Mortgage loan modification: what is it?
How to get a mortgage loan modification
Your ability to get a mortgage modification will depend in part on how you go about it. It is crucial that you take the following steps to give yourself the best chance of getting one.
Qualifications vary depending on the program you choose, but you will typically be asked to provide information on the following:
1. Call your lender
The first step that you need to take is to contact your lender to inform them of your inability to meet your monthly mortgage payments. The sooner you contact your lender, the more likely they are to help you find a solution.
When speaking with your lender, be sure to explain how your financial situation has changed and what caused the change. You’ll also want to provide them with an overview of how much you can currently afford to pay and when you think you can resume your regular payments.
2. Complete a loss mitigation application
Once you’ve spoken to your lender, they’ll likely ask you to complete a loss mitigation application. This request acts as a formal request for assistance and asks you to provide additional information about your finances.
3. Provide proof of finances
As you complete the Loss Mitigation Application Form, you will be asked to provide proof of your finances. You should expect to include copies of your most recent pay stubs, bank statements, and tax returns. You will also need to make an income and expense report that shows how you are spending your income.
4. Write a hardship letter
The last piece of your loss mitigation application will be a hardship letter. This document should clearly explain why you are having difficulty making your mortgage payments.
When writing a hardship letter, you need to make sure to include a header that says your name, contact details, and loan number. In the introduction, you should clarify why you are looking for a loan modification.
Your body paragraph should concisely explain the circumstances that have caused you or are likely to cause you to fall behind in your payments and why the situation is out of your control.
You should conclude by informing the lender that you are looking for a loan modification so that you can meet your obligation and provide the name of any financial advisors you have consulted during the process.
5. Accept or decline an offer
After you complete the application process, you will hopefully receive a change offer. The alternative presented to you by your lender may or may not suit you and your finances. That’s why it’s ultimately up to you to decide whether you want to accept or decline the offer.