I spoke to a woman the other day who had taken some of my courses. She had struggled daily for months to get a loan mod approved.
Finally, third major effort, she made it. Congratulations to you, "Nikki". You are amazing. And you are one of the very few out of hundreds of thousands who are
in these forever type "trial periods" to actually get anywhere.
Meanwhile, if you are an investment banker with Goldman Sachs, you are not in the recession anymore.
All over.
Another woman I spoke with yesterday was interesting.
She and her husband have amassed $130,000 in
cards she owes on. And a big second on the house.
For business purposes. She got caught in the real estate crash. No fault of her own, really.
She said, what should we do?
I explained to her what I would do. I would settle those obligations. And I would try for dime on the dollar type settlements and work on getting good FICO scores and be out of this mess in six months.
Rather than enslaving my family for year after year.
She said, but what about ethics? What about what we teach our children about keeping our word and doing what we say we are going to do?
I say, reality is what is real. Drop your concepts. Drop your beliefs that are stopping you from seeing what is real.
You are paying several THOUSAND per month forever to the banks.
Those banks got a huge bailout from the US gubmint.
At your expense.
And the money they extended to you was PRINTED anyway.
It is completely all set against the average person this way.
Don't take it personally. It isn't personal. It's business.
Allowance for bad debts. Reserves set aside for expected losses.
See what is real, settle, and move on. What a gift that is to your family, I told this woman. To be out of any obligations and free. And even with a decent FICO.
Yes, The recession is over if you happen to be an investment banker with Goldman Sachs.
If you are like the rest of us, it may not be quite over.
Mortgage Balances are Falling Slowly, Home Values Still Plummeting
What many folks don't get is that this is the Depression not a recession.
Credit was extended like crazy. The US government and the banks and the whole world's financial system is built on a lie. A lie that it's all about consumption and the US consumer getting even further into it by buying more Chinese made junk at Walmart.
Well, we don't need that. We know there are options, don't we?
Take a look at the chart on the right. You'll see owner's equity has plummeted to a new low. That means that if the typical American "owns" 35% of his or her house…then who owns the majority?
In my book, the banks own residential real estate in the United States right now. And Fannie, Freddie and the "Too Big to Fail" banks are really who I mean.
Does that change perspective on this? An enormous grab from the middle class to the big banks and ultimately the US government?
Now, what do you think?
Write down what you would do in this situation, as a comment. Thanks!
warmly,
P.S. Please leave a comment here about what you think I should tell these folks who I write about above.
Copyright (c) 2009 Calworth Glenford LLC. All rights reserved. Duplication of this email without written permission is prohibited.
Chart used by the kind permission of ContraryInvestor.com.
Filed under Blog by admin
Comments on »
I'd rather the banks be forced to help this lady rather than seeing it going to some hot shot's bonus or BMW car payment. The other choice is to figure some kind of workout like adding the interest to the principal balance and extending the term of the debt. At least consider a restructuring.
well here's the thing. Interest rates are at 29% on this debt. But the family is paying on time and has a high FICO score.
Just because they can pay now doesn't mean they should pay. Does it?
warmly
–Richard
Congrats to Nikki……I am one of the many out there that has been in this so called loan mod for 8 months now…..my lender always seems to need one more document from me…..I finally had to hire an attorney to get the lenders attention. I filed a complaint months ago with Special Agent of the Office of the Special Inspector General for the Troubled Asset Relief Program. The Agent was very sympathetic to my situation but basically could not do anything for me, hence hiring an attorney. So my hat off to anyone who can get a mod done on there own.
Regards
Pat
Richard I admire your work. Might be too late for me but will monitor your success and wish you the best. You are a critical thinker and wish I had met you sooner.
Richard,
I am struggling with a similar situation. I had 108,000 in credit card loans, a condo with 200k in first and home equity, 72,000 in student loans. My condo is only 3 years old and I am upside down in it. I got an interest decrease in 3 of the 5 credit cards through a debt councelor, and after 2 years of payments I am only 20k improved. At this rate, it will take me 5 years to pay the credit cards and at this point I am a believer in your recommendation to settle my debt and attempt a loan mod with the bank. I would be very interrested in your advice.
Student loans are ugly. Not too much you can do with those in many cases. There are some things you can do, though. Investigate.
I think I would think about settling the cards hopefully for a dime on the dollar. End up out of debt in 6 to 12 months. It just makes no sense for many folks to just pay and pay and end up with years of virtual debt slavery. At least it doesn't make much sense to me.
I would also think about a short sale on the condo. Then you are out of debt entirely and can buy something else and start building equity again.
