Who is Eligible for a Loan Modification?

A loan modification (loan workout), occurs when a lender agrees to change the terms of a mortgage in response to a borrower's long-term inability to repay the loan. The modified loan may be permanent or temporary and generally available to anyone in need of mortgage help that is at risk of defaulting on their mortgage or is obligated to mortgage payments that exceed their financial capabilities.

According to President Obama's Housing Stimulus Plan, several situations may qualify an individual to receive a loan modification:

• Those with a high combined mortgage debt compared to income
• Those who are underwater- i.e. they have a combined mortgage balance higher than the current market value of their homes
• Those who are in imminent risk for default

Lenders and servicers are generally concerned with one thing when considering the approval of a loan modification: can the borrower afford the terms of the modified loan? Some determining factors that a lender will consider include:

• The nature of the borrower's financial difficulty
• The borrower's ability to pay the modified loan (Note: The borrower can state all documented household income)
• What is the amount owed on the loan?
• How much equity does the borrower have in the property?
• How much does the lender stand to lose if the borrower defaults on the loan?

Click here for more information on loan modifications or to speak to a loan modification specialist, please call Toll Free 1-888-250-5227