Do you possess the means and desire to pursue a loan modification?
A hardship may exist if you have current financial difficulties or if you anticipate financial difficulties in the near future. Simply being upside-down or owing more than what your house is worth, is not necessarily a hardship.
Every case is unique; however, the most common examples of cases that are accepted by the legal team are as follows:
- Borrower is currently delinquent
- Borrower is current on their mortgage payment but delinquency is imminent
- Borrower has a Notice of Default or is in Foreclosure (please allow at least twelve days prior to the sale date in order to process the file)
- Borrower cannot qualify for traditional re-financing
- Credit score (FICO) is too low to qualify for traditional re-financing
- Homeowner's property values have retracted - little to no equity does not allow for re-financing
- Debt ratio is too high for traditional financing
- Mortgage has pre-pay penalty feature
- Unique property types such as manufactured home, rural, etc.
- Homeowner's property is "underwater" - owe more than the property is worth.
Borrower's current loan has a :
High Interest Rate loan
Adjustable Rate mortgage
4-Option Arm (also known as a Negative Amortization loan)
Interest Only loan
Loan with a Balloon Payment feature
80/20 loan where the Borrower purchased the loan with no money down
except the closing costs
High Loan to value loans (85% to 97% of home value when financed)
Stated income borrowers (self-employed)
Jumbo or Portfolio loan
Second loan or Home Equity Line of Credit (HELOC)
- Job loss by one of the Homeowners or a significant reduction in income by either party
- Increased living expenses
- Medical bills
- Increased property taxes
- Child's college tuition
- Divorce
- Called to active Military duty
- Credit card debt
- Homeowner is in chapter 13 and the modification process is agreed to by the court trustee
To be eligible for a loan modification you must be able to show the ability to consistently make the new modified payments. The following qualifies as income:
- One of the homeowners is still employed
- Spousal support
- Child support
- Investment annuities
- Social security income
- Rental income
- Permanent disability income
What may hinder the ability to get a loan modification?
- Some lenders may not modify if the Homeowner is current on their payments
- A few lenders may not modify a loan if the Homeowner has already been granted or offered a loan modification within the last six months
- A single income source that results in a job loss
- Unemployment as the only source of income
- Homeowner is in Chapter 7, therefore needs to wait until discharged
- High cost of living where the mortgage(s) is a smaller percentage of the monthly living expenses - Homeowner needs to first reduce any other extraneous costs i.e. life style, expensive cars, excessive travel, etc.
- Federal tax liens, i.e. IRS taxes, and other liens such as unpaid property taxes
