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The

Mortgage
Survival
Guide

Don’t Roll The Dice With Your
Mortgage… Fix It TODAY In Seven
Simple Steps!

By Frank Curtin and Jeff Wynn
Copyright © 2007 by Frank Curtin and Jeff Wynn

All rights reserved. No part of this publication may be reproduced, stored in a re-
trieval system or transmitted, in any form, or by any means, electronic, mechanical,
recorded, photocopied, or otherwise, without the prior permission of the copyright
owner, except by a reviewer who may quote brief passages in a review.

A Smart Guides Publication

Published by The Smart Guides Publishing, a “The Smart Guides LLC” company,
PO Box 1131, Coppell, Texas 75019-1131
www.TheMortgageSurvivalKit.com

ISBN 13: 978-0-9790283-0-4
ISBN 10: 0-9790283-0-2

Printed in the United States of America

This publication is designed to provide accurate and authoritative information with regard to the subject
matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal,
accounting, or other professional advice. If legal advice or other expert assistance is required, the ser-
vices of a competent professional person should be sought.

- From a Declaration of Principles jointly adopted by a Committee of the American
Bar Association and a Committee of Publishers and Associations
INTRODUCTION ............................................................................................. 1
STEP 1 Collect All Information..................................................................... 3
STEP 2 Complete Financial Forms............................................................... 7
Basic Information ........................................................................................ 9
Income Worksheet ....................................................................................... 9
Creditor Worksheet.................................................................................... 12
Annual Expense Worksheet ....................................................................... 16
Monthly Budget Worksheet........................................................................ 18
Cashflow Worksheet .................................................................................. 23
Net Worth Worksheet................................................................................. 27
Financial Summary Worksheet .................................................................. 28
STEP 3 Understand Your Options................................................................. 33
Conventional Loan with PMI ...................................................................... 38
Conventional Loan without PMI ................................................................. 39
FHA Loan .................................................................................................. 40
FMHA/RHS Loan....................................................................................... 41
VA Loan..................................................................................................... 42
VA Vendee Loans ....................................................................................... 45
STEP 4 Determine Your Strategy .................................................................. 47
STEP 5 Prepare & Submit Your Offer ............................................................ 51
STEP 6 Negotiate Your Outcome ................................................................... 55
STEP 7 Finalize Transaction ......................................................................... 59
WRAP UP ...................................................................................................... 61

Appendix A Glossary Of Terms .......................................................... 65
Appendix B Phone scripts ................................................................. 75
Appendix C Financial Forms ............................................................. 85
Appendix D Lender Letters .............................................................. 107
Appendix E State-by-State General Foreclosure Laws ...................... 111
Appendix F The Fair Debt Collection Practices Act Summary........... 117

About the Authors........................................................................... 121
Introduction

INTRODUCTION

The Mortgage Survival Guide was founded on the premise that anyone can find their
best resolution to their mortgage problem is in seven simple steps. We have been doing
loss mitigation work for many years and we know that what we do is easy. We remem-
bered when Jeff was in the middle of his mortgage troubles and we used to talk all the
time about how often he was called by various collection agencies wanting to know
when he was going to pay them. It got to the point where Jeff would only answer the
phone when he knew the caller’s number via caller ID.

We spent enough time talking about his problem back then that we decided to do
something about it by putting to use all the knowledge that we learned about the proc-
ess. Several years later, we found ourselves contemplating how easy it would have been
for him to have done this himself back when he was going through it all. And then it hit
us that this is something the homeowner can and should do if they only knew how.

So we went to work documenting our process and realized that there were only seven
(7) steps to finding a solution and getting it implemented. Those seven steps are:

Step 1 - Collect all information
Step 2 - Complete financial forms
Step 3 - Understand your options
Step 4 - Determine your strategy
Step 5 - Prepare & submit your offer
Step 6 - Negotiate your outcome
Step 7 - Finalize transaction

What we came to learn is that as loss mitigation experts we already have the home-
owner complete the first two steps on their own and the remaining 5 steps would be
very easy to teach them. Even if you sought loss mitigation help, it wouldn’t matter
what firm or person you hired, they will require you to gather up all your information
and will have you fill out a financial form. The challenge for you is that they will have
financial forms that are far less involved than the ones contained in this guide. We have
you complete very detailed forms for two simple reasons. First, we want you to know
exactly what you can and cannot afford before you start talking with anyone about
what you are going to commit to paying over the next “who knows how many” months.
Second, we want you to be able to better understand the consequences of your spend-
ing habits by looking at where the money you make goes.

