When a loan modification has been denied, the homeowner/borrower must decide if he/she wants to appeal. The appeal time is generally listed on the denial. Most of the time it is 30 days. If the denial is erroneous then it is necessary to appeal. Many times, the denial does not have a detailed analysis and is merely an unsupported denial. If this is the case, it is recommended to send a request for a detailed explanation with a reservation of rights to appeal the denial upon you receiving a detailed explanation for the denial. Sometimes the loan servicer that issued the denial may have misapplied the regulations which often results in a wrongful denial. In these cases, it is vital to appeal the decision and, if possible, bring the issue to the attention of the court overseeing the foreclosure action. In cases where the denial is based on insufficient income, it is important to make sure that the lender or its servicer relied on the correct sources of income that was documented in the application, i.e., pay stubs, rental income, and all other sources of income. Typically, rental income is discounted by a lender and/or the servicer. The rental income is usually reduced by 25%. If the lender or its servicer did not include all income then a homeowner must timely appeal the denial and submit documentary evidence supporting the unacknowledged income. This could make all the difference. Additionally, many homeowners think that increasing the monthly expenses will increase their chances to receive a modification, but this could actually do the opposite. Always be sure to reflect accurate monthly expenses in your application for mortgage assistance. It is best to consult with an experienced attorney before you apply for a loan modification or when you are denied one.
Arnold M. Bottalico is an experienced Long Island, NY foreclosure attorney with over 25 years of experience, and he welcomes your questions and comments.