can you do a home loan modification if you are unemployed?

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My husband & I have been out of work for a year. We have spent all of our savings paying our mortgage each month. Now we are out of money and behind on the home loan payment by three months. The problem is they bank is willing to try and help us modify our loan but they want last years tax return. We made about $ 15,000 (unemployment -EDD). Our loan balance is $ 302,000 & our home just appraised at $ 265,000. My husband just got a new job this month and we can provide W-2’s but does anyone know if the fact they our tax return last year showed really low income will hurt our chances to modify our loan?

2 Comments
  1. Reply
    Expert Realtor
    April 29, 2011 at 11:38 pm

    There is no reason, even in this economy, for anyone to be out of work over a year…that’s a choice.

    So no, they are not going to work on a home loan modification if you tell them you have been out of work a year.

    You may not get a job you want, each of you may have to work two…but there are still jobs out there.

    Why can’t you work?

  2. Reply
    Becky
    April 30, 2011 at 12:30 am

    Jennifer –

    If you’re seeking a loan modification ‘now’ you may be able to qualify regardless of the upside down state of your appraisal.

    You can call your mortage company and advise that now your husband is employed and provide them the two most recent pay-stubs, bank statements, hardship letter, etc. If you have a surplus after all your bills are paid at the end of the month (meaning utilities, groceries, phone, credit cards, 2nd mortgage, etc) or at least be breaking even, you may be able to pre-qualify now that your circumstances have changed. You’re also going to need a contribution amount towards your loan and it’s delinquency. This should be no less than 1 full payment.. but more would be preferable. Generally the investors are looking for about 35% of your delinquency for a contribution and if you’re pre-qualified and ultimately approved you will have to provide that exact dollar figure if you do get approved for a workout. There may be servicers out there who do it different, however in my world if the check doesn’t come back with the mod documents the workout is declined and the property will go back to foreclosure.

    Having said all of that – your husbands income may not support the loan now and may not even support it if your interest rate was lowered and your terms extended. That is a reality you may have to face. The banks/investors are doing modifications and other workouts — but you do have to meet the criteria/guidelines and you have to be able to afford the new mortgage. If you don’t there isn’t anything that we can do.

    You may want to find out who the investor for your loan is and do some leg work on what they have available. Freddie and Fannie obviously have new programs out there to help people. You can also go to the following websites for more detailed information regarding yesterdays announcements:

    http://www.hud.gov for information
    or http://www.financialstability.gov/makinghomeaffordable/

    Both explain what is going on, requirements, what to do and how to do it in simple terms.

    Good Luck

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