RAM MORTGAGEPRESENTS

SAVING YOUR HOME FROM FORECLOSURE

HIRE A PROFESSIONAL TO ARRANGE A SHORT SALE

SELL YOUR HOUSE YOURSELF

REFINANCE

BANKRUPTCY

SHORT SALE

• THIS IS WHERE A REAL ESTATE PROFESSIONAL WILL PETITION THE LENDER TO ALLOW YOU TO SELL THE HOUSE AT CURRENT MARKET VALUE WHICH IS LESS THAN THE LOAN BALANCE.

• A LENDER MAY AGREE TO A SHORT SALE BECAUSE IF THE PROPERTY IS FORECLOSED UPON, THE LENDER WILL HAVE TO SELL IT ANYWAY. WITH A SHORT SALE, YOU SAVE THE LENDER TIME AND FORECLOSURE EXPENSES.

HANDLING DELINQUENCY• HOW YOU HANDLE YOUR DELINQUENCY MAY EFFECT YOUR

CREDIT REPORT.

• A FORECLOSURE WILL REMAIN ON YOUR CREDIT REPORT FOR 7 YEARS AND ASSUMING THE REST OF YOUR CREDIT IS GOOD, YOU SHOULD BE ABLE TO BUY ANOTHER HOME IN 2 YEARS.

• IF YOU CHOOSE DEED-IN-LIEU OR SHORT SALE, NEGOTIATE WITH THE LENDER TO RE-AGE YOUR CREDIT REPORT TO REMOVE THE DEROGATORY INFORMATION AND BRING YOUR ACCOUNT CURRENT.

• CONSULT A TAX SPECIALIST TO DISCUSS THE TAX IMPLICATIONS. WITH THE LENDER ISSUING A 1099C FOR THE AMOUNT OF DEBT FORGIVEN, YOU MAY BE RESPONSIBLE FOR ORDINARY INCOME TAXES ON THE FORGIVEN AMOUNT.

SHORT SALE PLAN OF ACTION

• STEP 1: REALTOR AND YOU WILL CONTACT THE LENDER AS SOON AS

POSSIBLE THE EARLIER THE BETTER.

• STEP2: REALTOR WILL DRAFT A WRITTEN SUMMARY WHICH WILL

INCLUDE:• 1. STATEMENT OF THE PROBLEM

• 2. SUMMARIZATION OF YOUR EFFORTS TO RESOLVE THE PROBLEM.

• 3. SPECIFICALLY STATE WHAT YOU ARE ASKING FOR.

• 4. INFORM THE LENDER WITH WHOM YOU ARE WORKING AND HOW TO GET A HOLD OF THIS PERSON.

SHORT SALE PLAN OF ACTION

• STEP3: INCLUDE ANY DOCUMENTATION THAT WILL SUPPORT YOUR CLAIM SUCH AS OFFICIAL NOTICE OR UNEMPLOYMENT BENEFIT NOTICE, ETC.

• STEP4: SEND THIS REQUEST CERTIFIED MAIL, RETURN RECEIPT REQUESTED. BE SURE TO KEEP

COPIES OF EVERYTHING YOU SEND TO THE LENDER

FORECLOSURE TIMETABLE FOR CALIFORNIA

• DAY 1: YOU ARE IN DEFAULT ON THE 2ND DAY AFTER YOUR PAYMENT IS DUE.

• DAY 32: YOU HAVE NOW MISSED TWO MONTHLY PAYMENTS.

• DAY 32-90:SOMETIME DURING THIS PERIOD YOU WILL RECEIVE A LETTER STATING THAT THE NOTICE OF DEFAULT (NOD) HAS BEEN

RECORDED. THE SPEED WITH WHICH LENDERS RECORD THE NOD DEPENDS ON THE POLICY OF EACH INDIVIDUAL LENDER.

• NOD RECORDED: FROM THIS DAY, THE NEXT 90 DAYS IS A SILENTPERIOD IN WHICH YOU CAN PAY LENDER ALL BACK

PAYMENTS,FEES, AND OTHER CHARGES AND YOU DEFAULT WILL BE CURED.

• TRUSTEE SALE DATE: AT THE END OF THE 90 DAY SILENT PERIOD YOU WILL RECEIVE ANOTHER LETTER SPECIFYING

THE DATE THAT THE TRUSTEE’S SALE WILL TAKE PLACE. THIS IS USUALLY 3 WEEKS FROM THE DATE YOU RECEIVE THIS LETTER BEING SENT.

