We get the question all the time. How long does it take to get a loan modification? We even wrote about it a year ago, but the information is outdated so it seems like a good idea to bring the answer current.
Of course, the answer is that there is no sure-fire answer.
Loan modifications rely on the responsiveness and policies of the lender, effectiveness of the mitigation company and commitment of the homeowner. In other words, there are some large, moving parts that sometimes come together for a quick solution (less than 60 days), but usually take much longer (sometimes up to an entire year!).
Let’s look at the issues that effect how long the modification takes.
Effectiveness of the Mitigation Company
Because the lenders are strict and have rigorous requirements, en effective mitigation company is important to moving the process quickly.
In the beginning, there is a lot of prep work that includes compiling financial information and other pertinent information to your case. An effective company will have a proven process and stays on top of you to make sure you are providing the necessary information.
Once the file is at the lender, an effective mitigation company will stay on top of your file making sure the inevitable requests for updated documentation are relayed to you and processed quickly. Valuable time is often lost when a company or individual does not stay on top of an ongoing file.
Mitigation Prep Time: 7-10 days compiling information from date of contract with the cooperation of the homeowner. An additional 7-10 days is spent getting the file uploaded to the lender and in their system.
Responsiveness and Policies of the Lender
This is by far the most variable and important issue to the modification duration.
Some lenders are committed to the modification process and are organized in such a way that they can move quickly. GMAC comes to mind as one lender that we have recently seen quick results with. However, it’s more common to see lenders taking their time and dragging out the process.
If you’re doing this on your own, expect to get the run-around. Lenders are often looking for reasons to deny a loan modification. You probably won’t find them too responsive to your requests for immediacy. In many cases, they are understaffed, but often, it’s policy that dictates a long, drawn out process.
Time at the lender: Roughly 4 months, but highly variable. Some cases may take 6 months or even a year depending on the complexity and commitment of all interested parties.
Commitment of the Homeowner
Your commitment is vital to the process. A third party specialist may have an established way of doing things and can move quickly, but without your cooperation, it does not work. If a homeowner does not comply with documentation update requests, it kills the process and can result in setbacks in the case. Always respond quickly to any requests whether they be from a company you hire or the lender itself.
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