Once you complete these forms, every decision you make with respect to your finances
will be done with confidence because you will know what is possible for you and what
decisions will prolong your worried state. We want you to get to a solution that removes
the anxiety that you are currently experiencing so that you can put this event behind
you and get back to living your life in a financially stress free manner.
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So let’s look at the steps in detail:

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Step 1: Collect All Information

STEP 1 COLLECT ALL INFORMATION

You are going to gather up all your financial information as well as any documentation
that supports your hardship situation. Spend a few moments thumbing through the
financial forms in Appendix B. You will see many different types of expenses on several
different forms. These categories and expenses have been assembled to make this
process easy for you to complete and more importantly, to get you connected with
where your money goes.

Because of the volume of paperwork you are gathering, we suggest that you complete
an organizational exercise to help you quickly sort your documentation for easy refer-
ence. We want to encourage you to get an expandable folder if you do not already have
one, or at least establish some form of sorting that works for you. You will want to have
a minimum of 14 sections. Table 1 lists the recommended labels that you will start
your sorting:

Table 1 - Minimum Recommended Section Labels
1. Income Statements
2. Charitable Items (DON)
(INC)
3. Primary Residence (PR) 4. Household Items (HH)
6. Child Related Expenses
5. Transportation (TR)
(CH)
7. Meals, Entertainment, 8. Medical, Dental, Eye-
Misc. (ME) care, Insurance (MD)
9. Credit Cards, LOC’s, 10. Savings and Invest-
Past Due Accounts (CC) ments (SI)
11. Collections Corre- 12. Financial Statements
spondence (LET) (FIN)
13. Retirement Invest-
14. Other (OTH)
ments (RET)

For each item you have, place it with the appropriate title.

The following list contains the items you will want to gather:

… Pay stubs from your place of employment [INC]
… Charitable contributions receipts [DON]
… Mortgage statements including letters from attorneys [PR]
… Property tax statements [PR]
… Homeowners insurance premium statements [PR]
… Utility bills from past 12 months [PR]
… Phone bills and contracts [PR]
… Internet bills and contracts [PR]

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The Mortgage Survival Guide

… Cable bills and contracts [PR]
… Cell phone bills and contracts [PR]
… Home maintenance receipts for 12 months [PR]
… Clothing receipts [HH]
… Grocery receipts for 3 months or more [HH]
… Cosmetic and toiletry receipts [HH]
… Auto loan statements [TR]
… Auto insurance premium statements [TR]
… Auto maintenance receipts for 12 months [TR]
… Gas receipts [TR]
… Parking, tolls, bus fares [TR]
… Kids’ activities receipts (sports, dance, music, etc.) [CH]
… Day care or school tuition statements [CH]
… School supply receipts [CH]
… Dining out receipts [ME]
… Family activity receipts [ME]
… Baby sitter payments (estimated) [ME]
… Vacation expenses [ME]
… Dry cleaning [ME]
… Subscriptions, dues, and gifts including holidays and children’s holiday
gifts [ME]
… Pets (vet statements, food receipts, etc.) [ME]
… Health insurance payments (co-pays, prescriptions, etc.) [MD]
… Life insurance premium statements [MD]
… Dentist receipts (cleaning, etc.) [MD]
… Orthodontics receipts or statements (braces) [MD]
… Eyecare receipts [MD]
… Credit card statements [CC]
… Line of credit statements [CC]
… Education loan statements [CC]
… Business loan statements [CC]
… Any other type of charge statements [CC]
… Department store charge statements [CC]
… Past due account statements (medical, utility, etc.) [CC]
… Stock holding statements (mutual funds, etc.) [SI]
… Savings account statements [SI]
… Real estate owned paperwork [SI]
… Children’s college funds [SI]
… Business reports from your self-employment (balance sheet, profit and loss
statements, etc.) [FIN]
… Personal bank statements [FIN]
… Retirement account statements [RET]
… Any other income or expense item that will benefit your situation and
cause [OTH]

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Step 1: Collect All Information

While this list may seem overwhelming, it may not account for everything you have.
Nonetheless, by conducting this exercise, you will have an easier time completing your
financial forms.

You are now going to call your Lender and request the information stated on Phone
Script “Fact Finding” found in Appendix A. Remember that this call is your first call
and you will only request information about your loan. Do not get into a discussion as
to what your plan is at this time. You are not yet prepared to have that conversation
and you can simply inform them that you will call back when you are ready.

Once you complete the call and have gathered up all your financial information, you
are ready to complete your financial forms.

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Step 2: Complete Financial Forms

STEP 2 COMPLETE FINANCIAL FORMS
This section contains easy step-by-step instructions to complete your financial forms
that are included in Appendix B and can be downloaded from the website (excel work-
book file). For those of you who will not be using a computer and choose to use the
paper forms, the following instructions will assist you in knowing what values you must
calculate. The forms formula pages are located on the left-hand side of each form. The
information you need to complete the forms will come from the data you collected in
Step 1 and the instructions outlined below. If you do not own a copy of MS Money
www.microsoft.com or Intuit’s Quicken http://quicken.intuit.com, I highly recommend
that you buy a copy of this software. This software will afford you the opportunity to
monitor your budget on an ongoing basis and will allow you to stay on top of your
expenses month-over-month and year-over-year. You can establish the categories that
make sense for you and you can also create and track budgets, which is the most
important element of financial freedom.

