My Loan Modification was Denied

by mrmontoya | March 16, 2017 | , , , |

Loan Modification Denial

You receive a piece of mail from your mortgage company.  In the past, you did not want to open your mail from them, but now that you have applied for a loan modification you are waiting and anticipating the results. Unfortunately, your loan modification request has been denied.  You feel defeated and right back to stressed, worried and not sure what to do.  The important thing to remember is to not give up.  While the process of reapplying for the loan modification may seem overwhelming, it is even harder to overcome a foreclosure.  The next step is to evaluate your denial letter and take the next steps to reapply or appeal your denial.

Denial Letter:

 The denial letter you receive from your lender will lay out the reasons as to why they denied your request for modification to your loan.  Some reasons may be general and broad, so you may want to contact your lender for clarification, but the letter should:

  • Explain your right to appeal the denial and the timeframe in which you have to do so. Timelines differ between states. For example, in California, the homeowner has 30 days to appeal the denial.
  • Explain the specific reason your application was denied. (A specific reason has to be given if the Investor of the loan is the one who denied your application)
  • Explain other options you have. For example, a short sale, a refinance through a different program or a deed in lieu of foreclosure.

Reapply:

 After evaluating your denial letter, it is time to reapply.  In this case, it is important to know the reason your lender denied your first application.  If your denial letter is not specific, it is a good idea to contact the lender for further explanation.  This will help you in your reapplication process so you can address what may have been missing the first time or give more clarification for the lender as to your circumstances.  Common denial reasons can be insufficient income to make a payment, loan to value ratio for the secured property or missing information within your application.

Appeal:

If reapplying is not the option you need to take, you can also appeal the lender’s decision.  California set into effect on January 1, 2013, the California Homeowner Bill of Rights.  In this Bill of Rights, it gives the homeowner rights to appeal a denial within 30 days of the date of said denial letter.  As long as the loan modification you were denied approval for is in regards to your first mortgage, then you will fall under this right to appeal.  In the case of an appeal, your goal is to make the lender aware they made an error when denying your loan modification request.  Referring back to your reason for denial will assist you in alerting the lender to their error.  During the appeal process, the lender is not able to proceed with any foreclosure activity as well.  So taking the time to work through this process not only gives you more time but shows your tenacity and can help you get approved resulting in a more affordable monthly payment.

Home Equality Loan Program (H.E.L.P.)

A loan modification can make a great difference for your peace of mind and provide you with financial relief due to a more affordable monthly mortgage payment.  This can be a great option for you, but it is possible even after reapplying or appealing, your application may still be denied.  The important thing to remember is not to give up and you are not alone.  Keep the line of communication open with your lender. Let them know you are trying and be persistent to come to a resolution that will work for you.  We can help you find that voice with your lender to find the best possible outcome. If you would like to discuss your options, please give us a call at 949-413-7911 or contact us.