The Truth About Loan Modification

By Russell Arkin, CDPE

     If you’re like most people facing foreclosure, you’ve probably heard about loan modifications. But if you’re planning on asking your lender for a loan modification, there are a few things you need to know.

     First, there are specific rules that banks follow when considering a loan modification request. If you don’t qualify under their rules, getting a loan modification will be extremely difficult. Here are a few of the requirements:

1.)  The loan must be for your primary residence. Second homes or investment properties generally don’t qualify for a loan modification.

2.)  Your mortgage can’t be more than $729,750. Generally, anything larger than a “jumbo” mortgage won’t qualify for a loan modification. The banks assume that anyone with a loan above $729,750 has other assets to sell to pay off the home loan.

     However, if you have two separate home loans that total $729,750 or more, you may still qualify-if you have enough equity. Ask your lender what their policies are.

3.)  You must be able to pay at least 31% of your total income towards your mortgage. If you can’t afford that due to other debts, you may need to consider other options, including bankruptcy.

4.) You must have a complete loan modification and hardship package. That bank will require you to fill out detailed paperwork showing all of your assets and liabilities. This is what the bank will base their decision on, so make sure you’re as detailed and accurate as possible.

        You’ll also need to write a detailed letter explaining why you’re unable to make your payments. This is known as a “hardship letter”, and it can make the difference between a loan modification and a foreclosure. The hardship letter should be very detailed and give a clear account of why you’ve missed your payments.

          This may be uncomfortable to write, but it’s extremely important. At the end of the day, the people deciding on your loan modification are just that-people. If you’re honest and upfront about your situation, that can tip the scales in your favor.

        If you’d like some help with your loan modification, or if you just want to know all of your options, call me at 703-734-7045 and set up a free consultation.

        During this consultation, I’ll listen carefully to your questions and problems. Then I’ll use my legal expertise and real estate experience to assess your situation. And together, we’ll make a plan to get you back on your feet as quickly as possible.

        There’s no cost for this valuable service, and it doesn’t obligate you to work with me in any way. You’ll get the information you need to make the best decision for you and your family-without the pressure.

      To arrange your free, private consultation, please call me at 703-734-7045 or fill out the form below.

Thanks,

Russell Arkin, CDPE
Realtor/Former Practicing Attorney
RE/MAX Distinctive
Russell@RussellArkin.com
703-734-7045