Looking for a Loan Modification? Don’t Sweat the Numbers

In Uncategorized on July 19, 2012 at 9:26 pm

Every day I speak to homeowners who are applying to their mortgage company for a loan modification in order to reduce their mortgage payment. And many of them are losing sleep over something that may not even play that big a role in whether they get the modification–their budget numbers.
As part of the application process for a loan modification, mortgage companies require the applicant to submit a list of their income and their various expenses. I’m talking to a lot of people who are driving themselves crazy worrying about what they think these mortgage companies expect their income and expense numbers to look like.
People ask me all the time, “Is my income too high?” and “Am I spending too much on this or that expense?”
They get all wrapped up in worrying that their budget numbers they submit will disqualify them from getting the loan modification they are so desperate for. And I tell them the same thing: Don’t worry about it.
A person’s income and expenses are only one small factor that a mortgage company considers when reviewing applicants for assistance. There are a million other things they look at. For example, the mortgage company will also consider the type of mortgage it is, the value of the property, and the applicant’s credit history. Another factor is the amount of money the government will give them for putting someone in the Treasury Department’s Making Home Affordable program. And of course whenever real estate is concerned, location location, location plays a big role.
And remember, the mortgage company just services the mortgage. That’s why they’re called mortgage servicers. They’re just debt collectors who must follow the policies set by the investor who is actually owed the mortgage debt and who pays the mortgage company for their work. These investors all have different policies concerning who they want to give modifications too. And you usually don’t know who the investor is, much less what their policies are.
But here’s the biggest factor by far that determines who gets a loan modification: That is whether the mortgage company believes they’ll make more money if they modify the loan. If they think they’ll make more money modifying the loan, they do it. If not, they don’t. It’s that simple.
I don’t know why people worry so much about the budget numbers they submit. I guess it’s because it’s one of the few things in the application process they do have control over.
I’ve talked to people who were perfect candidates to have their payment reduced but got turned away. And I’ve talked to people who couldn’t afford their house with 10 loan modifications, yet they were approved. I’ve detailed a few these situations in the following page:’s-75-billion-housing-program-and-why-it’s-not-working/
Take a read, and do yourself a favor and try not to guess what some faceless analyst thinks of how much you spend on toilet paper.


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