You may want to place a book marker in Appendix C so you can follow along as we
describe each form. If you are using the paper forms, use the Smart Guides Formula
pages to see what values to insert into the corresponding fields. Once you complete this
section you will better understand your financial situation and you will have the oppor-
tunity to make modifications to your monthly budget based on your expectations of
your future income and monthly budget requirements.

The Smart Guides Formulas pages
contain field reference identifiers,
which identify that field’s value. The
actual field reference will always pre-
cede the equal sign (=) when that
field’s value is derived from a formula
or reference to another field. For fields
with a single reference, like A1, that
reference indicates a value that you
will enter from information you’ve
gathered. You may have to add up
some data to arrive at the number you
are seeking; however it will not be
found elsewhere in the forms. Some
fields have formulas that reference
other values on the page like C1 = A1 + B1 or INC1 = sum(C1:C7). The other type of
reference will utilize information from another form, like PR1 = CRE1. References that
use three letters and a number (CRE1) are generally utilized on other forms either in
formulas (CC4 = CRE5 + CRE6) or direct references (PR2 = ANL3).

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There are seven forms and an additional basic information form for the computer
version, which are:

X Basic Information - contains the common items used on all your excel work-
sheets.
Y Income Worksheet - contains your income sources minus your government
and pretax items which gives you your net useable income.
Z Creditor Worksheet - contains your contract debts like mortgages, auto
loans, and credit cards.
[ Annual Expense Worksheet - contains your non-monthly type expenses.
This is useful for determining a monthly budget.
\ Monthly Budget Worksheet - contains a monthly view of all your expenses.
Annual items are reduced to monthly items for budgeting purposes.
] Cashflow Worksheet – calculates the flow of money into and out of your
household monthly. It also depicts the percent of spend by category and com-
pares it to the recommended spend in that same category. This can be a very
eye opening exercise.
^ Net Worth Worksheet – contains all your assets and liabilities to give you a
picture of what you are financially worth.
_ Financial Summary Worksheet – contains a summary of the key items you
will need to determine whether or not you can afford the house you live in and
provides you with some insights as to what house value you should be living
in based on your income.

In the previous step, you were instructed to gather all the information necessary to
complete this next step. In a moment we’re going to find out just how well you did at
gathering all that information. The clock is ticking so let’s get started.

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Step 2: Complete Financial Forms

Basic Information
The basic information
is used to populate the
property address and
the lender information
on the excel workbook
only. When a package
is submitted to a
lender, there is the
potential for paper-
work to get separated,
misplaced, or lost
completely. As such,
we make sure that this
information is at the top of each page to minimize the risk of incomplete documents.
The address you will use is the address of the property that is securing this loan. Do
not use any other address here. It will only serve to complicate your loan resolution
process. Double check the lender information as an incorrect loan number could result
in your package getting routed to the wrong loan specialist or to no one at all, resulting
in possible delays. Finally, some government agencies that insure loans, like the Veter-
ans Administration, provide their own loan number. For your information we will call it
an Insured Agency Loan (IAL) Number and it will be located in your closing documents.
Check your closing documents to see if you have one. Most loans however, will not have
this number assigned.

Income Worksheet
The first form is your Income Worksheet. This is the form where you input all your
sources of income and account for the deductions most commonly seen on your pay
stub or pay statement from your employer. The purpose of this form is to determine
your maximum useable income. Do not deduct automatic payments for things like
autos, or personal savings accounts. Those items will be included on other forms.

This form is going to provide you with a clear picture of how much money you have
available to spend each month. It is a direct reflection of all your sources of income.
You may include alimony or child support in the ‘Other’ row if you want to declare it
and require anonymity if you desire. If you have income or investment items, like a loan
to a friend, that you are NOT receiving payments for, do not include them in your
income. It will only distort the real picture of your useable income.

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On this worksheet, you will notice five (5)
columns: Description, Your Income, Your
Spouse’s Income, Your Total Income, and
the Percent of Total. They are defined below:

1. Describe Your Income And Payroll
Deductions – List of items most com-
monly found. Be sure to account for
any items found on your W-2 that are
not included in the list. Do not in-
clude pre-authorized deductions like
cars or stock accounts. It is often the
case that your pay stub net earnings
will not match this form’s Net Income
Before Expenses (Useable Income).
2. Total Monthly Income – Input all of
YOUR income and deduction items in
this column.
3. Spouse’s Total Monthly Income –
Input your SPOUSE’S income and de-
duction items in this column.
4. Combined Total Monthly Income –
Add both your entry and your
spouse’s entry across for each item. This will provide you with a total for that
item. This column is auto populated in the excel workbook found on the website.
For those using the paper forms, we encourage you to double check your entries
to minimize any errors.
5. Percent – This is an optional calculation depicting the percent that item repre-
sents of your gross income (all income before any deductions). This column can
provide you with some insight as to how much money you earn by category and
how much of that money is taken away before you can spend any of it on your
living expenses. This column is auto populated in the excel workbook.