• RIGHT TO CURE: YOU HAVE UNTIL 5 BUSINESS DAYS BEFORE THE TRUSTEE’S SALE TO REINSTATE YOR LOAN (CURE) BY

PAYING ALL PAYMENTS, FEES, AND OTHER COSTS ASSOCIATED WITH THE FORECLOSURE.

• EVICTION: AFTER THE TRUSTEE’S SALE YOU MAY HAVE UP TO 30 DAYS TO REMAIN PRIOR TO BEING EVICTED.

SAMPLE LENDER & CREDITOR LETTERS• LENDER:

• RE: LOAN NUMBER 14365-3324

• 788 SYCAMORE STREET

• SAN FRANCISCO, CA 94111

• DEAR LENDER:

• I AM WRITING TO ASK FOR YOUR ASSISTANCE. ON NOVEMBER 15TH OF LAST YEAR, WHILE AT WORK ON MY JOB WITH X COMPANY, I FELL AND BROKE MY LEG.SINCE THAT DATE I HAVE BEEN UNABLE TO WORK AND HAVE INCURRED ADDITIONAL MEDICAL BILLS NOT COVERED BY MY INSURANCE. IT IS FOR THIS REASON THAT I HAVE NOT MADE MY DECEMBER AND JANUARY PAYMENTS. I HAVE ENCLOSED AN ACCIDENT REPORT FROM MY COMPANY VERIFYING THE DATE OF MY INJURY. I HAVE ALSO ATTACHED A LETTER FROM MY DOCTOR INDICATING THAT I WILL BE ABLE TO RETURN TO WORK ON MAY 1ST.

• I NEED YOUR HELP IN ORDER TO KEEP MY HOME FROM FORECLOSURE. I WOULD LIKE TO MAKE ZERO PAYMENTS FOR THE NEXT FOUR MONTHS.BEGINNING WITH JUNE, I WOULD LIKE TO MAKE A FULL PAYMENT AND A PORTION OF THE MISSED PAYMENTS UNTIL SUCH TIME AS I AM COMPLETELY CURRENT. THIS SHOULD TAKE ME 8 MONTHS TO GET BACK ON TRACK. I DO NOT ANTICIPATE HAVING ANY DIFFICULTY RETURNING TO WORK IN MAY. I HAVE BEEN WITH THIS COMPANY FOR 11 YEARS AND ANTICIPATE RETIRING WITH THEM IN THE FUTURE.

• I AM WORKING WITH____________ FROM______________. I HAVE PREPARED A BUDGET WHICH I HAVE ENCLOSED FOR YOUR REVIEW. YOU CAN SEE THAT WITH YOUR ASSISTANCE, I WILL BE ABLE TO MAKE IT FINANCIALLY UNTIL I RETURN TO WORK FULL-TIME.

• MY TELEPHONE NUMBER IS__________ AND THE BEST TIME OF THE DAY TO REACH ME IS BETWEEN _____AND______ EACH AFTERNOON. IF THERE IS ANY ADDITIONAL INFORMATION THAT I MIGHT PROVIDE, PLEASE LET ME KNOW IMMEDIATELY.

• THANK YOU VERY MUCH FOR YOUR CONSIDERATION AND ASSISTANCE IN HELPING ME SAVE MY HOME FROM FORECLOSURE.

• RESPECTFULLY,

SAMPLE LENDER AND CREDITOR LETTERS

• CREDITOR:

• DEAR CREDITOR:• DUE TO A LAY-OFF, I AM TEMPORARILY OUT OF WORK AND AS A RESULT, AM

EXPERIENCING FINANCIAL DIFFICULTY. I HAVE ANALYZED MY CREDIT SITUATION WITH THE HELP OF A CCCS COUNSELOR.

• AFTER MAKING A STRICT BUDGET FOR MY EXPENSES (BUDGET ENCLOSED) I FIND IT NECESSARY TO ASK EACH CREDITOR TO ACCEPT A REDUCED PAYMENT FOR THE NEXT THREE MONTHS. BY THEN, I ANTICIPATE BEING BACK TO WORK EARNING AS USUAL.

• I WOULD APPRECIATE YOUR COOPERATION IN MAKING THE PAYMENT PLAN WORK. IN PLACE OF THE REGULAR PAYMENT OF $50, I REQUEST THAT YOU ACCEPT PAYMENTS OF $30 PER MONTH DURING THIS EMERGENCY. I WILL PAY BEFORE THE 30TH OF THE MONTH.

