Once a loan modification has been denied, homeowners often face despair because of the belief that there is nothing more that can be done to save their home. After denial of a loan modification, the next course of action depends on the reasons for denial and how far the loan is into the foreclosure process.
The purpose of a mortgage modification is to reduce and make more affordable monthly mortgage payments. An "affordable” mortgage payment is generally considered to be 31% of a borrower’s monthly gross income. Thus, for example, if earnings are $4,800 a month, then a loan may be modified to 31% of gross income or $1,488 per month.
Re-submission of a request for a loan modification may be the best option after denial if a loan modification has been denied for one of the following reasons:
- Incomplete or missing documentation;
- Information is stale and not current, thus in need of updating;
- Failure to provide documents after a request for them to be resubmitted;
- Missing signatures;
- Information such as income is incorrectly verified; or
- NPV (net present value) is incorrect.
Obviously, in these cases, the loan modification was denied because the borrower's application was incomplete or deficient. Thus, it is important to remedy these failures and gather updated information prior to resubmitting the application for a loan modification.
Any application for a HAMP loan modification that is missing the debt to income ratio (DTI) or NPV is probably going to be denied. You may require the assistance of a qualified attorney to help organize and present your financial situation in a loan modification application to increase your chances of success.
If a HAMP modification has been denied simply based upon a lack of eligibility rather than a deficient application, the next step may be to apply for an in-house modification. Each lender has its own guidelines and requirements for in-house modifications, and thus any application must be specially tailored for each particular lender.Many homeowners who apply for a loan modification without the assistance of a professional are denied. At Loan Lawyers, our South Florida consumer rights and debt defense attorneys may assist individuals fighting the foreclosure of their home. We can help determine any options regarding loan modifications and loss mitigation. For a no-risk, no-cost consultation, contact one of our South Florida consumer defense attorneys today by calling (888) FIGHT-13 (344-4813).