Mortgage Modification Success Requires File Inertia

High School physics to the rescue! Let me tell you how inertia…in this case, file inertia…can help you get a mortgage modification.

File inertia is a term I coined after observing hundreds of mortgage modification applications (aka “files”) processed by banks. My acute observation and deduction capabilities led me to postulate this breakthrough principle! So, in the spirit of all great “scientific discovery” I will share it with you.

Applications that are in motion tend to stay that way unless acted upon by other forces. Applications that are stopped tend to stay that way. While this discovery may not bring me fame, it has brought my readers lots of mortgage modification success. And, with the acute dissatisfaction with the whole mortgage modification process, that’s a lot.

Here’s how insight into file inertia can help you save hudreds of dollars per month…and, maybe even save your home. There is an influence acting upon all modification applications that slows them or stops them. It’s the fact that the banks are still overwhelmed by the sheer number of applications. Systems and people are strained to the breaking point, making it rational to “stop, reject or send back for updates and corrections”, as many files as possible. Such action gets the file off their desks AND it becomes your problem, not the bank’s. Do not let that happen to your application. Do this.

Make you application perfect. Not only do you need to provide all the required info, that’s just table stakes. To play to win, you must also organize it and present it in a way that is perfectly understandable to an inexperienced, barely trained bank employee. Missing documents, unsigned tax returns, expired 4506-T and insufficient income verification make your application an easy mark for rework.

Take advantage of file inertia. Make you application perfect by:

1. Document Income correctly and show verification clearly. Include, notarized self-employment Profit and Loss Statements, include annual award letters for SSI and EDD income, show how you calculated your monthly gross amounts and how you calculated YTD 1099 income.

2. Document rent income correctly.

3. Be sure your front-end DTI (Debt-to-Income) is right. Total monthly payments on the 1st mortgage divided by gross household income must be greater than 31%.

4. Make sure your back-end DTI (total indebtedness as percent of gross household income) is less than 70%.

5. Get a copy of your credit report. Make sure you have included on your budget, all current debts that show-up. That’s not to say you have to list them as current monthly debt payments, just be sure all of them are dealt with in your application.

6. Budget bottom line should be zero. That is, show how you spend all the income but do not show your shortfall.

7. In order to be treated within a reasonable timeframe, you must be late on your payments. Most banks require that you be more than 60 days late before they stop halting your loan mod progress with their “Immanent Default” shenanigans.

8. Construct it like you are there live, presenting it in person. Include a cover letter, a table of contents page, and notes to clarify every little thing.

If you take these 8 tips seriously you will get file inertia working for you. It can be one piece of high scool physics that really pays off for you.

Need more “insider tips” to get Mortgage Modification? Visit Rockwood’s site about DIY Loan Modification at Home Loan Modification