Many borrowers experience difficulty receiving a loan modification and the assistance of an attorney is often necessary in order to get approval. A successful loan modification requires an agreement between the borrower and the lender on the new terms of the loan. A loan modification puts both parties in better position so lenders do have an interest in approving loan modifications if the borrower qualifies and the borrower is able to continue making payments with the adjusted terms.
Here is what is required in order to receive a loan modification.
Loan Modification Requirements
The borrower must establish the following three elements:
- Desire to keep the house;
- A financial hardship; and
- The ability to pay the loan with the new terms.
A lender will not approve a loan modification without a financial hardship. The following often qualify as a financial hardship:
- Loss of Income
- Sickeness or Medical Issue
- Death in the Family
- Predatory Loan
- Increase in Family Size
- Anything outside of your control which has caused you to be in a difficult financial situation
Loan Modification Approval Process
Lenders have loss mitigation departments. Lenders do not want homes to enter foreclosure unless it is absolutely necessary. This is especially true due to government regulations and assistance programs. If a homeowner can still make payments on the home, the lender will often be willing to work with the borrower to prevent a foreclosure.
The lender will compare the revenue lost due to the loan modification to costs associated with foreclosure and maintenance of the home after it is given back to the bank. If the lender will end up saving more money through a loan modification, it will be in their best interest to approve the modification.
If you would like the assistance of attorneys experienced in loan modifications, please call Zachary Zawarski at (610) 417-6345.
The key to the process is showing your lender that you cannot afford your mortgage with the current terms, but you have the ability to pay the loan with better terms. If you have the ability to pay the loan with better terms, but are unable to pay the loan with the current terms, the lender will be willing to work with you, especially if you are represented by foreclosure defense attorney.