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Q: What happens now that your bank turned down your re modification?
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Why can't you get a loan modification?

There are a number of reasons that homeowners can be turned down for a loan modification. Possibly the most common reason is that the borrowers are too far behind on their mortgage payments for the bank to consider a modification of the mortgage. With more arrears, it gets more difficult ever to pay off the fees, interest, charges, and make up the late payments. No modification could make up this difference that would be any benefit to the lender. Second, an issue exists in regards to the securitization of mortgages. Many loans are bundled up and then securitized and sold. The agreement governing these securities are called Pooling and Servicing Agreements (PSAs). They may contain provisions limiting the number of loans in the pool that can be modified. If a homeowner's loan is in a pool of other loans that has reached its limit, the modification will not be allowed. If there are additional liens on a property, such as a second mortgage or home equity line of credit (HELOC), the lender may require these loans to be modified first as a prerequisite to modifying the first mortgage or accepting a short sale or negotiating any other solution. The more complicated the situation, the less likely the loan will be modified. Finally, some loans are turned down for modification due to the fact that lenders are swamped with foreclosures now and have few resources to dedicate to each modification request. Some borrowers are simply going to be turned down due to incompetence, fraud, waste, and a low incentive for the owners of the mortgage to change the terms of the loan.


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