You can do your own mortgage loan modification.
First you need to prepare for your loan modification, you will be required to fill out forms, provide copies of financial, bank and tax statements and speak with the loss mitigation or loan work out departments of your mortgage company in order to modify your mortgage loan. This process is very lengthy and frustrating, the more prepared you are the better.
Step 1
Write down your budget. Include all expenses and all income. For example, the lender will want to know if you have a renter in the basement or you if you pay a lot every month for prescriptions.
Step 2
Decide on a figure that you can live with so you have something to measure the lender's offer against. Be persistent in asking questions. If your income supports the modification there will be some gray area to negotiate your offer.
Step 3
Examine whether you would be willing to accept a short sale on the property. Selling your house for less than you owe is an alternative to foreclosure if even a modified payment is unaffordable.
Step 4
Plan on fulfilling a down payment, forbearance plan or 3 months good faith payments before the lender will consider your application.
Step 5- Gather the required documents to modify your mortgage loan
1. Financial Statement- Statement of Income, Expenses, Assets and Liabilities.
2. Signed IRS Form 4506- Allows your lender to pull your most recent tax return.
3. Bank Statements- 2 months bank statements.
4. Pay Stubs or Profit and Loss Statement- 2 of either.
5. Other Income- please provide any rental income or social security payments you may receive.
6. Borrower Financial Statement- lender required borrower financial statements may vary, best to get it directly from the lender.
Step 6 – Strategize
When applying to modify your mortgage loan, make a game plan on how exactly you are going to approach them. These people are trained in minimizing loss for their company and they get paid to by getting the most amount of money out of you as possible or declare that your case is un workable and foreclose on you. Providing them with items such as pay stubs, tax returns and a whole host of financial information. Once everything is provided, most lenders will assign the file to someone higher up in the loss mitigation department.
The trick with any bank and getting a work out done is learning to navigate their phone system so as to increase your chances of getting a live person.
Once you get a live person, you want to be working your way up to a decision maker. This is sometimes harder to do for a homeowner than a 3rd party. Often with the homeowner they get stonewalled at the first level, and sadly the first tier in Loss Mitigation is really a glorified collections department. So it’s essential that you get beyond these people and to a specialist.
Step 7 – Keep a budget
The MOST crucial element to this whole process is your Budget. They will ask you for a detailed list of your monthly expenses. If it’s too tight, you may not get approved, if you have too much extra income you are going to have an outrageous payment plan. Don’t agree to it!
Step 8 – Save cash
The 2nd MOST important thing you can do is DO NOT SPEND YOUR HOUSE PAYMENTS. Sock away as much of that money each month as you can. Its crucial, here’s why;
If you don’t pay your mortgage for 3-4 months and your lender decides to negotiate a repayment plan or a loan modification, then they will want what is called “good faith” money for you to come to the table with. Typically this is from 30-75% of what you owe in delinquent fees and attorney fees. These are the best steps to follow to modify your mortgage loan.
By Kathryn Davis an Agent in 92881
Originally Posted on Trulia Blogs
April 16, 2012
