Question: As one of the 160,000-plus people waiting in the pipeline to apply for a mortgage reduction at the same lender mentioned in your recent [newspaper] column, I was greatly puzzled by one point in your article: “If you show negative cash flow, your application will be denied, period.”
Isn’t having a negative cash flow the reason for needing such a reduction? As in losing a job or a business whereby you temporarily cannot cover the cost of a high mortgage and still have anything left to pay for utilities, health insurance and medications, transportation, food and other basic necessities? With mortgage relief, one would thus no longer have a negative cash flow, right? So if your above statement is in fact the policy, then the entire program is nothing but a sham. – S.E.
Answer: Let me clear this up for you and other readers. If your post-modification cash flow is negative — that is, even after the lender modifies your loan, you have more money going out than coming in — you will be rejected, no ifs, ands or buts. Why? Because re-default rates are almost 100% for people who must shell out more than they take in every month.
But if your post-modification cash flow is positive, you pass one of several litmus tests. According to David Bartels of US Home Loan Advocates in Westlake Village, Calif., banks use five mathematical formulas to determine whether or not they will modify a mortgage. And all five must meet each lender’s individual criteria.
Very nice information.
With all the doggone weather we have had as of late I am stuck indoors, fortunately there is the internet, thanks for giving me something to do.