Do Not Get Your Loan Mod Application Locked
When loan modification reaches to its final stage and unfortunately it is denied
, the loan modification application will be given a "locked" status. This means the loan cannot be reviewed or changed for a certain period of time. Such period is usually 6 months but it varies among lenders.
The reason that the loan enters to such state is usually the mortgage notes' investor wants to prevent the borrowers from re-applying for loan modification over and over again in a short period of time when their mortgage modification is rejected. Lenders require borrowers to wait for a reasonable time, enough to allow borrowers' financial situation to be different to reapply for loan mod again.
Quite often, however, we see mortgage loan modification applications are denied due to reasons such as borrowers incorrectly filled out the financial statement, or bank's processor failed to enter the data accordingly. As a result, the application is stuck in locked state.
Since the loan modification process can take a few months to complete, you will want to prevent this from the get-go. Make sure your loan modification application is filled correctly and readable, especially the financial worksheets. Also make sure bank's processor does not screw up data entry. It is very important to be on top throughout the entire process.
The lender's loss mitigation phone representatives usually do not have the privilege to even request unlock of the loan, even it's caused by the lender's own mistake. You will usually need to escalate the issue to the lender's Executive or President's Office to resolve such issue. Explain why your application should be unlocked. Once your case is re-opened, the loan mod process resumed. Note that this does not mean your loan modification is approved. It just means that your case is reinstated. It takes one to two weeks for the unlock request to get responded, if not longer.
Our
Do-It-Yourself Kit: Rental Property Loan Mortgage Modification includes not only all the prevention techniques but also the valuable executive office contact information should your loan modification is ever stuck in locked state.
by: Cliff Tyler
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