5 Aspects to Mortgage Modification
Written on Feb 23, 2010 by Charles Kim
In recent months, I've been exposed to many stories about peoples experiences with trying to accomplish a loan modification with little to no real help in the end. According to David Bartels of US Home Loan Advocates in Westlake Village, Calif., banks utilize five mathematical formulas to determine whether or not they will modify a mortgage. And accordingly all five must meet each lender's individual criteria.
The 5 criteria typically utilized are:
Your front-end debt-to-income, meaning your housing expenses as a part of your monthly earnings; your back-end debt-to-income, which takes into account your total debt, including credit cards, car loans and what-have-you; your pre-modification cash flow; your post-mod cash flow; and the net present value of the modification versus that of a foreclosure. For the later, if the lender calculates it will make more money by foreclosing on the property rather than adjusting the terms of your mortgage, they most always will choose to foreclose.
Beside the modification, your credit history will drastically be effected negatively and it is often recommended that you contact all three credit bureaus to submit a hardship letter to be filed with your credit profile for future reference as to why your credit is what it is at that time.
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