Traditional Loan Modification Guidlines and Payment Reductions
What are the guidelines that the lenders use in order for you to determine that you qualify for a traditional loan modification and what kind of payment reduction would you typically be looking at with the traiditional modification?
Mortgage Loan Modification Answer:
There are no universal guidelines for traditional loan modifications. Each bank has their own internal processes and policies for non-HAMP loan modification.
The thing to keep in mind is that the bank will feed the financial information you provide into a formula that would tell them whether or not it makes more financial sense for them to modify your loan or to go ahead and foreclose. That is basically what it comes down to.
The basic NPV (Net Present Value) formula that banks use to approve or deny a loan modification application has been closely guarded up until recently. You can purchase online(for approx $200) a downloadable software that will make the calculation for you. It will determine whether or not the bank deems you a good candidate for approval. But like with anything in life, there is no guarantee.
You have nothing to lose if you go ahead and apply. Just keep in mind the obvious -- you must be experiencing a financial hardship but your reduced income must be enough to pay for all your monthly obligations if the bank decides to lower your payments.
All the best to you.
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