Sandy-- Thanks for the welcome!

Donna, Chuck -- Thanks for the comments.  My wife used to be an underwriter and the rule they followed was that anything the borrower signed was OK to draw a line through (page 5 of the application, the FHA/VA section of the Disclosure Notices if it's a conventional loan, etc.), but anything that wasn't signed by the borrower (bank statements, etc.) had to be untouched.

Chris

Dee Dee - Generally speaking, an underwriter will want to see the pay stubs to make sure you are earning enough money to pay the loan they are about to give you (in this case, it would be the modified loan, not your current loan).  That is based on what is known as a debt-to-income ratio (referred to as the DTI).  The DTI is calculated by dividing your housing expenses (principal, interest, taxes, insurance, mortgage insurance, HOA dues) and all the monthly expenses that show up on your credit report, by your monthly gross income. If you make $4000 a month, your housing expenses are $1,000, and your monthly expenses as shown on the credit report are $500, then your DTI would be 38%.  (1000 + 500) / 4000 = 38%.

Every loan program has a maximum allowable DTI percentage for the loan to be approved.  I don't know what Countrywide's max DTI is, so I can't tell you whether they would approve it or not. When a lender modifies a loan, it is really up to the lender to decide what the DTI should be. They can do whatever they want.  If the federal government is going to be sharing some of the risk with Countrywide on the modified loan, then the max DTI will probably be lower than if Countrywide was assuming all the risk themselves. I don't know what they're doing in your case, so I would just be guessing.

The reason they ask for bank statements is to see if you are depositing more money into your account than you make.  If you are, then they will want an explanation about where the extra money is coming from.  They also use the statements to see if there are any loans that don't show up on your credit report, any insufficient funds charges, and also to make sure the account is actually in your name.  Sometimes they will want you to have money left over after the closing in case you run into financial problems (they call the extra money "reserves").

Again, I don't know what Countrywide's underwriting guidelines regarding reserves, insufficient funds charges, etc. are for loan modifications, so I don't know whether they would approve your loan.

If they are willing to even look at your file, then I would send them what they are asking for and see what they say.  Many lenders won't even consider a loan modification, so you are one step ahead of most folks.  Just remember that a loan modification typically prohibits you from modifying the loan a second time, so make sure you understand all the terms of the loan.  Some modifications are worse than the original loans.  Keep in mind that the lender (regardless of who it is) is concerned with their own best interests, and not necessarily your best interests.  That's how we got into the mess we're in now - lenders selling loans that they knew the borrowers couldn't pay back.

Chris Thomas, Mortgage Support Services 303-345-3683