• YOU CAN BE SURE THAT I WILL RESUME NORMAL PAYMENTS AS SOON AS POSSIBLE. I FEEL VERY BAD ABOUT HAVING TO ASK FOR THE CONSIDERATION AND I HOPE YOU UNDERSTAND. IF THERE ARE ANY CHANGES IN MY SITUATION, I WILL NOTIFY YOU OF THEM AS SOON AS POSSIBLE.

SAMPLE LETTER AUTHORIZING AGENT TO NEGOTIATE WITH THE LENDER

• DATE:

• LENDER’S ADDRESS• DEPARTMENT & INDIVIDUAL WHO HANDLES SHORT PAYOFFS

• RE: LOAN #• BORROWER(S)• PROPERTY:

• DEAR______________________:

• THE UNDERSIGNED (IS/ARE) THE BORROWER (S) UNDER THE ABOVE REFERENCED LOAN. THIS LETTER WILL SERVE TO AUTHORIZE YOU TO COMMUNICATE WITH MY AGENT, (AGENT’S & COMPANY’S NAME), CONCERNING THIS LOAN, INCLUDING COMMUNICATIONS REGARDING A SALE OF THE PROPERTY AND A POSSIBLE SHORT PAYOFF OF THE LOAN.

• THE UNDERSIGNED HEREBY RELEASES YOU AND MY AGENT AND BROKERAGE FIRM FROM ANY LIABILITY IN CONNECTION WITH A SHORT PAYOFF OF THE LOAN.

• SINCERELY,

MARKETING SOURCES AND HOW TO USE THEM FOR REFIANCING OR SHORT SALES

• Most Loan Officers and Realtors go to Title Companies for farms (list of potential clients) to solicit for business.

• Realtors and Loan Officers will have different criteria for requesting farms from a Title Company.

• A Loan Officer must be aware of market and product conditions. In other words they must assess the market for opportunities created by certain products.

• In today’s market place Notices of Default (NOD) and foreclosures are rapidly on the rise as the result of two loan products the option loan and interest only loans.

POTENTIAL CLIENT LEADS

• Two potential client segments as the result of the two identified loan products are:– 1. Clients already in default– 2. Clients having such loans who are approaching

the end of the interest only period or a recast period for the option product.

A Loan Officer can easily order a farm from a TitleCompany of those in a certain county already inDefault. You and a 1000 other Loan Officers can sendout postcards, letters or flyers to the same farm list of 400 names (called shotgun market). Your odds of success in 4 in 1,000.

TARGET MARKETING

• The following is a sample NOD List;

TARGET MARKETING

• STEPS IN ANALYZING THE NOD LIST

• 1. Check to see if the site address is the same as the mailing address;

– A. If no then the property is non-owner occupied.

– B. If yes then property is owner occupied.

2. Check the default date to see how much time you have left before sale.

3. Check to see the amount in default and the loan amount add together for the total amount owed.

TARGET MARKETING

• STEPS IN ANALYZING THE NOD LIST

• 4. Take the property address and go to Zillow.com for a quick property valuation.

• 5. Take the total amount owed and divide it by the Zillow value to get an LTV (Loan-to-Value).

– A. If the LTV is greater than 70% forget refinancing it.

– B. If the total amount owed is equal to or greater than Zillow value approach owner and lender with a short scenario. The contact information is on the NOD List.

C. If the LTV is between 70.01% and 75% then it could be a good opportunity for an investor to approach the owner offering them a few thousand and bringing the loan current for the transfer of title.

TARGET MARKETING

• By following the five steps in analyzing the NOD List you might find out that only 200 of the 400 are worth sending anything to for one reason or another. Assuming the standard 1% return ;

– 1. The shotgun approach results in odds of 4 over 1,000 or about .4% .

– 2. The target market approach assuming that 10% of the 1000 other Loan Officers know how to do it and the potential went from 400 to 200 the odds are 2 over 100 or 2%. Which odds do you prefer?

SAMPLE NOD LETTER

Dear________

Public record shows that you have been given a Notice of Default for whatever reason. We all have financial setbacks sometime in our lives and this may be yours. I am here to make you aware of possible solutions to your problem if not taken care of could result in your loosing the biggest asset you own and ruining your credit for 2 to 7 years. Please call for a free consultation showing options available to you that may save your home or at least leave your credit in good standing.

