Am I a Qualified Candidate?

Lenders are typically mostly concerned with one thing when considering the approval of a loan modification: your income. Of course, you will need to document a hardship, however, lenders are mostly concerned about whether or not a borrower can afford the terms of the modified loan. If a borrower cannot afford the new loan terms, then the lender would be doing themselves and the borrower a great disservice.

So what makes a loan modification so difficult to process? Here’s why: if you make too much then the bank would have no reason to reduce your payments. If you make too little it would be to the advantage of the bank to simply foreclose or pursue a short sale. All lenders maintain varying guidelines for the approval of a loan modification. However, what all banks have in common is that they require proof of a hardship and proof that borrowers will be able to make payments on modified terms.

Many lenders are generous when calculating a borrower’s income, more generous than on loan applications themselves. For example, for loan modification purposes, borrowers can qualify based on their total household income. Calculating income this way is in the borrower’s favor. This means a borrower can count income from numerous sources including a spouse’s income that was not on the original loan, from social security income, income from a home business and income from a second job as long as it can be proved. This means you will need to show bank statements, 1099’s or some other proof to provide the lender. Once you calculate your total documentable monthly income from all sources, you have calculated your new qualifying income.

You can determine if you may qualify for a loan modification by calculating a payment based on your present mortgage balance at a 5.00% fixed interest rate for 30 years. If you can comfortably make this payment then you may qualify for a loan modification. DISCLAIMER: this calculation method is only a general qualifying exercise; do not expect to obtain this rate or payment! Understand as well that some clients get rates much less than 5.00% and some get rates that are higher then 5.00%.

Call the Law Offices Marshall E. Rosenbach today for a free consultation to find out if you are a candidate for a loan modification at (310) 860-4764.