There is a lot of misunderstanding surrounding the Loan Modification process. We are here to shed the light on these myths and provide the resources necessary to get you a lower payment. Here are a few important tips that will help you complete your objective.

1. Be Kind. As the old adage goes, �??One gets farther with honey than with vinegar.�?? You mortgage lender is not like the collection agents that hound you day and night. They are civil and most really want to help. The best way to get what you want is to make the person on the other end of the phone your best friend.

2. Understand The Process. If you go in with intelligence and explain to the Loan Modification Dept. your situation, the chances are actually pretty good you will walk away with a lower payment. The good news is that they do not want your house, they just want your monthly payment.

3. Have your paperwork ready. This will be the most impressive thing you can do. If you are prepared they will be much more likely to work with you.

Here is what they are going to require:
 
                1. Hardship letter �?? This is an important piece to the puzzle. Type it up so it looks professional. The letter needs to include the reason for your request (i.e. job loss, sickness, divorce), why you feel you  should qualify for  a lower rate, and that you are willing to do what it takes to maintain your home.

                2. Budget �?? Many times they will go over the budget during the initial call so have this ready to read to them. Also, fax it with the other information. 

                3. Pay Stub �?? They are going to require proof of income.

                4. Tax Returns �?? You are going to need to prove your income for the last two years.

                5. Bank Statement �?? Usually they need at least the last two bank statements.

4. Ask Questions. Be proactive and ask for the next step. They receive a lot of request so you will need to give them time to do their job, but you don�??t want to get lost in the avalanche of paperwork.

5. Keep paying your mortgage payment. Do not expect to be able to skip a payment. The Loan Modification approval is based on you continuing to pay your payment on time.

A few days ago I received a frantic phone call from a friend of mine. He asked to meet me at my office and before he hung up he said, �??I am in a real mess, Matt. I am not sure what to do.�??

He and I met on Wednesday of this week. He came in with a handful of documents and when we sat down he was visibly anxious. He laid out before me his story and as he did he showed me the supporting documentation as if he were on trial.

Unfortunately, his story is all too common in my line of work. He, like so many, bought a house and had to use a sub-prime mortgage in order to get the financing. He did well for the first two years, but last year his interest rate went adjustable. As was the case with most sub-prime loans the lender did not require the borrower to escrow his taxes and insurance. Sub-prime lenders did not have to work under the same stringent rules as conventional and FHA lenders.

So, about the same time his interest rate went from 8.99% to 11.95% in a period of six months he also noticed they started taking $125 a month out for taxes and insurance. Sub-Prime lenders were notorious for forcing escrow if you have not paid your taxes. To make matters worse since he had not paid his taxes they started another account for future taxes to be taken. His total payment went up about $425.00 a month.

Then, Murphy decided to just move his whole family in my friend�??s life. He ends his story by saying, �??Now my wife has lost her job. I can�??t keep doing this.�?? He then looks at me with pleading hope that I will have a magical answer.

I ask a few prodding questions. Does he want to keep the house? Yes, he says. How long does he have left until his negative escrow account is back to positive? We figure out that it�??s about six months. So $177.00 a month will be freed up in about six months. The good news is that he has been making the payments on time and it looked to me like he would be a perfect candidate for a Loan Modification, which is fancy speak for a lower rate without refinancing.

We call his lender and after about 20 minutes he has qualified for the Loan Modification. He is approved for a 5.75% interest rate fixed for five years which will reduce his payment by about $300.00. In six months his payment will actually be lower than when he first got the mortgage. He walked out of my office on cloud nine!

The bottom line is that it is imperative to speak to your lender well before you get into trouble and before you are late on your mortgage payments. Talk with them about your situation. They have enough empty houses on their roster �?? they do not want you house! Call your lender today and see if they can help you get some breathing room.

Tomorrow we will get into more specifics about what you lender is going require before you speak with them.

�??Nothing is Priceless�?? �?? Maxed Out.

I always tell my conspiracy theory buddies that the truth is way more brutal than any 9/11 commission, UFO sighting, Illuminati or anything else. The truth of life is that everything is driven by GREED. Unlike Gordon Gecko (Michael Douglas) in the cult classic Wall Street, greed is not good.

Enter: Maxed Out. This book jumped out at me as I was perusing the hallowed halls of Barnes & Noble. I was, ironically, headed down to Florida and was looking for some light reading. The book called out to me and demanded that I pick it up. I devoured it within two days and gave it to my wife. She also read it in two days.

