I ran across this article today on CNNMoney. This is a great article about what banks are looking for in order to qualify home owners for a loan work-out or not modification.
Here are some excerpts from that article that really caught my attention:
Open the books, the bank wants to know everything!
“A frank discussion The first step in the workout process is to document the borrower’s financial situation.
Servicers request details about a borrower’s income, as well as what the family spends on food, clothing, car payments, credit card debt, and student loans, according to Cleveland-based foreclosure prevention counselor Mark Seifert. Homeowners have to submit copies of pay stubs, bank statements, and utility bills to back up their claims.”
“To stay in their home, borrowers almost always have to cut back on other expenses. “We’ll tell someone they have to get rid of that $600 SUV payment if they want a workout,” said Wesley Justice, a vice president for loss management for AIG United Guaranty, a mortgage insurer.
Counselors often suggest homeowners cancel extras like cell phones and cable television, and stop eating out.”
A Common Solution to Adjusting Rates and Payments
“Other at-risk borrowers may be able to afford payments at the teaser interest rate on their adjustable rate mortgages (ARMs), but not at the higher, reset rates. A $200,000 loan at 6% might cost $1,200 a month, but if that rate resets to 8% the payments climb to $1,570.
For them, a rate freeze keeping the payment at $1,200 may be the answer.”
“We do the five-year freezes,” said the director of loss mitigation, “but most of out modifications are two-year freezes. If there’s still a problem, we promise to do another two years after that.”
You can read the whole article here -The trick to getting a mortgage fixed
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Tags: loan modification, loan modification help, loan workout