Sincerely,

SAMPLE FARM

HOW TO DETERMINE WHAT TYPE OF FARM TO ORDER FROM A TITLE COMPANY

• STEPS IN ORDERING A FARM• 1. Be aware of what is happening in the market

place;– A. Interest rates are rising– B. NOD’s are increasing

2. Home prices are dropping

3. Listings are staying on the market longer

INTEREST RATES ARE RISING AND NOD’S ARE INCREASING

• Loan Officers should analyze the effect rising interest rates will have on certain types of clients(those with I.O. & Option loans) and what correlation is there between I.O.’s and Option loans.

• Rising interest rates immediately means that anyone having an adjustable rate mortgage;– A. Their fully index rate (note rate) may already be

above the fixed rates available thus it will be easy to sell peace of mind.

– B. Any negative amortization may be eating away at the owners equity and will continue to do so.

– C. Future payments (after re-cast year) may be more than the borrower can afford.

DETERMING CRITERIA FOR A FARM

• A through C are good reasons to order a farm of those currently have an adjustable rate mortgage. But how far back should the Title Company go? Loan Officer should know that most adjustable rate mortgages recast in the 5, 7,10 or 15 year when needed to make sure the loan is zeroed out at the end of the loan term (15,30, 40 or 50 year loan). This is when the largest possible increase in monthly payments can occur. What started out to be an affordable monthly payment now becomes an unrealistic payment based on monthly income.

• The simple fact that the negative portion of an adjustable mortgage is eating away at one’s equity is reason to refinance. How much equity can you afford to loose?

DETERMINING CRITERIA FOR A FARM

• Most Interest Only loans are for 3, 5, 7, or 10 years period. But what happens at the end of the period? Like re-cast the loan has to re-amortorized in order to zero out at the end of the term of the loan. This could result in a large increase in monthly payments even though the interest stays the same fixed rate.

• Example: $600,000 loan at 6% Interest Only for 5 years with a 30 year term;

• Years 1-5 Years 6-30

• Monthly

• Payment $3,000 $3,865.81

DETERMING CRITERIA FOR A FARM

• As you can see most people do not get an $866 raise a month. Remember the longer the I.O. period the bigger the monthly increase. The majority of the I.O. loans have been written for a 5 year period.

• Re-financing for both loans discussed can be easily sold as peace of mind for the future against the possible loss or forced sale of one’s home.

• Once again, the Property Profile gives the address (Zillow can determine value) and the current loan amount to determine LTV for program max.

SAMPLE FLYER FRONT PAGE

Is your Option Loan eating away at your Home Equity and possibly putting you at risk of higher

Monthly Payments?

SAMPLE FLYER(BACK PAGE)

POSSIBLE PAYMENT INCREASE(INFORMATIONAL PURPOSES ONLY)

CURRENT PRINCIPAL BALANCE

CURRENT PRINCIPAL

BALANCE AS OF

PERCENTAGE OF ORIGINAL

LOAN AMOUNT

ESTIMATED PRINCIPAL

BALANCE AT RECAST

CURRENT INTEREST

RATE

ESTIMATED REMAINING TERM

AT RECAST*

ESTIMATED NEW MONTHLY MINIMUM PAYMENT

CURRENT MINIMUM PAYMENT

INCREASE FROM

CURRENT MINIMUM PAYMENT

 $527,646

 103.05%

 $588,800

 7.875%

 320 MONTHS

 $4,407.43

 $1,770

 $2,637

BACK PAGE CONTINUED

As illustrated above your Minimum Payment could go up to $4,407.43, which is $2,637.13 more than your current Minimum Payment. This new estimated monthly payment is triggered by one the following two events:

 1)     When you reach 115% of your initial loan balance, your unpaid

principal balance will re-amortize based on the remaining term of your loan. At that time, you will be required to make the full principal and interest payment for the remaining term of the loan.

 2)      After your mortgage recasts (based on your Note), or is re-

amortized. This means that the new minimum monthly payment will be calculated based on the unpaid balance at the time of the recast. The unpaid balance could be significantly higher than the original loan balance if you have not consistently made the Amortized or at least the Interest Only Payment.

RAM MORTGAGE

YOU NOW HAVE TWO

EXCELLENT REASONS TO

CALL BOB MELLINO AT

831.233.2229