How Can You Get a Loan Modification Approval then a Denial
Homeowners can become confused when they get a loan modification approval letter with their terms, and then shortly after that they get a loan modification denial letter. When a loan is being reviewed for a loan modification the lender is considering a lot of different things to complete their decision. Regardless, for the bank to get started on working on your loan modification they need some general information to get started. That is where the problem could have started. We will look at some different scenarios for the reasons why someone may get denied after an approval.
To not get too technical we will just cover some of the most important reasons that could cause someone to be ineligible after their approval. In most cases lenders will request information from borrowers over the phone before beginning the loan modification process. The lender uses the information to input it into a matrix that is used to decide if someone qualifies for mortgage help or not. What you will often see is a homeowner will call to their mortgager for help, and will be asked a series of question to see if they qualify. They may initially qualify based on the conversation that they had over the phone, and get an approval package that is send out after a review of the property value, the location, if the mortgage has been modified before or not in some cases, the borrower’s ability to repay the modification payment amount, etc. Once the borrower meets the requirements that are established, the lender may then release the modification approval letter with the modified mortgage payment amount and required documents to be returned such as : pay stubs, tax returns, bank statements, government documents, etc. The borrower is given a certain amount of time to get those items in. In some cases the borrowers are unable to return all of their documents, the payment amount that is needed to start their new trial payment which usually lasts a few months before the real modification is granted, or they return documents does not match the information that they gave over the phone to their lender. So the lender waits for the information and the borrower goes beyond a reasonable deadline to get the required documents in, and the lender denied the borrower; which is a common occurrence.
There are other reasons why homeowners are denied and we will cover the other reasons in a minute. I want to make one thing clear, it is important to try to give your lender the most accurate information you possibly can give. For example, if your mortgage company asks you what is your gross monthly income, and you give them $5000/mth, and when your pay checks arrives there and it shows your monthly gross at $7000/mth, that could be enough of a problem to cause you to be denied. And if you think well, let me just resend or correct my information, and that will fix the problem. It is not always that easy. Some lenders are not taking any resubmits on their loan modification applicants, or if you are allowed to resubmit it may start the process all over again; in a situation like that you would have lost many months of ground you previously made in completing your loan modification. It is important for you to give your correct information when asked, remember this is your home you are trying to protect. Other common reasons why some homeowners are approved and then suddenly denied are:
They did not get the information in the mail to be able to return it back to their lender.
They are not pleased with their new payment amount, so they do not respond.
They do not sign the documents, or fill them out correctly.
Everything was returned but after the deadline.
The homeowner wants to dispute the amount of the modified payment that the lender wants to offer.
By having this information, this may help you to stay on track when you are looking for help with your mortgage. It is nice to get a lower a mortgage, and because you got your approval letter it does not mean you have completed everything and you are now modified. You can be denied again quickly if your do not pay attention, and stay on top of your loan modification progress. Remember, getting a loan modification is a privilege, not a right. So follow through with what is need to complete the whole process.
