Banks consider a number of factors when they decide whether or not to offer you a loan modification.

One very common factor is the debt-to-income, or “DTI” ratio. The bank will likely aim for a debt-to-income ratio of around 31% (depending on the investor, the servicer, whether you have a Freddie/Fannie loan and other factors). The idea is that if your mortgage payment is more than a third of your income, the mortgage payment is not affordable, and you may be denied a loan modification for that reason.

Another factor is something called “Net Present Value,” or NPV. This is how the bank decides if it will make more money by giving you a loan modification or foreclosing on your home. There are a handful of factors used to calculate NPV, including the current fair market value of your house. However, NPV can be tricky, and once again, different banks will tell you different amounts of information about your loan modification denial.

If you have been denied a loan modification, you can book a free 15-minute consultation, or you can hire us to provide customized services for you. We are here to help.