A brief review of this scientific principle can help you balance your family’s budget through a mortgage modification. That’s right, high school physics to the rescue!

File inertia is a term I coined after observing hundreds of mortgage modification applications (aka “files”) processed by banks. My acute observation and deduction capabilities led me to postulate this breakthrough principle! So, in the spirit of all great “scientific discovery” I will share it with you.

Applications that are in motion tend to stay that way unless acted upon by other forces. Applications that are stopped tend to stay that way. While this discovery may not bring me fame, it has brought my readers lots of mortgage modification success. And, with the acute dissatisfaction with the whole mortgage modification process, that’s a lot.

Here’s how it can help you to win a mortgage modification and improve your family’s budget. There is a force acting upon all modification applications that tends to stop them. It’s called overwhelmed. The banks are still overwhelmed with the sheer number of applications. All systems and processes are strained to the breaking point so it is logical for them to “stop, reject or send back for updates and corrections”, as many files per day as possible. This “rework” gets the file off their desks and onto someone else’s. AND, it becomes your problem, not the bank’s. You can’t let that happen to yours!

For anal retentive types, this will be easy (and, do not read into that statement any insinuation that the whole process has a relationship to excrement). And, for others with less obsession with details, I will make it easy for you. Your application has to be perfect. Not only do you need to provide all the information that is required but you must also organize it and present it in a way that is perfectly understandable to an inexperienced, barely trained loss mitigation agent. Items such as missing documents, unsigned Tax forms, expired form 4506-T and inadequate income documentation make it vulnerable to rework.

I have eight recommendations for you:

1. Document Income correctly and show it clearly. This includes, notarizing self-employed P&L, including annual award letters for SSI and EDD income, showing calculations for monthly gross amounts and explaining precisely how you calculated recent 1099 income.
   
2. Show rental property correctly. This is especially important if you are applying for a HAMP modification on your primary residence.
   
3. Your front-end DTI (Debt-to-Income) must be right. This is the total monthly payment on the 1^st mortgage (PITIA) divided by your gross household income. It must be greater than 31%.
   
4. Your back-end DTI (total indebtedness as percent of gross household income) must be less than 70%. If it is higher, you will get rejected for having too much debt.
   
5. Check your credit report (get a free copy each year at www.annualcreditreport.com) to be sure all debt items are present and accounted for on your application.
   
6. At the end of your budget…after income taxes, debt payments and costs-of-living…you should have about $0 left each month.
   
7. In order to be treated within a reasonable timeframe, you must be late on your payments. Most banks require that you be more than 60 days late before they stop halting your loan mod progress with their “Immanent Default” shenanigans.
   
8. Make it easy to understand. Put it together like you are there presenting it…with a cover letter, a table of contents page, with notes to clarify things, etc
   

Do these eight and you will capture the power of file inertia instead of falling victim to it. It can help you get through the process successfully and in a reasonable timeframe.