What is a Home Loan Modification?
Traditional home loan modification is the process of taking a portion of the unpaid principal balance, or amount that borrower may have fallen behind and placing it back into the principal balance. If interest rate remains unchanged, and fees, and past due balance are added, this in many cases could actually cause the payment to increase on the home.
Home loan modification at one time, was a method of redemption for mortgagors, that happened to fall behind on their mortgage due to temporary financial hardship. wherein they would be unable to recover utilizing other recovery methods such as a Repayment plan.
As the mortgage financial crisis increased, lenders have been pushed into a position trying to create and utilize new home loan modification methods to decrease the interest rate , forgive defaulted amount, extend life of the loan, or modify loan to the current value of the home.
There are many Home Loan Modification companies, that will try to scam you into paying for them to fax information you can ultimately send to the mortgagor yourself to apply for modification.
To obtain SUCCESSFUL MODIFICATION: You must have income, enough to afford a mortgage payment.
For example: Sally Jenson makes $200.00, from part time work, Her husband is unemployed, not receiving any alternate sources of income. Her mortgage payment is $1200.00 a month, and her other expenses are $300 a month. She would be considered unable to pay the mortgage at its current rate, and any rate whatsoever, because even if the mortgagor were to lower her payment to 1.00, Mrs. Jenson has expenses including the mortgage of 1500.00, to afford her home and her bills she would need income of at least 1500 to be considered for any type of assistance.
To apply for modification:
Gather last two years tax returns
most recent pay stubs for w-2 employment
Self employed, last quarterly statement/ Profit and Loss Statement
Hardship Explanation detailing reason for default, and also certify you did not default intentionally (cause for automatic denial)
Income and Expense Worksheet (Reflecting all INCOME SSI, Child Support, Rental Payments, Etc.)
Utility Bills
Most Recent Bank statements (if applicable)
MAKE SURE EVERYTHING IS SIGNED AND DATED and contact your lender’s Loss Mitigation Department/ Collections/ for Fax information, and also update your financial information(you may prequalify for a program!)
Keep faxing, 5 xs a month, follow up every day,
FREE RESOURCES
www.makinghomeaffordable.gov
www.hud.gov