.