How Does a Lender Determine a Borrower’s Eligibility For a Loan Modification?

by admin on April 9, 2015

Loan Modification Eligibility:


*Loan Modification a Saving Grace For Many:

Loan modifiation is something that has become quite common especially since the increase in home foreclosures. Loan modification is offered by almost any lender as a means of helping a homeowner. Loan modification works by renegotiating the original terms of an existing loan primarily a mortgage loan.

Loan modification essentially will come up with a more affordable monthly payment for the borrower. A lower more affordabe monthly payment will help increase the chances of a homeowner keep their home. In addition, in most cases a lower interest rate will also be offered to those who qualify.

Loan modifiction programs are made possible through the Government. Government loan modification has helped countless individuals save their home from the foreclosure process.

*Loan Modification Requirements:

There are certain requirements that must be met in order fora lender to be able to offer loan modification. For example, the borrower must be able to prove that they in fact are experiencing a serious financialhardship and can not continue making monthly loan payments in accordance with the original terms of the loan.

In addition to be able to prove a financial hardship, the borrower would have had to obtain the mortgage prior to January 1, 2009. In addition, the borrower must owe anywhere from $150,000 up to $725,000. It must be proven tha the property in question has not been condemed.

All original mortgage loan documents must be presented to the lender as part as the loan modification qualification and review process. It is important to make certain you have all required documents.

*Proof of Income Required:

The person seeking loan modification must provide detailed documeentation of current income. Income must be able to support new monthly payment after modification is granted. In addition, the borrower must have no criminal background. Any person who has a felony conviction does not qualify for a loan modification. A complete background check will be conducted.

*No Guarantees/ Other Options:

In some cases, even if the borrower meets the qualifications for loan modification sometimes the application request is denied. There is an appeal process for loan modifciation however it is not always successful. There are also VA loan modification programs that could prove helpful to struggling homeowners.

Loan modification can be a huge help to many struggling homeowners. The increase in foreclosures has been evident since 2007. The housing market has improved somewhat. However, there are stillmany homeowners in fear of eventually losing their home.

Keep in mind, banks do not participate in government assisted modification programs. Therefore, it is important to make the correct contacts so that no time is wasted.

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