How to hold up under the stress and strain of getting a loan modification…

Every single day of the last 18 months I’ve talked to homeowners who are somewhere in, around, or near the process of attempting to get a loan modification.  Some who call or email me have yet to apply, some have only just applied, many have been living through the hellish experience for over a year.

There are those with a sale date only days away, and then there are those who have already lost their home to foreclosure.  I’ve spoken or emailed with literally thousands of homeowners, some for hours on end and on more than one occasion.

I’ve seen the emotions people go through as the process incomprehensibly drags on, month after unbearably stressful month.  I’ve seen the happy days, when something inexplicably seemed to go right, and the absolutely terrible days, when nothing the bank said made sense or came true.  It’s one of the fundamental paradigm shifts that everyone goes through at some point during the loan modification prices: they come to the realization that banks lie often and whenever it suits them, and there’s nothing anyone can do about it.

We weren’t raised to think of banks as liars or con artists, so it’s a difficult thing for most people to accept, but after a few first hand experiences, everybody ends up in the same place: stunned at the realization that the bank doesn’t care about us as customers at all.

There’s no point in sugarcoating this… getting a bank or mortgage servicer to agree to modify a mortgage is never a pleasant experience.  In fact, it’s pretty much horrible, even when it’s good.  You may finish the process with a permanent loan modification, but it’s unlikely that you’ll feel much like celebrating.

There are a few things you should know about the loan modification process, from the bank’s perspective, that may make it a little easier to get through the process.  Because in my experience, when it comes to loan modifications, it’s the uncertainty that will drive you to distraction.

First of all, it’s important to understand that banks know that some people who become delinquent and apply for a loan modification will end up bringing their account current again on their own.  The banks refer to this as “self-curing” and it should be obvious that to a bank, modifying a loan that would end up self-curing would be like throwing money out the window.

The problem is that the only way a bank can tell if a borrower is going to self-cure is to basically torture that borrower.  The bank will do just about anything to make a borrower who becomes delinquent feel uncomfortable.  Banks call at all hours of the day and into the evening, and, of course, send collection letters that are designed to make borrowers feel guilty, irresponsible, ashamed and afraid.  No one who falls behind on mortgage payments gets through it unscathed.  Most people stop answering their home phone, some even turn it off, and the days of happily walking to the mailbox to get the mail are over.

Homeowners who are delinquent on their mortgage are not only being tortured by their banks in the hopes that they will breakdown and bring the loan current on their own, but at the same time they’re tortured by others around them as well.  From television programs that talk about “irresponsible homeowners” who borrowed too much, to friends or relatives who don’t understand why anyone would “get in over their head,” it’s no picnic to feel like the only one in the room who is at risk of losing your home.

Bound by Shame…

You see, when people are ashamed of something they don’t talk to others about their problem.  They keep in inside… hidden… a dark secret that no one can ever know.  And that makes it worse… and worse… and worse.  It’s something like being in solitary confinement.  Over time, and loan modifications can take plenty of time, it can become unbearable… and lead to lashing out… sometimes at loved ones, or at others who are trying to help.

I can tell you that I’m contacted at least once each week by a homeowner who tells me that his or her spouse either has already left, or may soon leave the marriage because one blames the other for the predicament in which they find themselves.  Many others have told me that without some of the articles I’ve written, they would not have made it through the storm as they did, and frankly it’s these emails that have kept me going every time I wanted to stop writing on Mandelman Matters.

I’ve also received more than a dozen calls from people that have lost someone to suicide as a result of the pressure and shame that can come along with losing a home.  It makes me sick, and I’ve been reduced to tears more than a few times as I’ve come to understand what’s really happening in millions of American homes today.  I know… if the foreclosure crisis has not yet affected you personally, then you can’t see it or feel it… but it’s there and its growing every day.

There is still a portion of our society that feels little if any empathy for homeowners at risk of foreclosure, and they justify their intolerant views by telling themselves that foreclosures only happen to irresponsible homeowners… certainly never to them, they rationalize.  They, after all, are responsible.

Well, let’s dispense with these viewpoints right away.  It’s not the fault of borrowers, what we’re going through was caused by the banks, Wall Street, commercial, and miscellaneous others.  Period.  Is that to say that some homeowners didn’t borrowers more than they should have… of course not.  But, three years into this crisis, it has affected tens of millions and unless something changes, it will affect tens of millions more.  If you’re not losing your home today, you’re lucky.  And unless you sold bonds to Iceland… then our global economic meltdown and financial crisis is not your fault.

I’ve said it before and I’ll say it again now… foreclosures breed foreclosures… they lead to reduced consumer spending, which cuts corporate profits and leads to increasing unemployment, which leads to more foreclosures, which destroys even more equity and contributes to more foreclosures still.  And in addition to that disastrous downward spiral, foreclosures continue to make the toxic assets residing on the balance sheets of many of our nation’s banks, that much more toxic, thus deepening our problems.

So, if you’re a homeowner at risk of foreclosure, start by letting yourself off the hook because it’s not your fault, and you didn’t do anything wrong, except in hindsight, of course.  And if you’re still unsure, or have someone in your life that simply won’t listen to reason, send that person one of the links below, and if they still want to argue, tell them to come argue with me.