Condos are still falling in value in most places but you could pick up a great deal as a buyer.
warmly
–Richard
she should settle with the creditors starting at .05 and going no higher than .10. they're sucking the life out of enough others between the late fees, over the limit fees and the interest. "it's in there". then she should work to get a modification on the 2nd. years ago i called my 2nd mortg co and told them i just couldnt pay that amount. they dropped the interest rate 3pts and the payment was reduced by about $180. well now i'm about to be relieved of my contract position at at&t and my husband possibly at sprint. i'm going thru NACA to hopefully get my mortgage reduced to something more reasonable and affordable while on unemployment while i work these programs. if Uncle Sam is extented you a hand of assistance, grab it and squeeze it for all it's worth. i love the US and i love Uncle Sam. God Bless the USA!
Great points. Thank you! I wouldn't depend on NACA though. Stay involved in the process in case someone drops the ball. Talk to the lenders yourself, directly, now and then. That goes for any third party solutions or help with loan mods.
warmly
–Richard
I am in month 6 of the program. My creditors are now "threatening" me with the charge off reminding me that my credit will be damaged more than bankruptcy. I go between days of really scared and really empowered. I have offered the banks 15% of what I owe on the cards under my husband's name to clean his credit up (my biggest fear is that our house insurance and auto insurance will cue off our credit rating and drop us). I wish the Free & Clear Club had more members in it that had been through all of it to guide the rest of us, but reading it just caused me more anxiety because we were all in the same boat and it was sort of depressing. I think once you get to the end of the program and can breathe again you should be offered free access to the Free & Clear Club to help the rest of us who can't sleep at night. I pray this all works the way Richard tells us it will.
Thanks for the suggestion, Debra. It's a good one.
You are talking to a lot of folks in the thick of it, and that gives us a distorted picture because we don't get to talk to all the folks who successfully settled their debts and left their bank debts behind. So I think you really have a good idea. I am sure things will work out very well for you because you are already one of the few who is taking the bull by the horns instead of just ignoring the problem hoping it will go away like most people do.
warmly
–Richard
I am in a very similar situation, and worse. Because of the RE crash
and the investor mortgage loan change (have to bring in 25% cash to all transactions) I lost two triplexes, because I could not get financed out of seller finance notes, couldn't sell a high end home we remodeled, couldn't sell another gutted home we paid on ($3K/mo. $50k down), that was lost to the bank.
I got your Loan Mod Course, and was ecstatic to receive a 3% interest rate on a $650K note from Washington Mutual. However, four duplexes I own have been in the loan mod process now for 16 MONTHS!!!! Auctions have been postponed, time drags on. Ocwen was modifiying two of the four loans, got one modified for 4.3% - ecstatic. The next one they offered was 7.89% with all the added payments and interest. Payment without P&I was $200/mo more than the original loan payments. I refused the offer. They said I had better sign the offer and send it in with the money or they couldn't postpone the auction. I received no official notice of the auction from the attorney (who' website was under construction and unavailable) only that the loan moderator would "see what she could do" one day before. I checked all the auction sites. No record of the duplex anywhere. I thought the loan was sent back to be re-negotiated.
Yesterday a guy from the bank declaired I was no longer the owner. WHAT!!!!!!!!!!!! I had remodeled and a potential renter was veiwing the apt.
Please advise Richard. Now I've a foreclosure on my credit, tons of money lost, my favorite tenant lives there, something is wrong with this pciture!!
BOA has had my other 2 loans now for 16 months. They sent similar offers with a 7.9% rate, and a payment that is higher than the rents.
Please advise.
Thank you
That's very upsetting. But I would probably move on. You can certainly do some amazing things to improve your credit and actually have a pretty decent credit score. I am really not big on doing loan mods for investor owned properties unless you can really get a positive cash flow and have a good possibility of being out of the hole. And this is not the way lenders are doing things. Although in Loan Mod Breakthrough I do teach how to get principal reductions.
Congratulations on doing the mod with WaMu though. You are really good to get a mod done! You have to be, because they are just so tough to get done.
warmly
–Richard
Ok people I see your pain here and really I have been thou it before
Let me say this don't sweat it stop worrying they can't get blood out of a turnip
I'll be back on later and tell you why you should stop worrying
Thanks Don
Richard,
Can you recommend a good company to assist with a loan mod?
I sure can. http://www.loanmodbreakthrough.com/contact/
All the people in the Loan Mod Breakthrough course are great. Please understand that I get no compensation from recommending them and that I cannot stand behind them although I would work with any of them if I wanted a loan mod for myself, my mom or a family member.
warmly
–Richard
If you know of a proven, reputable credit card debt settlement company, I would love to have their name; seems like most of those advertising are scams. Thanks.
You and me both. I love the Do It Yourself approach as I think it is best. But I hesitate to recommend a firm to do this for you. I have one in mind but I can't yet give it a full Gell-Dog recommendation.
warmly
–Richard
She should tell the crooks/banks to take a flying leap off the nearest bridge to match up with the market drop in real estate they caused and made hard working families suffer for their gain! It is time for the people of the United States to stand up and be united against the fraud and scams the banks pulled to take advantage of the people!
