The Loan Modifcation Process

Modification Process

After a completed application and interview has been completed by our Sales Associate, the next financial and hardship overview will be conducted by our President, who is a licensed Loan Originator for the past 10 years. Then your file will be handed off to the Processor and Negotiator for a final financial analysis. The analysis includes:

• A NPV (Net Present Value) analysis that will illustrate the financial advantage to the lender to modify the loan as oppose to foreclosure. Let us know if you have received any recent appraisals, comparable sales information or BPO on your property’s current market value. This value is used for the NPV report.

• If requested, this analysis can estimate the potential savings opportunity for the client per property to see if the program that the lenders may offer will provide enough financial relief to improve cash flow - if that is the primary need.

• Each case file submitted to the lender can be used as a ‘hand off’ for a smooth transition to a short sale or BK if these options evolve as the most viable steps. 

SDR’s processing and negotiating team will call the lender to make sure every piece of paper submitted has been uploaded properly into the lender’s system.

• SDR will contact the lender every month to see if anything is outstanding or needs updating.

• We stay on top of the endless maze of process changes the lenders implement for the modification programs.

• We have developed contacts at executive levels and departments to ensure intelligent intervention for a successful result if the case is warranted.

• We will compose and file letters of complaint to the BBB, FTC, State Attorney General’s Office, US Dept. of Treasury, and lender’s Loss Mitigation Supervisor’s if necessary and the lender’s responsiveness is egregious. 

Most lenders will address a file where the payments have fallen behind by assigning the file to the LOSS MITIGATION department right away. These files take priority, especially if there is a foreclosure sale date that is imminent. We prefer picking up these cases no less than 3 weeks from the date of foreclosure.

If a client is being proactive about an imminent default (current or a month behind) and is running out of savings, personal loan channels, money borrowed from friends, family and credit lines or credit cards to “self correct” their mortgage, then the file may be submitted to the HOME RETENTION department for initial review.

• If a future hardship is coming within the next few months, such as a job loss, pay reduction, business failure, retirement, disability; or higher expenses expected due to an adjustable rate increase, surgical costs, mandatory repairs to your home, etc., we need to be aware of the scope and how it will impact your financial situation.  

• If at any time the client begins to fall behind WE NEED TO BE AWARE of this to make sure the file needs to be transferred to the LOSS MITIGATION department if not there already, to expedite the process of resolution. It is up to the property owner to inform us of these changes in a timely manner. 

We expect each client to understand that the process of applying, submitting and monitoring a consistent financial hardship will take months; anywhere from 2 to as many as 10 months depending on the situation and lender, investor or servicer before a modification is contractually granted. Practicing patience, understanding and cooperation of the many hurdles will be strongly encouraged. 

• The process length is to allow the lender to make sure the property owner can maintain a mortgage modification low enough to create long term sustainability (a trial period) and they WILL regularly ask for updated information such as recent paystubs / bank statements to see if the hardship has stayed relatively consistent.  Also, the lender will be looking to see if the financial hardship has been resolved at some point so that consideration for a modification no longer applies, or a trial period payment agreement will not graduate to a long term contract.

The results will be offered in a variety of ways depending on your case and your lender, investor or servicer:

• The average loan modification is a full P & I (Principal & Interest) payment between 2 - 4% on average. Remember, if the loan terms are Interest Only and the lender re-amortizes the monthly payment, we may not meet the savings needed to correct the monthly shortfall. However, it will create consistency and predictability throughout the loan term.

• A trial period can be temporary, anywhere from 4 to 8 months on average until entering into a final contract with your lender.

• A government sponsored MHA or HAMP program contract can have a step feature where the interest rate (P & I) will gradually increase over 5 to 9 years to not exceed a rate of 5% (generally). 

• Entering into a Debt Settlement program (any unsecured debt exceeding a combined total of $10,000) can work in conjunction with a Modification Process to establish long term financial improvement and security.