What if your loan modification is Denied?

Published: 12th February 2010
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What happens if after months of painstaking waiting you are denied a loan modification by your lender? Although it is easy to do your own loan modification: filling out the paperwork and making sure everything is together, once your file is faxed to the bank this is another story. Your file could get overlooked, misinterpreted by processor or have important missing information (lost by the lender, not necessarily you). Don't assume that once you receive that denial letter that the situation is hopeless and start preparing for the worst. There are still options open to you.

First, if your application is denied by your mortgage lender, you should receive notification in writing as to the reasons. Some lenders can be vague and general in the terms that they use for the denial, some will tell you exactly what the problem was. It might take more than one phone call to find out all the information, but it is important to know, and here is the reason why.

If you know the reason for the denial, you may be able to fix it. You can be denied for a loan modification for something as small as incorrect paperwork or missing paperwork. Many of the lenders will not call you back or notify you if you are missing paperwork. The system is so overloaded that it is easier for a bank to deny you a loan modification rather than ask you to submit the right paperwork.

You must always keep an exact copy of all the documents that you send to the lender. If they have incorrect paperwork or deny you for a loan modification based on what you submitted on you application you need to be able to refer to that. It is guaranteed that six to nine months down the road of a loan modification you are not going to remember what you submitted to the bank. Take exact copies of all the information (including the bank statements and tax returns). Keep all of it in one place so you can access it easily.

If you were denied because your debt to income ratio is too high, then lower your grocery bill or gas expenses to reduce this ratio, or cut out an unnecessary expense that you don't need. Do not lie. Your lender will pull your credit report. Car payments and other similar bills should not be adjusted as they are reported on your credit. You can then resubmit your application. Also, did you know that you can apply for a loan modification more than once? It is obviously less stressful if you have everything approved the first time around, but let's say for example, you got the figures wrong (wink, wink), so if you submit it again, there is a good chance that you would get your loan modified.

Your lender should have more than one loan modification program apart from the HAMP program (also known as the Obama Plan). So, ask your lender if you can qualify for one of the other plans that they may have, because you may be rejected for one loan modification program, but you may be qualified for another.

Above all be patient. Getting a loan modified does take time. It is not difficult but it can take persistence. If you come up against a road block, don't necessarily think that it is the end of the road, but work out a different path and how you may be able to negotiate around your problem.

GFS is a company that provides financial services across a broad spectrum and includes real estate and mortgage professionals with over twenty five years of combined experience. You can get all the help that you need to understand the loan modification process by down loading the simple and economical e-book from http://www.diyloanmodkit.com, which will give you a full step by step guide to understanding how to do your own loan modification without having to pay a company or an Attorney. It comes with all the forms that you would need and answers many questions that you may have. This process can easily be done on your own if you have the right information. For more about loan modifications please visit http://www.diyloanmodkit.com

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