Loan Modification Kit
How to do a loan modification
The government revealed the Making Home Affordable
Program in February of 2009 to help homeowners
who were in jeopardy of missing mortgage payments
or behind on their payments. The program is
made up of two main areas: Loan modifications
and loan refinancing. The loan modification
portion of the Making Home Affordable Program
is called the Home Affordable Modification
program (HAMP) and is tool to help decrease
mortgage payments for struggling homeowners.
The refinance plan is known as the Home Affordable
Refinance Program (HARP).
A loan modification has been known to help homeowners
jump back on their feet after a temporary fall
due to some kind of financial hardship. The
way these homeowners were able to receive their
loan modification is because they showed their
lender that they were in need of help in order
to maintain their home. When a homeowner goes
to their lender about a short sale, the lender
will typically ask for a cluster of documents
validating your yearn for a loan modification
as well as your ability to be able to afford
a lower monthly mortgage payment that may be
due from the loan modification.
The following list is a generalization of typical
documents that most lenders will require the
homeowner to submit in order to approve a loan
modification:
Hardship letter- This letter
will be written by the homeowner and will state
the reasoning for the inability to be able
to make mortgage payments.
Homeowners financial worksheet-
This will give the lender an idea of your income
and assets, and is similar to the Uniform Residential
Loan Application that was completed when applying
for the primary loan.
W-2 - Two years
Bank Statements- The lender
will want this because they will want to know
if there is a pile of money sitting in your
bank; if so, chances of an approval is doubtful.
Pay Stubs- Two months
Mortgage Statement- Copy of
the most recent one.
Current Financial Statement- This
will give detail to your monthly income and
also your expenses and will show how much of
a loss you are taking each month with the mortgage
payment.
Cover letter- This will explain
why you are making your submission of all the
above documents. Its important to make sure
the cover letter has your name and loan number
on it.
Before making your submission to the lender,
be sure all papers have been signed and the
loan number is included on all documents within
the package to insure they are not misplaced.
Homeowners should realize that they may only
have one shot at getting their loan modification
application approved, so it is highly advisable
to follow all instructions given by the lender
in a timely fashion. The quicker the documents
can be submitted, the quicker a potential approval
can be determined.
One of the greatest benefits of a loan modification
is that lenders will typically agree to one
in order to avoid a foreclosure. In a foreclosure
they will lose money by potential vandalism
or repairs that occurred due to a vacant home
and banks are in the loaning business, not
housing repair business. Most lenders would
rather give a homeowner the chance to re-establish
themselves rather than deal with the foreclosure
process and the amount of work and time it
could take to get the house sold again. However,
should the loan modification deal be broken,
the lender will take further action. It is
important for any homeowner to know that they
do have options in order to avoid a foreclosure
and it is always best to try and research those
options as quickly as possible. |