The author, James D. Scurlock delivers in gut wrenching detail the lives of the blood thirsty credit industry vampires and their endless quest for higher interest rates, late payments fees, and over the limit charges. I highly recommend it for anyone with a pulse. We all need to be aware of what the stakes are and who is really running the show.

I went on a field trip with my 3rd grade daughter yesterday to our county 4-H. I learned a lot about farm animals. It was quite amazing because I saw the farmer of today and even with all the modern technology, (like a $280K combine that has a stereo, GPS system, and two seats) it felt like going back in time.

Did you know that there is a shortage of rabbit meat in America? I didn�??t either. According to the rabbit farmer I spoke with yesterday, he told me the demand is so high he can�??t keep up. He told me of a girl in Kentucky who made 10k last year simply raising rabbits. Now, that doesn�??t sound like a lot, but I am sure it was not her full time job.

We can make money doing pretty much anything. I heard a gentleman who called in to the Dave Ramsey Radio Show and said he had cleared $150k starting a dog poop clean up business for wealthy individuals. That amazed me.

How is it that we as American�??s can live in the richest country in the world and yet we as consumers have achieved a negative savings ratio? I am in that lot. I often see myself as a child in the toy store, demanding that my mother buy me the latest gadget and throwing a tantrum if she dares say, �??No!�??

So how do we transition out of such a mindset? I have learned the hard way, it�??s not about your income. The more money I make the more I spend. The restaurant name changes from McDonalds to Ruby Tuesday�??s.

I have some ideas that have worked for my wife and I over the last couple years.

1. Use cash only. When McDonalds began taking credit cards I heard their average per order revenue almost doubled. My wife and I struggle with this even using our debit card. I use the card to fill up the gas tank and forget to tell her. We go out to eat and in the hurry of it all we fail to write down the receipt amount. Next thing you know we have three Overdrafts at $30 bucks a pop. Ouch! We have decided to just use cash. We take out a certain amount at the beginning of the week and use it till it�??s gone.

2. Consider the cost. This is one my favorites. I used to be a compulsive shopper. I would buy something just to fill that empty void somewhere. It is a scary place because you realize you are just buying �??stuff�??. Now, I have gone the opposite way. I usually wait and wait before buying anything. Sometimes I never buy it at all. It is a great feeling to not be tied to an emotional chain. When you are making a purchase I would recommend waiting 24 hours before actually buying it. Try it out with the small stuff first and then when the major purchases come you will already have the �??Wait�?? muscle flexed and ready.

3. Savings. Can we move to number 4 now? Wow! This is a tough one. My wife and I struggle with this even today. There is no excuse �?? there just always seems to be something that needs to be done. Is this reality or is it just our perception that we feel as if we have done without for so long. We as Americans have no real clue about what it means to be poor.

4. Write a plan. Laura and I love to make lists and notes. We are weird, but it does work. It clarifies the soul and lets you know where you stand.

As you can tell this is a continuous work in progress at our house. We don�??t have all the answers, but we are working through it, and that, I believe, makes all the difference. I am not sure I have to buy a farm to experience the simple life. I think it�??s a mindset. My wife already said she would not let me buy Rabbits. Something about there was no way she was going to eat Thumper. What do you think?

I�??ve been thinking a lot about my Grandfather lately, and how he�??s gotten to where he is today. He lives in a million dollar home on a PGA level golf course, drives a luxury SUV, gets a new one every three years, travels to all the family functions and enjoys bringing little things that he knows everyone will enjoy. But he didn�??t start out that way. The farm store at the front of the property was run by family, including himself for most of high school, selling things raised and made there on the farm. Spending money that should be saved for a rainy day just wasn�??t an option.  They lived with the mindset of not spending any more than necessary for today.

So what changed? How have we gone from forward thinking, to, my rent/mortgage is paid, the car note and insurance is paid, I�??ve got enough left over to go out two nights a week and take a two week vacation this summer. Sure, marketing geniuses have convinced us that their product alone is the answer and we can get it right now, but only right now, for only $149 $99.99, and at midnight tonight, this deal is gone forever. But is their �??solution�?? truly necessary, and second, can I still set much more aside for tomorrow? Instead of getting the slightly smaller house with a one car garage instead of two, or the slightly less inexpensive car/truck, we go out and get everything we can.

But doesn�??t it turn out in the end that by going for all the bells and whistles now, that we have to sacrifice in an area we forgot about because we weren�??t looking forward? I�??m certain my Grandfather could have purchased a new Mercedes when he retired. Instead, he bought a very average three year old luxury SUV, and got most of his money out of it two years later because he kept the miles low. Here�??s the bottom line. When are we going to get back to old school money thinking, and only spend for what is absolutely necessary today, knowing that we have enough to get through a crisis tomorrow.

