Loan Modification

Equity is the usually the largest constituent in the decision making process of whether to approve or deny a loan modification package.

When a homeowner has little equity, no equity, or negative equity it is almost always a better decision from a financial perspective to modify the loan. If the bank has to repossess the home, it will be very difficult for the bank to recoup its investment if they have to sell it.

In instances where there is substantial equity, it is generally more profitable for the bank to move forward with a foreclosure than to modify the loan to a break even point. When the bank resells the home, they will get back there initial investment and try to cover any lost interest and foreclosure costs.

Banks are careful about who they approve for a loan modification. If they allow a homeowner to modify their loan to a lower interest rate, they lose income. If the bank does not feel it is absolutely necessary to change the terms of a loan they will not approve it.

Our attorneys are familiar with the calculations that each bank uses to determine eligibility for loan modifications. They know the floor rate that each bank will allow, and what they will need to prove in order to get your modification approved.