Loan Modification Questions

Loan Modification Questions Answered: Why is an Appraisal done for a loan modification? The loan modification process is quite lengthy and for most homeowners it takes a period of 30 to 90 days to complete-- at times longer. The Appraisal is a key factor in the Loan Modification process and is meant to help the bank decide whether to modify the present loan or foreclose on a home. The Value of Appraisal; Whether the loan is modified or an originating loan, the appraisal is the same. In each case, the lender must ensure whether the home has the basic requirements and satisfies the value of the loan amount. The home, in turn, acts as collateral for mortgage debt. The lender also wants to guarantee the sale of the house at a foreclose sale if the borrower cannot continue to pay the mortgage interest amount to recover the majority of the debt. Methods of Evaluation of Property Loan Modifications are done on the basis of evaluation of property. This can be done in two ways: BPO or Broker’s Price Opinion and AVM, or Automated Evaluation Model. The lender can order a BPO to show the property to a real estate professional which can be a lengthy, expensive process and generally much more accurate. AVM, on the other hand, is the quickest and cheapest value estimator. As a result, the resulting price is usually not accurate because it does not consider the full condition of the property. A proper appraisal requires coverage of the property both internally and externally to set the exact Evaluation rate. Other requirements of the Appraisal; Evaluating comparable home values in your area is also a large part of the appraisal process for BPO's, AVM's and appraisers. The BPO’s and AVM’s take into consideration how long a home has been on the market and other market conditions. In the end, the appraised value of a home is just one factor used to determine whether or not a loan is modified or to begin the foreclosure process. An Appraisal helps the lender for Loan Modification by taking into account its real value in the present market. Predicting the outcome of a lender's decision can be difficult for homeowners and waiting around to hear "yes" or "no" is torturous. FAIR Counselors can help you run the numbers before or after your lender responds to your modification request. Contact us at: (310) 321-1234 to learn more.