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The decision to apply for a modification is simple. Homeowners faced with this increasing expenses and/or declining income, whether they are delinquent or not, should request a modification.

For lenders, the decision to modify can be complicated. In most cases, the decision is not made by the firm that owns the loan, but either by the firm servicing the loan under contract to the owner, or a combination of both.

The servicing firm is contractually obligated to find the solution to payment problems that will minimize loss to the owner. If the lowest-cost solution is a contract modification, that’s great — everyone involved prefers a modification instead of a foreclosure. But if a foreclosure would generate lower costs for the owner, the decision will be to foreclose.

Yet the decision is far from cut and dried, and it can be materially affected by whether and how the borrower presents his case. It is imperative that you are well prepared and/or seek professional counsel to assist you. The difference could mean your home……

Factors affecting your lender and your modification decision:

  • Equity: Perhaps the most important factor. If the borrower has enough equity in the property to pay any deferred interest plus foreclosure expenses, foreclosure is almost bound to be the lower-cost solution.
  • Servicing Costs: Modifications must be handled by well trained and higher paid employees. Hence there is a tendency to be non-responsive in hopes a borrower will go away. This is where it pays to have a professional aid you. They already have relationships with banks and know how to get to a decision maker.
  • Burden of Proof: Servicers fear that if they are too liberal in granting mods, borrowers that do not need one will seek one anyway.  They protect themselves against this by only entertaining mods on a case by case basis and require documentation from the borrower to prove the mod is necessary and realistic.  This can be difficult for many borrowers as they will not know how to properly document and/or analyze their debt to income ratios and present their case successfully.

You are not alone in your fight. Many others have been in similar situations and have greatly benefited from a modification. Submit an application today to see if you qualify for professional help!