Before the restructuring your mortgage Make sure you meet the minimum requirements

For obvious reasons the minimum qualification for a mortgage restructuring are quite different from those of a first time home buyer. The homeowner's attempt to restructure usually indicates some current, or recent, financial duress by the landlord, who in all likelihood is trying to save the house and stop foreclosure. Understandably a lender is likely to be very severe, even cruel, depending on the circumstances of the landlord.

Similar to a first time home buyer, a homeowner trying to restructure to be able to demonstrate that it can afford the new monthly payments. Unlike the first time buyer those attempting to restructure typically face a difficult test for the creditor, even if they have recently suffered a financial set-back, are in fact "back in the saddle" and have an adequate flow of Monthly cash to enable them to afford what is likely to be a higher payment monthly mortgage.

It is proving to be a bit 'more annoying for those with damaged credit when applying for a mortgage restructuring in recent times. Conventional loans usually are not available in this circumstance, leaving only those that offer loans at interest rates much higher. The caveat is that along with higher interest rates comes a higher monthly payment (unless the homeowner has accumulated a significant amount of money to buy points), which may possibly "kill the deal" if the borrower can not prove definitively able to afford the new mortgage payments higher.

Income

Income requirements for the restructuring are the same as for a conventional mortgage loan first time. The maximum amount of income allocated to a mortgage payment can not exceed 28%. As mentioned previously the difficulty comes with proof to the lender that the monthly income will be sufficient to cover the monthly mortgage payment higher.

A word of caution is in order. As tempting as it may be to inflate your income or minimize your debts and other financial commitments in order to improve your position, is a fraudulent offense to lie about your income on a mortgage application form.

Employment

Lenders all seem to follow the same guidelines for employment. Regardless of whether the borrower has a job or self-employed, they must still submit the following documents:

For all loans:

or last full year and previous years signed federal tax returns and last year and the previous years W2 federal forms.

Two or more current payroll within 30 days for each borrower.

The last three or bank statements for all savings and current accounts.

The test or additional income (rental agreements, child support, alimony, military allowance).

For self employed borrowers:
ast year and previous years signed federal corporate tax returns.

ast year and previous years signed federal partnership tax returns.

ast year and previous years and current (calendar or business) year to date (YTD) signed the profit and financial losses.

current year or date (or year calendar of activities) signed state tax returns.

Conclusion

In what was an act of "too little, too late," the government has stepped in and began examining some of the questionable lending tactics which started the whole sordid mess. As a consequence lenders have been forced to adopt more stringent lending requirements and funding obligations to negate the need for government legislation. While this strategy has provided a stop-gap measure to reduce future abuses and irresponsible actions, provides little help to those borrowers who are struggling to stop foreclosure and keep their homes.

Homeowners and buyers today can expect much more stringent requirements on providers. Credit score requirements are becoming tighter. If you are looking to restructure an existing mortgage, make sure you have the money for closing costs and a substantial down payment with a solid documentation of your income. And above all, do not let the clock run out on your efforts .......