Do I qualify?

Pre-Qualification Application Process

We will need to do a thorough analysis of your financial situation to determine if your particular circumstances fit into a hardship the lenders are willing to rectify.

Thoroughly filling out the Pre-Qualification Application will help to disclose monthly Mortgage (rate, term, what is applied to principal (if any), interest payment, mortgage insurance, if applicable). We need to know monthly payment amounts for Property Tax and Hazard Insurance and whether or not this is paid in the monthly payment (escrow) or paid separately from the mortgage. Also, Homeowner’s Association Dues (HOA) if applicable. For ease, please provide your last Mortgage Statement – we will need it eventually.

The form will also itemize Expenses such as Secured Debt - cars, recreational equipment, etc. and Unsecured Debt - credit cards, installment/ personal loans, medical bills, student loans, tax liens, etc. plus notation of outstanding balances. We will then need you to break down expenses paid out as Cost of Living - utilities, cable, food, child care, spousal support and day-to day living expenses.

We will verify and document your Income from all sources, including boarders, child or spousal support, rent, SSI, disability income, annuities, etc. On the Pre-Qualification Application, we will need both gross and net income noted correctly. 

• If employed as a W-2 employee, it would be helpful to provide your pay stubs from the previous 3 months (we will need this to submit to the lender once we accept your case). If you choose to wait to provide the documentation until after contracting with Strategic Debt Resolutions (SDR), make sure the application has been filled out correctly. It is important we understand the difference between Gross Income from your Net Income (take home pay), so that 401K distributions, garnishment payments, medical insurance deductions, taxes, etc. are taken into consideration. 

Note: We will then deduct your Mortgage(s) and related expenses, monthly minimum Installment payments and Cost of Living expenses to calculate how far you are above or underwater each month. 

• If self-employed, we will need you to fill out a Profit and Loss Statement (P & L) showing each of the last 3 months of sales, commissions, etc. and deducting business related expenses to estimate your net income before taxes or after taxes (only if available). If you need assistance with this analysis, we can provide a (P & L) format and any other support you may need. It would be helpful to provide the last 3 month P & L, once finished, or you can choose to wait until after contracting with SDR. 

Note: We will then deduct your Mortgage(s) and related expenses, monthly minimum Installment payments and Cost of Living expenses to calculate how far you are above or underwater each month. 

• If you have other investment properties, vacant land or a second home, we will need the mortgage statement(s) and all other related expenses, such as property taxes, hazard insurance, HOA dues, utilities not paid by any tenant, etc. On the Pre-Qualification Application we will need all these costs noted as well as Rent(s) received. Rental agreements will need to be provided after the contract is signed to move forward. 

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One of the most common issues that the lenders will be looking for is if the monthly Mortgage Payment (added with the Property Taxes, Hazard Insurance, and if applicable, Homeowner’s Association Dues), is greater than your gross income(s). If the payment amount exceeds 31%, then the banks will be very responsive to modifying the monthly payment amount to not exceed this ratio. This is an easy Pre-Qualification for Strategic Debt Resolutions to quickly proceed through the processing and negotiating process. 

If your situation is not as easily identifiable as a good candidate for modification, we will need to gather more information to determine if we can succeed in obtaining the best possible outcome. Additional information will be needed to determine a good case that we are comfortable accepting.  
 

We will conduct a phone interview to determine if we can proceed. The interview will address the following issues: 

• Fully explain the hardship as it evolved and where it may be going

• In the case of imminent hardship, what conditions are coming in the next few months to create the probability of mortgage default, such as medical conditions, job layoffs or an ‘end game’ from using all cash and credit reserves or borrowing from a 401K

• If a loan modification was attempted by you or another company, what happened?

  • Were you denied and what reason was given?

  • Did you succeed to some degree and were offered a trial payment period?

  • Did you default at any point in making the modification payments you were offered?

  • Did your situation change in some way during the process to cause you to seek a better reduction in your payments in order to sustain the modification terms for the long-term?

  • We will need a copy of all paperwork you submitted to the lender and all modification correspondence they presented to you in order for us to understand the chronological steps and challenges you faced in trying to secure a workable solution. 

• If you have ever gone through a Bankruptcy (BK) in the last few years you will need to verify with your lender and / or attorney that the mortgage note was REAFFIRMED in order for us to modify it.

• If you are undergoing or will be undergoing a Bankruptcy Chapter 7, you will need to wait until your case is discharged or until a modification is completed to start the BK process. Make sure your mortgage is going to be REAFFIRMED in order for us to modify it.

• If you are undergoing a Bankruptcy Chapter 13, we can proceed through the process to obtain a mortgage modification. We will need written permission from the trustee to proceed. Generally, they are very supportive of any improvement in your monthly cash flow. 

Special Note: We may need you to first fill out and sign a 3^rd Party Authorization for us to submit to your lender(s). This form allows SDR permission to discuss any possibilities and receptivity for a loan modification before we accept and proceed with your case. 

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Some of the hardships that discourage lenders in helping are:

• Underwater mortgages (owing more than the current market value). If this is the only reason for modification, the lenders haven’t yet embraced principal balance reductions in order to create a more viable investment.

• Mortgage rates and terms that are not already at a low fixed rate unless a viable hardship exists.

• College education costs for adult children are contributing to the hardship.

• Extended families where the adult children are not contributing to the household as boarders or helping to off-set expenses in any way.

• High religious or charitable donations that are not part of a required tithing.

• Boats, RV’s, and other recreational use expenses (in some cases).

• Excessive spending on extraneous activities centered on entertainment, food costs, vacations and too many automobile loans, etc. 
  
  

The most important part of the interviewing process is what the short and long term goals are for the property owner:

• If a primary or a secondary residence, do you intend to hold the property for the long term?

• If an investment property and we can shrink any shortfall that may exist if the rent doesn’t cover the mortgage and related out of pocket costs, will that be acceptable?

• If a forbearance agreement (a payment plan to catch up on any arrears and bring the loan current) is not affordable, will you consider other options?

• If a ‘good faith’ payment to offset arrears, legal fees, late fees, etc. is required to modify the loan, can you afford that? Do you have any funds set aside for this potential lender requirement? If after our continued negotiations with your lender, the financial contribution is still too high, will you consider other options?

• If the arrears are added to the principal balance to create an outstanding balance that far exceeds the current market value, will you be committed to hold the property until the market rebounds? 

• If a modification is denied or inadequate to maintain consistent payments for at least 2 years, will you consider other options? 

The next step to consider if a modification is denied or not feasible, is enrolling in a government sponsored program (HAFA) that is being offered by increasingly more lenders. This will allow SDR to hand off all paperwork and analysis compiled to a short sale expert that will work towards selling your home (below the balance owed) before the foreclosure sale date. They can delay the foreclosure until a sale is accepted by your lender and a benefit starting around $3000 will be paid to help the Homeowner with relocation costs.