In the first section titled Gross Monthly Income enter in all your income sources as well
as the sources from your spouse. It is important to include all sources like alimony and
child support (unless you would put yourself or your children in danger doing so), and
business income. The more complete you are, the more accurate you will be in deter-
mining what’s best for you in terms of a solution to your situation. The Lender will be
fair with you when you lay out all your cards on the table when discussing your situa-
tion. We highly discourage entering in inflated estimates of your earnings. You will find
that it is difficult to get and stay current with your mortgage payments during a hard-
ship and if you find yourself behind again, the lender will not be as compromising on
your next go around. We urge you to be as accurate as possible so that you can deter-
mine the best solution for you based on your actual financial situation.

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Step 2: Complete Financial Forms

Your pay stub displays your gross wages earned and also depicts overtime, bonuses,
and/or commissions you have earned. Depending on how you are paid, you may have
to do some math to compute your monthly earnings. The following table outlines the
multiplication factor for your monthly income calculation:

How are you paid? Multiply by this
factor:
Weekly 4.33
Bi-weekly 2.17
Semi-monthly 2
Monthly You’re good to go!

If you receive your check weekly, take the weekly gross earnings and multiply by 4.33.
Do this for each item or group of items you are reporting. If you have more than one
job, be sure to use the appropriate factor for each pay stub. You must conduct this
exercise for each job you have. Do not include earnings like overtime that you do not
expect to be consistently getting. If you have an inconsistent stream of income month
over month, calculate the average of those earnings over a 6 or 12 month period and
use that figure.

In Appendix B, the formula sheet depicts the manner in which you will enter your data
and calculate totals. In the Gross Monthly Income section, the total combined income
referenced as INC1 is a value that will be used on the other worksheets. Its value is the
sum total of all your household income sources.

Section two titled Gov’t (Government) & Pretax Deductions contains the deduction
categories. If you are a wage earner, you will receive a pay stub that contains all the
information you need to complete this section. If you are self employed or a 1099 con-
tractor, you will need to estimate the amount of withholdings you should have based on
your estimated income. Similar to the first section, you will need to adjust your earn-
ings by the “How Paid Factor”. Use the same factor you used for the income portion of
that particular pay stub.

In this section, you should only input the values for items that are most often not
discretionary, like federal, state, and local taxes and Medicare. You should input 401k
and stock purchase plan auto-deductions, but remember that you can always suspend
or reduce those deductions while you are working through your hardship. That deter-
mination can be decided later. Once you total your combined deductions referenced as
INC2, you will have the basis for calculating your useable income.

Your useable income INC3 is the total amount of money you have to allocate to the
eight categories you live from. Quite simply, it is your total income (INC1) minus your
total deductions (INC2). This is the amount of money that your lender will take into
consideration when determining a workout plan for you.
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Creditor Worksheet
On the Creditor Worksheet are six
main sections: mortgages, auto loans,
credit cards, lines of credit, education
loans, and business loans.

There are seven columns on the work-
sheet.
1. Lender – who lent you the
money;
2. Describe Account – primary
residence, vehicle, credit card,
etc.;
3. Interest Rate – for that ac-
count;
4. Account Balance – may or may
not include missed payments;
5. Total Past Due Amount – For a
mortgage it could be a very large
number. For an auto loan, it
probably isn’t very high. For a
credit card or line of credit there
most likely will be a past due
amount declared separately on the statement even though it is also included in
the account balance;
6. Minimum Monthly Payment – often found on your monthly statement whether
it’s a mortgage statement, auto loan, or credit card; and
7. Number Of Late Payments – matters most with autos and mortgages. In the
mortgage section, input every mortgage you have, whether it is for a primary
residence, a second house, and/or an investment property. Be sure to include all
the notes you have that are secured by real property. This would include any
home equity lines of credit.

In the auto loans section input all vehicle loans (truck, car, etc) that you have titled in
your name or for which you are responsible for the payments. This would include
anything that you are a co-signer on; however, do not include the monthly payment
amount unless you either are making or have been ordered to make those payments.
Be sure to include trucks, airplanes, boats and any other items associated with trans-
portation and/or recreation.

In the credit card section, input each credit card account you have. This would include
any Master Card, Visa, Discover, American Express, or other credit issuing company.
Do not include revolving charge accounts here, like department stores and gas cards.

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