You only qualify for a loan modification IF

http://www.corp.ca.gov/forms/pdf/CFP_Application_Package.pdf – did you take a look at this PDF file and exemption document? Do you understand it? Well, they finally said it in black and white; here are the basic requirements for those individuals seeking a loan modification:

The applicant’s (in the case the bank or mortgage servicer/lender) loan modification program must meet the following requirements:

• The program is designed to keep borrowers in their homes when the anticipated recovery under the loan modification or workout plan exceeds the anticipated recovery through foreclosure on a net present value basis.
• The program targets a ratio of the borrower’s housing related debt to gross income of 38% or less, on an aggregate basis in the program.
• The program includes a combination of the following:

1. An interest rate reduction, as needed, for at least five years.
2. An extension of the amortization period for the loan term, to no more than forty years from the original date of the loan.
3. A deferral of some portion of the unpaid principal balance until the maturity of the loan.
4. A reduction of principal.
5. Compliance with a federally mandated loan modification program.
6. Any other factor the Commissioner determines is appropriate, as identified and described in this application and approved by the Commissioner (see 10 CCR § 2031.5(e)(1)(F)).

• In determining a loan modification solution for the borrower, the program seeks to achieve long-term sustainability for the borrower.

The appropriate page and paragraph from the loan modification program must be referenced on the application to show the program’s compliance with the above requirements and expectations.

NOTE: A servicer is not required to violate a contractual agreement for the investor-owned loans or provide a modification to a borrower who is not willing or able to pay under the modification.

Okay so what is this really saying to the banks and/or mortgage company applying for an exemption? It basically outlines what perimeters need to be in place internally within the banks or mortgage holders BEFORE they can be considered for exemption. Are you paying attention to these perimeters i.e. debt to income ratios, no more than 40 years on a mortgage, deferral of some of the unpaid balance until the maturity of the loan…are you kidding me here? Do you know how many people will NOT qualify for a loan modification under these perimeters? And even if you happen to get a loan modification it will likely not bear real solutions that will be long lasting and/or helpful.

Don’t kill the messenger here…but this is serious, very serious! And I just wanted to get the information out there.