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Loan modification

I had bought a home 2  1/2 years ago now being foreclosed. I tried for loan modification as my mortgage is extremely high.  2200 a month for a 284,000, 1178 sf house. I would like to know what would allow for loan modification, as I turned in my financial papers, and what was asked for, and the bank did not seem to feel it would work.  I want to know is it income, credit score, what would require the bank to lower the mortgage to 1300 a month? Thank you. carla_rayne@yahoo.com
  • July 12 2009 - Wilsonville
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Answers (3)

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It  is several factors.  Credit is usually not one of them.  However, your income, debts and description of your hardship are the major ones used to qualify.  If any of these are not prepared properly in accordance with the bank's requirements, your modification could be denied.

The lender will evaluate your DTI (Debt to Income) ratio.  This is a comparison your monthly expenses vs monthly income.  If this ratio is too high or too low you will be considered under or over qualified for the modification.

If you are looking for additional information on How To Qualify For a Loan Modification, just Click On My Profile.
  • July 14 2009
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Carla,

A loan modification involves your monthly income levels, budget, and how these fit into your current mortgage and proposed modified payment. If your lender took bailout money (TARP), then the HAMP would be the best situation for you.

Credit score is not a factor when applying for a modification.

When is your sale date? did you receive an NOD, or is your lender telling you that they are accelerating the process. If so, you need to seek legal representation. Our attorneys do not take on a client within 21 days of a sale date, so if it is close you may in some trouble. However, there are other remedies at your disposal to keep you in your home indefinitely.

Basically, the bank wants to see an ability to make your mortgage payment if they change your terms. Possibly, when you gave them your financial information, they concluded that this would not help your situation and your ability to pay your mortgage. There are ton a of varibles that go into a modification.

Carla, if you want a deeper understanding, you can contact me and I would be happy to see what your situation calls for. best of luck. take care
  • July 13 2009
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Carla,
 
Your lender would have to agree to lower the interest rate to 3.66% on a $284,000 loan (you didn't say what your loan amount was, so I took the only number you provided). Taxes and insurance would add something. I'm not sure credit score and income is entering into this equation, but I don't know who your lender is. It can do whatever it wants. Credit score and income are used for refinancing, not loan modifications.

Under the Making Homes Affordable Act (click here), a lender can modify your loan and get the rate down so that your loan is affordable. I've heard of interest rates being lowered to as much as 2%.

You can get in-depth answers to your questions at The Mortgage Rescue Cafe, a website I set up just for this purpose. I can't urge you strongly enough to take every step you can to fight off foreclosure.

You can also find HUD-certified counselors at the Making Homes Affordable website.
  • July 13 2009
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