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The process of home loan modification can be daunting. While each homeowner's financial situation is different, below are guideline on how to request a loan modification.
Contact your lender
Specifically, ask to speak with someone in the loss mitigation or home retention department. Do not speak with people in the delinquent accounts area as they do not have the authority to change the terms of your loan. Each lender will have their own forms and procedures so ask what the process is for requesting loan modification.
- Bank of America mortgage help and personal budget worksheet
- Wells Fargo mortgage help
- JP Morgan Chase (for Chase, WaMu and EMC loans) mortgage help
- Washington Mutual (WaMu) WaMu Cares mortgage assistance and personal budget worksheet
Complete necessary documentation supporting your request
Lenders will request the homeowner complete a budget worksheet listing total monthly income and expenses and the current value of your home (formal appraisal not needed, use sites such as Zillow for estimations). In addition to this you will likely need to provide a letter of hardship explaining your situation, your last two pay stubs and two months of bank statements. Keep your documentation organized.
Follow-up regularly on your case
Lenders are overwhelmed with requests. Homeowners need to be proactive in making sure their case is being reviewed. Tips for follow-up include:
- Call at least once a week to check the status of your case
- Verify your paperwork has been received; record the date the lender has on file for receiving your documentation
- Ask if your case has been assigned a case worker. If not, escalate to the point of getting someone assigned.
- Keep a written record of the date, time and person (name/ID number, department, city/branch) each time you call
Be prepared to ask for terms
Loan modification will only work if you are able to make the payments of the modified terms. Therefore, it is important to know what you can afford and show the lender you are willing to make concessions. If your salary has decreased or you are in between jobs, knowing what you can pay over the next year wil help you in negotiating the terms. If you haven't already done so, cutting out extra's in your monthly expenses - gym memberships, etc. to apply more to your modified mortgage will help. Be proactive and create a proposed monthly budget worksheet showing a modified mortgage payment and ask questions such as
"I can afford monthly payments of $1150 and can provide a proposed monthly budget worksheet with my income and expenses to support this. Can you work to modify my payments to $1150? If not, why?"
If the terms the lender proposes don't work in your budget, continue to ask how you might come to terms that will allow you to meet the payments and stay in your home.
Many people have completed loan modification on their own without hiring an agency but dealing directly with the lender. Our own Tampa Wellness Examiner was able to lower the house payment without refinancing through modification.
Next: Home loan modification - do you qualify?
Home loan modification defined
Home loan modification - do you qualify?
Home loan modification - online support resources
Comments
I have to respectfully disagree with your overview. Contacting your lender is tantamount to "The Fox Watching The Hen House". Lenders are self-serving at best and naturally only looking to protect their own interests.
Lender generated LM's are merely cosmetic by their very nature. They drop interest rates for a few months, maybe a year max, tack the arears onto the back of the loan and within months the borrower is right back to square one; losing their home.
The only long term solution is permanent interest and principle reduction and this can only be accomplished by a impartial third party i.e. experienced licensed loan broker or more preferably an experienced RE attorney who specializes in LM's.
The key ingredient is to lower the principle to 85% of the current market value and the interest by at least two percentage points which will drop the monthly payments considerably and place the homeowner above water thereby giving him/her some equity.
Then if the homeowner wishes to sell their home they would have to repay the lender a good percentage of the profit from the sale as a partial repayment.
In view of the fact that TARP money is being made available to banks and lenders for this purpose it's only fair that they should have to suck it up and compromise a little to the borrower. And why not? It was their predatory lending practices and greed that got us into this mess in the first place. Sorry, but I'm hard pressed to find much sympathy for banks.
John DL Arendsen
arendsen@cox.net
Well spoken John A. We've been helping clients for the past 10 years to get out of foreclosure and to modify their mortgages before it was the "trendy" thing. I've had countless clients contact me with the same feelings only due to the fact that they have gone the route of "do it yourself".
My one question to most home owners facing foreclosure is this, "Would you go to court and face a judge without an experienced team on your side?" No way!
Home owners can try the "DIY" approach with their lender. However, statistically they end up having to use a third party because they've been declined by the lender.
For more information about us, our clients and recent successful results, see our website or contact me directly for a free-no-obligation consultation.
Terry Harrison
Default Mortgage Center - Austin, TX
www.defaultmortgage.org
tharrison@defaultmortgage.org
I am self employed and could not get approved for a refinance after ARM expired. I used an attorney from www.us-loan-modification.com and they lowered my payment and helped me avoid foreclosure.
I respectfully disagree with our commenters here - mainly because they have their own personal/professional agenda of recruiting clients to pay fees for completing paperwork that you can do yourself with your mortgage holder. In some cases, you may need outside assistance, but as our own Tampa Wellness Examiner has shown as have many others - you can deal directly with the loss mitigation department at your lender.
If you feel you are not able to handle this yourself, you can hire an outside agency but do proceed with caution as there are no guarantees you will do anything more than pay $2500 - $3000+ and be no further ahead than when you started.
Some banks are not modifying loans because of income problems. If we are unemployed ( as thousand lately) this is the time when we need a lower loan payment!
I was checking a non-profit site where they have information about government programs for Loan Consolidation (www.hopenowmortgages.com ).
I wonder if the government will they modify a loan of a recently unemployed?
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