Senate Investigation Says Banks Caused Crisis Not Borrowers

Phoenix Couple Says Wells Fargo Is the Loan Modification Scammer

Mandelman U Presents Securitization of Mortgage Backed Securities

Physical & Fiscal Health: About Alcohol, Sugar, Exercise… and Sleep.

The stress involved in the loan modification process is debilitating, but there’s plenty you can do to make it even worse, and people do these things all the time.  Consider the following information on four things that you can do that will make the process that much easier.

A. Alcohol is a bad idea when you’re under a great deal of stress.  The problem is, it can also feel like the right thing to do, when you’re under a great deal of stress.  While there’s no way for you to stop someone who’s determined to drink through stressful times, you may be able to stop, or at least slow, those who just need to hear someone tell them to be aware of this issue.

I always tell homeowners entering the loan modification process that they should consider being aware of the tendency to drink more alcohol when feeling stressed… you want them to remember that drinking doesn’t make it easier… it makes it harder… much harder

B. Sugar is another drug that people turn to when stressed out.  It’s also a substance with few true positive benefits. Too much sugar makes one sleepy and the ability to calculate and remember is lost.

Here’s a link to an article about sugar titled: Refined Sugar… The Sweetest Poison of All.

C. Exercise is the best stress reliever of all for several reasons.  In fact, the best way to deal with stress is to increase the amount of exercise you get.  Any exercise will do.  Even walking three times a week can mean the difference between restful sleep and nights spent tossing and turning.

• Exercise decreases ‘stress hormones’ like cortisol, and increases endorphins, which are your     body’s ‘feel-good’ chemicals.  The result gives your mood a natural boost.
• Physical activity can take your mind off of your problems. Exercise usually involves a change of     scenery as well, either taking you to a gym, a park, a dojo, a biking trail, or a neighborhood     sidewalk, all of which can be pleasant, low-stress places.
• Exercise helps you lose weight, and many people feel a boost as clothes look more flattering on,     and as a result they project increased confidence and strength.
• Stress can cause illness, and illness can cause stress.  So, improving overall health with exercise     can also save a great deal of stress in the short run, by strengthening your immunity to colds, the     flu and other minor illnesses, and in the long run, by helping you stay healthier longer.
• Research shows that physical activity may be linked to lower physiological reactivity toward     stress. Simply put, those who get more exercise become less affected by the stress they face.

The 180-Day Savings Challenge

Maybe your loan will  loan be modified, maybe it won’t.  Maybe it’s bankruptcy that’s the best path, or maybe it’s not.  There are many potential outcomes for homeowner at risk of foreclosure.  But all of them involve one thing: money.

The answer is money.  What was your question?

Start saving on day one of your loan modification process, and it may be advantageous to think of this  saving as part of a challenge.  Here’s what I’ve often said to homeowners when they’ve called me to tell me they just started the loan modification process.

1. I start by reminding them that the process is lengthy, stressful and no fun.

2. I explain bluntly that six months from now, they may or may not have been successful getting their mortgage modified, but regardless of where that situation stands six months down the road, they’re going to want to have as much money as they can sock away.  And there’s no better time than right away to start saving even small amounts.

3. I recommend everyone applying for a loan modification start their own 180-Day Savings Challenge.

4. Here’s all you need: A calendar to mark off the days as they pass, and chart progress along the way.  A large jar in which to throw change and small bills.  A commitment to answering the question: How much can we possibly save in 180-days if we try our absolute hardest to save every nickel.

Why is this important?  Because if your lender or servicer fails to modify your loan as you hope they will, the only thing that may save your home is money, so you’ll need all you can get.  Also, along the way… your lender or servicer may do something illegal or unfair under the law, and an attorney may be able to file a suit on your behalf.  Check out how homeowners are slowly regaining some of their power:

Court Rules Private Right-of-Action Exists for Violations of CA Civil-Code-2923-5

HAMP-It’s a Real Class Action

But suing a bank isn’t cheap, much less free, so you’ll need money on hand for that.  And lastly, maybe everything will work out exactly as planned, meaning that your loan will be modified to fit your financial situation, so you won’t need the money you’ve saved over the past six months, but who cares?

Won’t it be cool to know how much you can save in a six month period of you tried your hardest to do so?  You bet it would, so there’s no reason not to get started immediately.  Hold a garage sale?  Sure.  Babysitting on weekends, why not.  Bake sale… sure but make it sugar-free.

In Conclusion…

I have to tell you that after spending all of my waking hours shoulder deep in the foreclosure crisis, watching our government bungle everything it touches, and talking with homeowners in almost all 50 states, I’ve wanted to quit a thousand times, and yet I’d never did.  Because I’ve also met some of the world’s greatest people who I am proud to call friends today.

We’re in this together, whether you’re losing your house today… or possibly tomorrow.  The link below will take you to my last bit of advice… and it’s perhaps the single most important thing you can do.  It’s called the REST Report and you send it into your lender or servicer.  It shows how the investor who owns your loan will come out by modifying instead of foreclosing.  I wouldn’t even consider starting down the loan modification path without it.

How and why to use the rest report when applying for a loan modification

And I’m here: mandelman@mac.com