Tax returns and stimulus package checks will be arriving for most of us within the next 90 days, if they haven't arrived already. Are you willing to be different and go old school? From a Debt Free Start, here�??s old school thinking:

Don�??t worry about the neighbor getting the big screen TV or new motorcycle with his refund, it�??ll be on craigslist in six months and you can buy it for cash at half of normal retail with what you saved after paying off debt.

�??Faith is not simply a patience that passively suffers until the storm is past. Rather, it is a spirit that bears things - with resignations, yes, but above all, with blazing, serene hope.�?? -
Corazon Aquino quotes (Political leader and president (1986-92) of the Philippines, b.1933)

For merchants to accept credit cards, they have to meet industry standards that credit card firms impose on merchants to protect data. The standards are administered by the PCI Security Standards Council in Wakefield, Mass., and include making retailers maintain firewalls to protect data inside their computer systems, encrypt data when it travels across public networks, and generally restrict access to cardholder data. However, all it takes is a few seconds of exposures for tech, savvy thieves to intercept the data.

The unfortunate part is that most ID theft is never reported because it usually involves a family member or someone you know. 43% of victims believe they know the person who stole their identity. 16% of identity theft victims are also victims of domestic harassment/abuse by the same perpetrator. These victims believe that the identity theft is used as another way for the abuser to continue and demonstrate his harassment and control. Amazingly enough the most common reported perpetrator in cases where a child's identity is stolen is the child's parent.

So how do your protect yourself? FreeCreditDusters.com is always looking for cutting edge ways for our readers to stay informed and protected.


1. First off it is important to find out how your data is compromised. The mail, trash, and computer are three of the main ways your information is stolen.

Mail Tips:

• Don't leave outgoing mail in an unsecured location. Deposit mail in USPS collection boxes.
• Don't leave mail in your mailbox overnight or on weekends.
• Have your mail held at the post office while you're out of town.
• Get a mailbox that locks.

Trash Tips:

One man's trash is another man's treasure. Nothing could be closer to the truth when it comes to discarding personal documents. If it has your social security, bank account, credit card, or any other identifying number on it, remember to shred it before you trash it. And don't skimp out on your shredder. We recommend a Royal 10-Sheet Cross Cut Paper Shredder.

• Bank statements.
• Credit card statements.
• Pre-approved credit card offers.
• ATM receipts.
• Canceled or voided checks.
• Expired passports, visas, and credit cards.
• Tax forms.
• Bills.
• Paystubs.

Computer Tips:

• Use anti-spyware and anti-virus software.
• Be wary of online shopping sites. Only shop at sites that you trust and are secure.
• Don't get baited by phishers.
• Encrypt your wireless internet connection.
• Erase your hard drive if you ever sell or give away your computer.

2. "An ounce of prevention is worth a pound of cure. " - Benjamin Franklin. There is no better quote that illustrates the importance of protecting yourself from identity theft. There has been a lot of press and misunderstanding about all of the different Credit Watch and Protection Services on the market. It is a hot topic so everyone is getting in the game. All of them are not created equal so you will want to do a little research and find which one fits your needs. We have recommended a few of the ones we have found to give you the biggest bang for your buck.


We personally like IDWatchdog because they protect all three credit bureaus and seem to have the most robust service that we have seen.

IdentityTruth is another service that offers a good set of tools. The tagline: Is your identity safe? Check it in 5 minutes! IdentityTruth - the earliest possible notification of identity theft.





The point is that you need to have a service to be fully protected. We will be posting more on the identity theft crisis on how to stay safe.


Thanks,

Matt Sullivan

Time, not money is the key to a great Spring Break!

Back in the day there was a big movement of child experts who claimed that your kids require, �??quality and not quantity.�?? If this has been your philosophy I have a question for you, �??How is that working for you? �??

The cold, hard reality is that your family is just like anything else worthwhile. It takes both quality and quantity to be successful. This is the case with any endeavor from your career, to your hobby, and anything else.

 If you decide this spring to plant a garden, then you cannot simply till the soil, plant the seed, and wait for the harvest. A gardener knows that he must care for the little seedlings even though he cannot even see them. He realizes that in order for that seed to shoot roots down and have enough strength to break through the ground it is going to need a fertile, well-cared area.

Your children are no different. They require you to spend time with them. Do not make the mistake of feeling as if you have to go somewhere to have a great time. Love in any family is spelled  T �?? I �?? M �?? E!