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Your Loan Modification California Checklist

Many homeowners are seeking a loan modification in California due to the severe national recession and the downturn in the California real estate market.  Reports have indicated that, nationally, more than 25 percent of homes are upside down in their mortgages, meaning that the morgage debt exceeds the propery values.  The percentages are higher in California, particularly in areas that are experiencing large price reductions.  Regrettably, their loan modification requests are not being approved. 


A California loan modification is a negotiated legal alteration of the terms of your existing mortgage loan agreement for properties located within the State, to help ensure continued home ownership.


Surprisingly, the requirements for California loan modification are simple. The basic criteria include:

  1. Financial duress of the California homeowner. 
  2. A hardship which caused the financial duress which is demonstrated in a hardship letter.


The lender will carefully review the homeowner’s hardship letter (that you would write), and will also review the homeowner’s family budget to better understand the homeowner’s financial status, including paychecks, income tax returns and financial forms.

The lender may approve the California loan modification, if doing so would make the loan affordable for the homeowner, at least temporarily, and avoid the lender’s need to foreclose on the loan.  A major challenge that applicants face is getting the bank to accept the loss in revenues that would result.  In most circumstances, the lenders may temporarily reduce the interest rate and lengthen the mortgage to 40 years, but they generally will NOT reduce the principal balance except in a few limited circumstances.

Note:  Due to the extremely low approval rates for loan modifications, currently, we are not recommending any companies for this service. Feel free to contact us for a free evaluation so we may suggest other more viable options for you to consider.