Financing in 33141>Question Details

Orlando, Both Buyer and Seller in Miami, FL

I have been denied modification 4 times. What is it for if they cannot help?

Asked by Orlando, Miami, FL Tue Jun 9, 2009

Lender says that i don't qualify for modification because my expenses are more than my income.
In the last few month when my income finally increased back to normal i tried modification
4 times and was denied. I tried it again this month and did an financial update to the same money i
made before. They said no. I am about even with income level and expenses for now. How come
they deny this again, what is the reason for inventing this? It's doesn't make sense.
I only have 1 mortgage and no credit cards and no car payments. Owner occupied,
what else do they want? If i make more money then i wouldn't have to ask for help?

0 votes Share Flag Financing in 33141

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Robin Silverberg’s answer
What the banks are looking for is for you to prove that you qualify not just to cover your payment with your income, but to have a debt-to-income ratio that is no more than 45%, most likely. That is a bit of a high number even. I do not know where your income is coming from. Are you employed somewhere that you get a regular pay check and will get a W-2? Or, are you self-employed and showing more income now? They will look to average your income for the last 2 years unless you have a great explanation of why you were not earning enough before. Are you behind on your payments now? Some people are advised to let themselves fall behind, but that is not the case. They do not want to see you behind on your payments, they just figure that you will still be behind so why should they do something for you. Also, has the value of your home dropped so that you now owe a lot more than it's worth? Do not pay anyone up-front to negotiate a loan modifacation, but there are some decent people out there who will look at what you have, and will let you know up-front if they can do something for you. They have contacts at the banks that you don't have if you call on your own, and sometimes get further than you do, so it is worth the money if they can get it done.
1 vote Thank Flag Link Tue Jun 9, 2009
Work out all your financials on paper before you call. Lower your expenses. Don't put $600 in food put $300.00 Work the numbers and if you need income, rent a room
0 votes Thank Flag Link Wed Sep 12, 2012
Here is a link to the FDIC loan modification guidelines.
It calls for your PITI to be no more than 38% of your DTI. Sometimeas it does not make sense to the lender to adjust the payment to the 38% guideline and loan modification must also be in the interest of the investor. In fact on of the review items is if the cost of forclosure is lower than the cost of modification.

On a second note I talked with someone who had their income change. At the 38% DTI their monthly payment would not cover taxes,insurance,and HOA dues. They were denied a loan mod.The lender will not come out of pocket every month to cover the property while the owner is living there.
Web Reference:
0 votes Thank Flag Link Mon Dec 28, 2009
min $500 surplus (monthly income minus expenses) required for lender to start modification.
0 votes Thank Flag Link Mon Dec 28, 2009
Hello Orlando,

Loan Modifications are not the only option, if you have equity in the property and a clear 12-month mortgage payment history you may qualify for a rate-and-term refinance. Also, having two months of paystubs at the same pay level and a good explanation of the previous fluctuations is good to have. Some lenders will go as high as 50 DTI on rate-and-term refis, but there are a number of factors that can influence results. Much of what was said below is absolutely correct, especially the part about refusing to pay an up-front fee before seeing any footwork on your behalf. Make sure you keep your payments timely and good luck!

Kind regards,

Jason Diperstein
E Mortgage Management
800.793.9633 ext. 156
0 votes Thank Flag Link Wed Jun 10, 2009
Thumbs up from me Robin,for your very helpful,thoughtful answer.
0 votes Thank Flag Link Tue Jun 9, 2009
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