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If Your Loan Modification Application Is Denied

Transcript: If your loan modification application is denied

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If you've been denied a loan modification, you're probably disappointed, but don't give up. You may have other options instead of foreclosure, and we're here to help you understand them. 

These options may include one of the following:

  • Reapplying with updated information if your circumstances have changed
  • Applying for a short sale
  • Applying for a deed in lieu of foreclosure, and
  • Selling the home

For example, if you realize that an important piece of information was left out of your original loan modification application, an appeal can be discussed. Talk about it with your home preservation specialist and see if reapplying makes sense.

If it doesn't, there are other ways to avoid a foreclosure and potentially minimize the impact on your credit. These options take effort on your part and unfortunately will mean leaving your home, but they can help you stabilize your finances and regain your footing more quickly than foreclosure.

If the real estate market in your area is healthy, you can consider a traditional sale of your home to pay off the mortgage.

Another possibility is a short sale, which is a way of selling your home for less than what you owe on your mortgage. With a short sale, the proceeds from the sale of the home are used as payment in full and cancel other terms of your original mortgage. This option may allow you to stay in your home until the sale is finalized, giving you time to make other living arrangements. In some cases you may even be able to receive a cash bonus to help you move.

Another possibility is a deed in lieu of foreclosure, which is also called a mortgage release. Here you voluntarily transfer ownership of your home to Wells Fargo, avoiding a foreclosure sale and removing the obligation to repay your mortgage.

Of course every situation is unique. With either option you'll be required to leave your home and there could be costs or tax implications later on, so talk with us and a tax advisor to learn more.

You may not want to pursue any of these options, and that's understandable. However, if your loan modification request was denied it may not be possible to stay in your home.

While this isn't the outcome you wanted, avoiding a foreclosure sale will help you move forward as quickly as possible.

We really do want to help you, so continue the conversation with us.

If you have questions, call us today at 1-800-678-7986.

Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A. 
© 2015 Wells Fargo Bank, N.A. All rights reserved. NMLSR ID 399801. Equal Housing Lender.