Another Loan Modification Denied

By
Real Estate Broker/Owner with South Florida Real Estate & Development, Inc. BK3027955

One of my good customers asked me for my help about four months ago. They wanted to do a loan modification and had tried three other times without success.

I have a software product that puts a loan mod package or soft sale package together for the bank. It was put together by a group of attorneys and it is a great tool.

My customer submitted the loan mod package produced by the software, and was approved in two weeks. As with any loan mod approval, there is a three month probationary period.

After the three months probationary period was completed, and the customers made the payments on time for the entire three months - DECLINED - DENIED - UNAPPROVED BY THE BANK!

The reason the bank denied the permanent loan modification is that the customer had $12,000 in a money market account.

Had another client denied because they had no money in savings.

What is the deal with the bank - too much money - no money - DENIED!

The bank told them to do a short sale or deed in lieu of foreclosure.

The banks want the property sold, period. Just tell the truth...

Home Affordable Modification Program is a complete failure.

Comments (7)

Margo Marshall
Re/Max Specialists - Jacksonville, FL

Nicholas- Unfortunately, we are at the mercy of the banks- I feel most loan modifications are denied, for wahtever reason, or in the future, will not be continued and there are usually a lot of additional costs to the homeowner.  Short selling is a better option and they can usually stay in the home for quite some time but at least they can move on with their lives. 

Jun 27, 2010 03:50 PM
Keisha Hosea- KASIHomes.com
KASI Homes - Chino Hills, CA
Real Estate Solutions For Real People

Same story...different day...different town. Will this ever end?

Jun 27, 2010 03:59 PM
Lane Bailey
Century 21 Results Realty - Suwanee, GA
Realtor & Car Guy

I think the ONLY reason that banks are even talking about loan mods is because the government wants them to talk about them. 

Jun 27, 2010 04:34 PM
Rob Arnold
Sand Dollar Realty Group, Inc. - Altamonte Springs, FL
Metro Orlando Full Service - Investor Friendly & F

Unless the lender is willing to reduce the principal amount owed and bring it in line with a current appraised value, a loan modification is pretty much worthless in my opinion.  The reality is that if you have 50K or 100K in negative equity, then you should try to short sale the property and move on.  Why throw away money for years only to have an asset that isn't worth what you paid for it?

Jun 28, 2010 02:11 AM
Jon Budish
Resident Realty - Fort Collins, CO

I've had the same experience with banks. They would rather have the homeowner short sell the property, then the bank fights you every step of the way on the short sale. You'd think the banks would be more competent by now, with the amount of these situations they've had to deal with.

Jun 28, 2010 07:42 AM
Melissa Anderson
Mortgage of Texas & Financial - San Antonio, TX

The bank does not WANT to do the mod in the first place.  They would much prefer the client short sell so they can get that loan off their books.

Most mods don't work in the long run & the banks have figured this out.  Most mods end up in foreclosure or a short sale anyway.

Jun 28, 2010 10:50 AM
Mike Frazier
Carousel Realty of Dyer County - Dyersburg, TN
Northwest Tennessee Realtor

Nick,

All we can do for our customers is our best. Out of our hands after that.

Jul 01, 2010 05:28 AM