| California is one of the most enticing states in America. | | | | the banks assume that they would just probably |
| Boasting of warm weather, beautiful beaches, the | | | | default on the loan in the near future. |
| hippest stops, and endless financial possibilities, it is a | | | | 2. Loan modification packages are not completed |
| place where the glittering worlds of celebrities and | | | | correctly. The flux of loan modification and short sale |
| luxury converge. It is not surprising, therefore, that | | | | applications to mortgage give lenders a hard time to |
| flocks of people have opted to transfer and live there | | | | pay attention to each one. They do not have the time |
| permanently. However, living in this state has proven to | | | | to process incomplete or incorrect applications. Such |
| be quite a challenge, especially now that the country's | | | | packages are immediately discarded, and the |
| economy is spiraling downward and seemingly out of | | | | borrowers at fault are required to resubmit their |
| control. | | | | applications, usually without the necessary feedback |
| Out of all the states in the continental U.S., California | | | | explaining the rejection. |
| has the highest rate of foreclosure, which increased a | | | | 3. Banks reject loan modifications with interest rates |
| staggering 83% since 2006. Four of the top ten cities | | | | and terms which are not tedious enough or are too |
| with the highest rate of foreclosure in the country are | | | | "good". This strange criterion depends on the bank, |
| in this state, and Stockton, CA is in the lead where 1 | | | | sum of the loan, the area, political influence and |
| out of every 27 homes is foreclosed. The surest way | | | | pressure, and so on. The homeowners would simply |
| of preventing all these foreclosures is through loan | | | | be surprised to find out after weeks of negotiations |
| modification. The process involves changing mortgage | | | | that their loan modifications are rejected. |
| contracts and terms. This is to make payment terms | | | | 4. California homeowners write extremely poor |
| and the amount of debt more affordable. | | | | hardship letters, which are essentially required by all |
| Despite the popularity of loan modification all over the | | | | mortgage banks. These hardship letters would be vital |
| country, especially since it is strongly supported by the | | | | in the lenders' conviction of the borrowers' need and |
| federal government, recent studies have shown that | | | | dire situations. |
| only 2 out of 10 homeowners are granted loan | | | | There would be more loan modifications granted in |
| modifications in California. People would expect the | | | | California if these pitfalls are wisely and responsibly |
| numbers to be much higher, but the unfortunate fact is | | | | avoided. The crux of the matter is, these problems are |
| that a lot of California homeowners are being denied | | | | usually caused by lack of awareness regarding the |
| modifications to their loans. The reasons for this are | | | | very basics of loan modification itself, all of which can |
| the following: | | | | be easily avoided if homeowners take the time to do |
| 1. Many people are unaware of the basic income | | | | research on the "know-how's" of loan modification. |
| qualification parameters. When these homeowners | | | | The lesson that California homeowners must learn is |
| apply for loan modification, their incomes usually do not | | | | that ignorance is never an excuse. During such hard |
| justify the severity of their financial hardship, meaning | | | | times, extra effort goes a long way, especially if it |
| to say, the amount of money they make is too little | | | | would greatly aid in the alleviation of problems and the |
| compared to their living expenses. Some of them are | | | | salvation of numerous households. |
| denied also because their incomes are too low that | | | | |