Rejected Loan Modification? Banks and mortgage companies often reject the proposals of loan-modification with the most common reason for rejection being that the mortgage loans are current. When the lenders provide you with an explanation that why they have rejected loan modification proposal, then you should look over the paperwork carefully for any mistakes before making your next move. You would not be the only one who is suffering if your home falls into foreclosure, but your mortgage lender will also suffer along with you. Not only a bank pay must legal fees, but also it must pay taxes and upkeep on the property until it sells. Thus, most mortgage companies would rather approve a loan-modification agreement than foreclose on your home, but even if your lender has rejected loan modification request.
Get Approval for Rejected Loan Modification Request:
The possibility of foreclosure is horror-stuck, but a home loan modification is typically one of the first steps that homeowners take forwards saving their homes, but as well as the process of loan modification can also be stressful and boring. You should not be discouraged because all hope is not lost if your loan modification is rejected because it is not the end of the road. You can still qualify for a modification or consider other foreclosure alternatives.
Up-to-Date Mortgage Loans:
Mortgage lenders approve loan modifications when the borrower convinces the lender that they are suffering financial hardship. The lender then faces the possibility that the property may go into foreclosure, which generally encourages the lender to make changes. If you are current on your mortgage loan and have made all your payments on time then there is no incentive for the mortgage company to agree to reduce your payment, lower your interest rate, or make any other modifications.
Mistakes You Should Avoid:
Since the start of downturn in late 2007 lenders have been overloaded with the proposals of foreclosures and loan-modification. These lenders may be understaffed because of the enormous layoffs that beat financial institutions during the height of the downturn. Overworked employees who face rising caseloads may introduce errors or missing key information in the proposals. You should investigate if you loan modification is rejected to see if it may have come as a result of a lender mistake. Stressed-out homeowners facing job losses and higher expenses also can make mistakes, so review your original proposal to make sure that it does not contain errors or lack supporting documentation.
Misunderstandings can occur in loan-modification requests. For example, borrowers may be advised by lenders to “do nothing” until they hear back from their specific financial institution. Borrowers may stop making mortgage payments and actually “do nothing” because they thought they were advised to by lender personnel. When lenders fail to call borrowers with updates on their proposals then loans may go unpaid and lead to foreclosure. To reduce the chance of misunderstandings you have to do your best to maintain contact with loan service personnel on a weekly basis, so you can find out what needs to be done from your end and what the status is on your modification proposal.
Get Expert Help:
Generally, borrowers are not experts on mortgage loans and because of this there are non-profit and for-profit companies, groups, lawyers, consultants and bank experts that are available to help the homeowners file loan-modification proposals or challenge professional who can help you to avoid or correct loan modification rejections.
Address the Reason:
You should contact the lender’s loss and mitigation department to discuss the reason of you loan modification rejection. Possible reasons for a modification rejection include insufficient income, high debt-to-income ratio, missing documents, or delinquent credit history. According to Loan Safe, the main reason loan modifications are denied is due to a mistake on the loan officer’s side. So you should verify that all the information entered was correct and accurate.
Fix the Problem and Reapply:
If the loan modification proposal is denied due to credit, then the lender is required to send you a copy of your credit report. You can improve your credit score by settling past-due accounts. So you have to continue by paying your bills and other accounts on time. Each missed mortgage payment negatively affects your credit score, and payment history accounts for 35 percent of your credit score. If your debt-to-income ratio is too high then you may want to improve your income. Always remember to try putting in extra hours or taking on a part time job. After making the changes you have to contact the lender again to report a change in circumstances and request to reapply.
Local Help Options:
State and county support programs can help you to prevent foreclosure and get back on track. If you are in a state that was hit the hardest by the foreclosure crisis then your state may offer additional HUD programs to help homeowners. For instance, the California Housing Finance Agency offers a program to help unemployed homeowners by paying the mortgage payment for up to nine months. If you are able to bring your loan current with support then you may qualify to refinance at a lower interest rate.How to deal with a rejected loan modification? by Chris Hall