I only post a quarter of the modifications we complete, and I have not posted any of them for some time.I will get caught up on that job when we get back from our road trip vacation.

But I just have to post this letter from a client regarding a modification that is just now wrapping up.

This is a big, old, charming house with a view in a city north of Seattle, the kind that requires a lot of upkeep.

The clients owed around $550,000 on a property with a Zillow value of $458,000. They had a 7.5% interest-only loan on the property and were paying around $3,200 per month plus taxes and insurance of around $900. The monthly payments of around $4,100 were killing them, and they had no money to pay for needed repairs.

The client had a big drop in income. He lost his business and had to go to work for a company which paid less than he was earning on his own.

They had applied for modification on their own but were turned down. We put together a proposal and got a quick result: A principal reduction of $100,000 plus a 40 year amortizing loan at 4.0%. The new payments are around $1,900 + $900 for taxes and insurance. Then went from $4,100 per month down to … Well, you can read the letter below, which is modified to keep the client’s identity confidential:

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July 4, 2012

Dear James,

I wanted to share the good news with you: I received a call from __________ Bank yesterday afternoon with an offer for a modification!!!

I’ll gather up the details, but it is basically a principal reduction of $100k, plus a 4% interest rate, plus they put our past due payments out at the end as a forbearance. All told, it puts our new payment all in at $2,472 vs. the current of $4,100.

This was, as you can imagine, incredible news. Candidly, I sat in my office and cried for about ten minutes after.

I can’t thank you enough for your help, and needless to say this is a life changer for us.

They need to complete a title search, and the intent is to have paperwork done such that our first new payment is the August payment.

Thanks again.

___________

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We believe that a big part of getting a good modification is 1) knowing what you can ask for, and 2) being a lawyer, because a lawyer is taken more seriously. Do not entrust your modification to a non-lawyer or to anyone outside Washington.

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We still have to work out a deal on the client’s second mortgage, which is with a different lender, one I have worked with before. The balance is $99,000. We are hoping to negotiate a payoff of around $15,000. The client was in a hurry for us to modify the second mortgage, however, seconds can take sometimes a year to complete. So I advised him to be patient and let us take care of it.

James