What is the main thing banks are looking for to approve a mortgage loan modification?

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  1. Reply
    Ethel C
    February 16, 2011 at 10:16 am

    Banks rarely approve loan modifications.

    There has been much talk about loan modifications, however that is all it is, just talk.

    There are scammers all over the place who are promising to get a loan modification for you if you pay them several thousand dollars of up front fees.

    The scammers then pocket the up front fee and do nothing to get your loan modified.

  2. Reply
    February 16, 2011 at 10:58 am

    I was approved Friday and they wanted income, last year taxes, hardship letter meaning how did you get in this predicament, I was mailed a 4506 package in which included a request for transcript of tax return. Each time I spoke to an agent they seemed most concerned with if modified can you pay the loan not just get a modification but did I have enough income to repay the loan with.The condition of the housing market and the recession helped I ended up with my mortgage payment lowered by 700.00 and 2% interest rate on a 160.000 mortgage so go for it. Good Luck

  3. Reply
    February 16, 2011 at 11:44 am

    Most borrowers are unaware that the primary factor banks will look at in approving a modification is whether doing the modification is in the best interest of the BANK, not the borrower. The bank will figure out which option has the highest Net Present Value (NPV). The result will figure highly in whether they modify or not.

    This is why so many modifications get stuck in process. The bank wants to say “no” because they would rather foreclose. And if they drag it out long enough, many borrowers will go by the wayside all on their own.

    When modifications are declined because of failure to met the NPV test, I don’t think the bank reveals this as the reason – though I could be wrong. I believe the borrower should be told that this was the reason the mod was turned down.

    Read about NPV here: http://www.mortgagebankers.org/files/Conferences/2008/RegulatoryComplianceConference08/RC08SEPT24ServicingJordanDorchuck.pdf

    Good luck. Happy New Year

  4. Reply
    February 16, 2011 at 12:30 pm

    For it to be in their favor.

  5. Reply
    Janet P
    February 16, 2011 at 12:51 pm

    They need to be able to justify 2 things. First that there is a need to modify in the first place. Second, that modifying the loan will in fact help the homeowner out, they will be able to make payments at a new interest rate.

  6. Reply
    Josh Murray-Southeast MI Realtor
    February 16, 2011 at 1:12 pm

    Usually some type of hardship, but if you have a hardship, your credit and debt to income ratios are probably out of whack and they will tell you “you are not a good candidate for modification.” It’s a big game. They’re told by Obama to offer these mods but the banks make it damn near impossible. If you can’t afford the payment and they won’t let you modify, I would suggest short selling as a foreclosure is much more detrimental to your credit. I hope this answers your question.

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