Rejection has become a way of life to applicants for mortgage modifications. The lenders have made very little progress in improving process performance in spite of over 18 months of financial incentives from the Obama Adminitration’s Making Homes Affordable Modification Program (HAMP). Applicants, even very well qualified ones, get rejected routinely.

But, I have come to think that rejection is a very good sign! A review of my files over the past 6 months shows that not one single mortgage modification was granted without a prior rejection. That’s right, every one of the modifications I have completed for clients in 2010 has been rejected before being accepted. Even the ones that began with the encouraging Trial Modification resulted in a rejection of the Permanent Mod before final acceptance. Some of the mortgage modifications I have successfully managed were rejected as many as three times before we achieved the modification. Whew!

It’s hard enough to meet the challenging application procedures and follow-up effectively to keep your application on-track. To have to also escalate your rejections to supervisors, managers, Directors , Vice Presidents and CEOs and to contact your local congressperson, the regulatory agencies, the trade associations and even the press in order to get it done? This is tough stuff!

But, that’s the deal so dealing with rejections is now part and parcel of the mortgage modification process. There really is no end to the number of reasons for rejection: Your lender does not participate in mod programs, Your application failed the NPV calculation, You make too much money, You make too little money, Your home is too valuable, Your 4506-T has expired, Your Ratios are not right, You failed to provide updated documents, We needed a letter from your renter saying that he pays rent (not just a copy of several of his checks along with a valid/current/signed lease), Your hardship does not qualify and etc. These are bad, but the worst one of all is when the agent can’t explain why you were rejected and claims that they do not have to provide a reason.

These reasons may be valid but all too often, they are simply erroneous, resulting from lender mismanagement of the file. Othertimes, they are patently untrue statements that slow or end the application process if you do not object. So, rather than be discouraged and give-up when you get rejected, press on. At least you’re not being completely ignored! Promptly get clarity on the reasons for rejection. Go through several agents (by simply calling back at different times) and then escalate to a supervisor if you must to get a straight answer. Then supply the missing documents, sign the updated form, or correct the typo on your income. Do whatever it takes to get them back on track. Request reconsideration when you submit the correction. If you have submitted a good and accurate application upfront, you will - eventually - get the relief that the mortgage modification programs are intended to give.

Be encouraged when you get rejected (sounds strange, eh?). It’s far worse to get ignored for another week and to remain in the seemingly endless loop of “active review”. The whole process is taxing not only our intelligence, our paperwork processing skills and our patience. These days it’s also taxing our perseverance and raw nerve. Still, still, still it’s a cheap and ralatively easy way to get some financial relief to help your family through this housing market meltdown.

Need help with your ownMortgage Modification? Visit Rockwood’s site about DIY Loan Modification at Home Loan Modification

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