Foreclosure Defense and Loan Modification Blog

1. Natural Disasters.

Floods, earthquakes, hurricanes, tornadoes, etc. During natural disaster, people will skedaddle from their homes and sometimes they never return.

2. War or Civil Conflict.

Violence, anarchy, etc. In times of war and civil conflict there are lots of people who will just abandon their homes and never ever come back.

When it comes to applying for a loan modification, your debt-to-income ratio is really very important. Having the right or wrong DTI ratio can make or break your loan modification. But what is debt to income ratio? Let's dive right in. President Obama's foreclosure prevention plan has it set up so that for your first mortgage, your Front-end debt-to-income ratio can be no more than 31 percent. This basically means that your house payment cannot exceed 31 percent of your gross monthly income. So if for example your monthly mortgage is $1,000, your gross monthly income should be at around $3,230 or more.

There are actually 2 debt-to-income (DTI) ratios to become familiar with:

1. First there's your Front-end DTI ratio which is based on your house payment. Under the President's plan, the Front-end DTI ratio target of 31 percent only applies to your first mortgage. Other loans taken against your home such as a second mortgage or an equity line of credit are separate and are not a part of your Front-end DTI. Instead, you can calculate these other loans as a part of your Back-end DTI. But wait, what is Back-end DTI? I'm glad you asked!
   
   
2. Besides Front-end DTI, you also have your Back-end DTI ratio which is based on all your monthly debt payments combined. This includes your house payment, credit card payments, auto loan payments.

If your loan modification was denied, don't worry: you're not alone. Loan modifications may be one of the hardest things to get approved without the assistance of an experienced attorney. After denial, your next step will depend on the reason why you were denied and where your home is in the foreclosure process.