May
16
What do mortgage lenders look for when reviewing loan modifications?
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I recently applied for homeowners’ assistance with my mortgagor, and am currently in the foreclosure process. I’m not sure if I’m going to get the loan mod or not. What do banks look for when a homeowner applies for loan modification? I realize that lender practices vary; I’m just looking for general guidelines, because I don’t want to lose my home.
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3 Comments
May 16th, 2009 at 6:52 pm
1. Payment history and risk potential
2. Payment potential (how will you pay in the future)
3. House value against money borrowed (is the house in a state of negative equity)
May 18th, 2009 at 5:54 pm
Mortgagor=Borrower
Mortgagee=Is the lender
What banks look for is payment history…if you have alot of lates throughout the ownership history, you are very unlikely to pay on a new agreement.
Overall debt on your credit report, if you have substantial debt, another poor risk.
Can the bank actually make money on the foreclosure? Sometimes they do, and if they can, they will deny your request for loan modification.
Understand that loan modification is extremely rare and banks will usually give this temporarily (I have seen them defer as much as 12 months worth of payments), but to alter the note? I’ve only seen it done twice in my career.
May 20th, 2009 at 12:28 am
1) payment history-this establishes the borrowers willingness to pay the loan in a timely fashion
2) credit and income-this establishes the borrowers ability to pay the loan in a timely fashion
Under normal circumstances, a modification will not be granted if you are currently in forbearance or foreclosure. However, the market certainly isn’t normal right now, so for your sake, I hope they work something out.
I wish you the best.