Loan Modification Requirements

Loan modification sounds intimidating to the average homeowner but the process is indeed simpler than you might think. We have tried to break it down in simple terms so you can better understand the process. Ultimately, a successful loan modification requires an agreement between the homeowner and the lender on the new terms of the loan causing both parties to become better off after the transaction. Below you will find what is required for each party.

For The Homeowner

Three elements must exist to make a homeowner a good candiate for loan modification:

1. Desire to Keep the House

2. Experienced a Financial Hardship

3. Income/Employment - Able to continue making lower payments

Examples of Hardship:

• Loss of Income
• Sickeness or Medical Issue
• Death in the Family
• Divorce
• Predatory Loan
• Increase in Family Size
• Anything outside of your control which has caused you to be in a difficult financial situation

For The Lender/Servicer

Lenders and mortgage servicers each have their own loss mitigation departments and policies, but what is clear is that no lender wants yet another house to enter foreclosure, specially with all of the recent government incentives and assistance. As such, given foreslosure the alternative, as long as the homeowner can still make payments on the loan, the lender would be willing to work with him/her to prevent a foreclosure. Typically, lenders' requirements are to make sure that the deal makes fiscal sense. For example, they must determine that the revenue lost in lower payments on the loan would still be better than the cost assosicated with the foreclosure and maintenance of the home after it is given back to the bank. In certain situations, this really gets down to bad vs. worse for the lender, but as a general rule, it is always better to let the homeowner keep his/her home and not take the house back.

What is the Secret?

The secret to a successful loan modification is finding the right formula.  This formula lies within your income to expense ratio.  The key to this formula is to show the lender that you cannot afford your current mortgage terms, but you are a very qualified borrower at better terms.  Basically you want to show that you can’t afford the current payment but you can still afford a substantial payment.  The lender wants to know that if they do all this work for a modification the borrower is going to be able to make the payments.  The difficult part is that many times the lender will ask very pointed questions and many people do not know how to answer in the best way to help their case.  Our specialists know how to answer and they know how to achieve this specific formula.  Fill out the form to the right and talk to them about this today.