Many people are being approved for mortgage loan modifications, but the process is not simple and varies significantly from lender to lender
Unfortunately, there is a lot of misinformation in the media and online regarding the loan modification process. Until 2018, many banks were required to approve a client’s loan modification application if the client met certain guidelines created by Government through a program known as HAMP. Unfortunately, HAMP ended in 2018 and will not be renewed. Therefore, it is now entirely up to the individual lender to set up their own modification guidelines, and these guidelines vary by lender.
Why is it so difficult to get the banks to approve these mortgage modifications? Here are a few reasons:
1. Most banks are probably understaffed to review the applications. They are simply flooded with applications, and we believe that there are many applications that are not properly reviewed.
2. Many banks just don’t offer alternate modification programs.
3. Many applications that are submitted are not complete, and this is slowing down the process for everyone. We are not seeing any banks approve modifications without all of the necessary paperwork. This typically includes tax returns, pay stubs, a hardship letter, banks statements, and other financial information.
4. Many people who are applying are simply not eligible. The banks cannot approve homeowners if they do not meet lending criteria. The most important of these are stable sources of permanent income and sufficient income to meet required debt-to-income ratios.