I agree with your position on the duty we have to our families to be survivors of this mess and not forever enslaved to a corrupt system that not only destroys families, but countries as well. It's not often brought up but I think doing what we need to do to get out of these horrific debts is the best thing we can ultimatly do for the future of this country. As systematic debt slaves we're useless to just about everyone. This system must be broken and rebuilt on a sound foundation or we won't have a country worth fighting for and it's clear our leaders in Washington are too bought and paid for to do it. The revolutionary war wasn't exactly moral in many peoples eyes, but it was quite necessary, and doing what you can to help yourself, and your family while at the same time striking a blow against this totally screwed up system is the best for all concerned in the long run. If everyone just keeps paying the corrupt system will just keep growing.
Hi Richard. My case is simple compared to these others. Hope you can help them and me as well. I have BOA CC debt of approx. $32,00 (2 cards). I rent. No house/car payments. I spend what I receive just to live and can't continue paying on these cards. At the moment my credit score: 757 (Transunion). I expect to see that go down the toilet but that's ok. First things first. The phone calls have not yet begun since I made my December payments, but as of this writing I am overdue on both. I guess the ride is just beginning, and it's kinda scary. I subscribed to your e-class on the subject and I guess soon I'll be doing my homework. Will something else arrive via USPS? I frankly don't recall.
You may have some hand-holding to do here. So….when that first call comes, I need a script or some talking points to tell the 'concerned' person who calls. I understand there are some things I should definitely NOT say, and I really need to learn what they are.
And concerning this message: do you (or a trusted employee) respond directly, or do I need to somehow navigate back to this message board? I'll save the email Kathleen sent just in case.
Best wishes
Jim in Cali
From the look at those charts and what I have read, I will simply let everyone else know this is not the time to make the rich richer and the poor, poorer. Take the time to re-evaluate your finances and make the necessary adjustments in every possible area. There's no way we be able to survive at this rate. Identify your expenses, settle for way less than what you owe and make the necessary adjustments to stay above water.
I am a Real Estate Investors and do Forensic Loan Modification Audits and Short Sale. I take my job very seriously when it comes to educating the homeowner. It's my job to educate myself and make my contribution in solving this housing market we living in. I have hear those being affected and go back to find the tools to help these homeowners. I look at everything from programs available, the laws and what's working for others in similar situation. That's my passion.
In summary, I know many of us can't afford to seek professional help or don't trust some that are out there advertising how they can help. But timing is very crucial here and unless you want to end up in a public shelter, I suggest to take another look at charts like the ones presented here and take some advice in taking action. There's help and tools out there we can use. If you don't know what those are, start asking. Because this is a topic everyone today is talking about and being affected by somehow. Some more that other. Get your loan debts taken care first, adjust your mortgage if you can; if not, Short Sale the property and downgrade to a more affordable housing condition.
I myself did - and still do - appreciate lenders' having been there for me when I wanted to purchase courses by credit card, or to pay big dentists' bills, etc. - am grateful for their assuming the risks that X numbers of people would not pay them back for the loans they made … now am working on my mindset, to generate enough monthly income to pay off all those debts I incurred (in fact, what have been your observations about the most do-able, reliable ways for most ordinary people to generate enough income to pay off debts quickly? Perhaps real estate– wholesaling?). …I just don't appreciate such high interest rates, of course; I'd like to think they set those so high just to be able to stay in business lending (thereby helping many more people), because so many people stop paying, BUT- from bits of news I've heard, credit card moguls earn MUCH more than absolutely necessary to keep their businesses' lights on, so maybe many more people are paying interest rates much higher than are absolutely necessary (maybe because they lent much more money than seemed warranted to people like me to buy wealth-building courses and pay for big dentist bills, etc.)….
I also appreciate the integrity of borrowers who pay off debt- want to be able to continue doing that myself.
AND I appreciate your generous, relatively affordable information on strategies for survival while digging out from under mountains of debt, Richard- also your alternative, contrarian perspectives … thank you! …Did you once say that prayer: "Lord, help me to not waste this suffering!" -at some time when you were struggling with debt, too? Your surmounting such a challenge and then going on to help others do so, too, are wonderful examples for people to emulate however we can, too!
Thank you! -Also to your assistant Katherine, who has been SO helpful to inquirers, offering us links to informative webinars & web pages to order your courses … in fact, she invited me to read this blog & offer a comment, so that is what I am doing- and why: out of gratitude for her and also to you, certainly.
Much appreciated!
You are so nice, Judi. Thank you very much. Katherine is the BEST.
I've been through all this before. Never had to file for bankruptcy, but I thought I would have to. Had great credit, terrible credit, great credit…owed HUGE amounts of money, paid it back.
The important thing about it all is to realize that none of it is that important. We'll all die someday, maybe in a minute or a decade, and debt ain't the worst thing that can happen to us
warmly
–Richard