Does the Lender Have to Give Me a Loan Modification If I Apply For One?
Though lenders typically want to avoid a foreclosure as much as the homeowner does, they are not necessarily obligated to approve all applications for a Loan Modification. There are few circumstances in which your application for a loan modification may be denied, or possibly not even reviewed.
The following may limit your chances of a loan modification approval:
- Paperwork errors or missing information/documents
The most common reason for loan modification denials is unqualified applicants due to missing/inaccurate documents. Some lenders will not even continue reviewing an application if required information is missing.
- Applying too early
Homeowners typically must be past due by 60 days, or it must be clear that they may be in default soon in order to be qualified for a loan modification application
- Failing to demonstrate hardship
A hardship letter or proof of hardship is almost always a required accompanying document in a loan modification application. This letter must include the unforeseen circumstance that has affected your ability to pay your mortgage. Common examples include, loss of job, loss of a spouse, disability or health-related issues.
- Foreseen inability to pay modified payments
After review of your financial documents and hardship letter, your lender may not trust that you will be able to meet even the new modified payment, and may deny your request to urge you into a short sale or other alternative.
Despite the possibility of, or the reality of being denied a loan modification, application errors can usually be corrected, and sometime an appeal may even be made. Additionally, if a loan modifications turns out to not be the best option for your situation, there are many additional alternatives to foreclosure that an experienced foreclosure defense attorney can help you identify.
If you would like to discuss loan modification or other alternatives to foreclosure with an experienced foreclosure defense attorney, contact our office today. Set up a meeting by calling (702) 998-1188, emailing email@example.com, or by scheduling a consultation online.
For more information regarding loan modifications, foreclosure, or other related topics, check out our Foreclosure Defense blog or Foreclosure Defense Law TV playlist on Youtube.