Advice on applying for a re-fi or loan modification

A loan application form.

Ever seen how much paperwork is involved in buying a home? And if you find yourself unable to make mortgage payments, things can become even more complicated and confusing. But it's no easy task to clear answers from your mortgage lender. Wouldn't you like some straight talk from a banker? Us too. So we asked Jess Tirado of Wells Fargo Home Mortgage to stop by for a little chat. He's a senior vice president and regional servicing director who lives in the Inland Empire.

What makes an application for a refinance request or a loan modification stand out in the eyes of a bank?

"What we look for is, obviously we want to make sure that the customer is qualified for the mortgage. That we're going to be able to give them a loan that they're going to be able to afford and make the payment on. So in any loan situation what we're looking at is that you have credit, that you have collateral and that you have capacity, meaning that you have income to sustain the loan. We want to make sure that anybody who gets a loan today can service that loan for the time that they have it," says Tirado.

But what about those people seeking loans who are in distress?

"We know that there are people out there that are still struggling with their mortgage payment. We ask all customers as soon as you run into any difficulty, in fact don't even wait, if you know there's going to be a change in your financial situation let us know ahead of time. You don't have to wait until your mortgage is delinquent. A lot of people immediately think they need a modification, it might be a repayment plan. You had a hardship, you're back on your feet now, you just can't get caught up on your payments that you missed, we can work with that. There are different solutions to each financial situation," says Tirado.

Tirado says contacting the bank if, say, you are notified that you're going to lose your job, can possibly improve your chances of getting help. Yet there are countless stories of people saying they are getting the run-around from their bank or going through the process of a loan modification or foreclosure at the same time.

"Years ago when we started in this crisis, there was some confusion. There were some things that we had to work out. As you know, this economic crisis has been unprecedented in our time. So none of us have the luxury of having experience in this. I think what you'll find now is that a lot of that has changed," says Tirado. "We've learned a lot and it just works a lot better for customers now."

For people contemplating a re-fi or loan modification, Tirado advises you to tell the bank your story.

"What is happening in your life? What has changed? Contact your bank early and they can help you work through the options that might be available for you," says Tirado.

About the author

David Lazarus is an American business and consumer columnist for the Los Angeles Times.

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