How to request home loan modification

January 9, 7:43 AMSF Personal Finance ExaminerSylvia DeFrance

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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?