How long does it take to get a loan modification? Right now, because there is such a huge demand for loan mods, it could take a little while. In actuality, it only takes one day for the loan modification to happen, but prior to signing the contract, other things have to take place.
From the time that you request a loan modification from your bank to the day the loan mod actually happens could be 5-7 business days. That’s because the bank must approve you as if approving you for a first time loan and process the paperwork. They are also working other loan modifications during the same time.
Prior to requesting it from the bank, you should have forensic loan audit or document review done. That will another 5-7 business days. If you have a homeowner-client who is very distressed financially then they need to understand that it’s not an overnight solution. If the homeowner is caught up in the foreclosure process while pursuing a loan modification then the bank could come from the keys before the process is completed. That’s why you should contact the bank prior to initiation of the loan modification process (after you receive your loan audit) and inform them of your decision to pursue the loan modification. It is often wise to halt the foreclosure process before seeking the loan modification. Let the audit be your leverage.
Many homeowners, when they face foreclosure, get desperate and end up selling their home for less than it is worth. They’ll either get taken in by the snazzy sales talk of a smooth talking real estate investor or attempt to short sale their own home in order to save their credit. Neither option may be necessary. Before you advise a client to sell for less in order to get out of a credit-killing foreclosure settlement, order a loan document review and know the facts.
A document review can uncover several key facts that will help you and your client negotiate a better settlement from the lender. Banks don’t want to own the property. They’ll just get stuck with it and it will be a liability for them, not an asset. That’s the last thing they want.
Instead, they’d rather help a homeowner stay in the home. But they don’t offer loan modifications on a silver platter. You or your client has to request it. And then you may not be approved unless you can show a compelling reason why it’s necessary. That’s where the loan document review comes in.
The document review will show you if the lender has violated any local, state, or federal law. Even minor infractions can be enough to win at the negotiating table. Some lender violations can result in heavy fines or refunds to the borrower. Therefore, a bank will willingly settle on amicable and equitable terms with the borrower rather than pay huge amounts of money for a small mishap. Wouldn’t you?