Loan Modification Confusion
Trying to get a loan modification from your mortgage lender when you are facing financial hardship can cause a lot of confusion and frustration. Why do they make it so hard and how can they keep losing your paperwork over and over again? Is it possible they are that inept or is it something else? Some people think that the banks are stalling on purpose while they try to figure out the best way to hide the billions of dollars of non-performing loans from regulators or that the bank would much rather foreclose and collect the insurance money on the defaulted loan. If banks really wanted to help homeowners keep their home, then why make it so difficult to apply and qualify for a loan workout?
A loan modification should ideally be offered to distressed borrowers who can prove they fit into the guidelines within 30 days of applying. How often does this happen? How about, NEVER! It can take over a year to get a loan mod approved, if it ever does happen. Unfortunately the most recent statistics prove that less than 10% of eligible borrowers are offered a permanent loan modification. Why is this happening and is there anything at all that the average Joe Homeowner can do to gain their mortgage lenders cooperation?
The answer to why it is happening is pretty simple-banks will only do what makes them money, and modifying loans does not usually do that. Even with the federal stimulus funds and monetary incentives to modify loans, the total number of permanent loan modifications to date is only a fraction of what the fed had projected. It seems that while lenders were making those risky mortgage loans, they were also hedging their bets and actually insuring those same loans for failure. So, either way the bank wins.
Now, what if anything can the average guy to do convince their mortgage holder to give them a second chance with a loan modification instead of trying to foreclose on the loan? It may be an uphill battle and many times homeowners give up because they are simply tired of fighting, but persistence and knowledge can win the day when it comes to surviving the loan mod ordeal. How many times can you be told no before you go away? Well, it may take 8 or more times of applying before you get the result you want. That’s right-just because you are turned down once or even twice you should not give up!
But, the only way to get your lender to review your loan modification application again is to revise and update your information. Your financial statement which details your monthly income and expenses is changing all the time as you make adjustments to your budget. So whenever you submit new updated information it will be reviewed again for eligibility. Here’s the tricky part though, you must take the time to learn how to prepare your application so that you know it fits right into the approval guidelines if you hope to get a loan modification approval. Submitting the same, unacceptable information will not get you the results you want. You can use a software program that actually helps you prepare an accurate and acceptable application-all of the critical calculations are done automatically for you. Use this information on your updated application and it could be the difference between denial and approval.
Tags: foreclosure
