Most mortgage modifications work this way:
Step 1 Contact Lender
If you think you are going to be falling behind in your monthly mortgage payments by more than one month or you are already two months behind, you should contact your lender immediately. Ask for the mortgage modification department or loss mitigation department. Many of the lenders won’t consider a mortgage modification unless you are at least three months behind. However, with the government pressure and the economy right now, some lenders are offering modifications to borrowers even if they are not in default.
Once you reach the correct person or department, ask them about a mortgage modification. They will tell you what they need you to send them. Most of the time, you can just fax the documentation to them. It takes an average of 24-48 hrs for the information to get in their system. They will want an authorization letter if you are asking a third party such as your mortgage broker, attorney or counselor to help negotiate the modification for you. So you will need to send the authorization to them. Besides the authorization form, most lenders require the following:
1. Hardship letter explaining why you can no longer afford to make the monthly payments. Income loss as a result of the economy or your wages being reduced, death in the family or a divorce. Be honest about the hardship. Be sure to include your name, address of the property and loan number on all correspondence. And the last four digits of your social security number.
2. Last two paycheck stubs.
3. Two years tax returns and W2’s or 1099’s.
4. Borrower’s Financial Statement.
Step 2 Follow up with the Lender
Call the lender 24 or 48 hrs after you submit your request to make sure they have received the paperwork. They will tell you sometimes that they have not received it so you may end up refaxing it several times until it gets in their system as most of the lenders or servicers are extremely backed up with other similar requests. It’s a frustrating process so make sure you start the process as soon as possible so that your home does not go into foreclosure while you are waiting for a response. If it does go into foreclosure or your lender files a notice of default depending on what state you reside in, don’t panic, keep calling the lender, but contact an attorney right away to defend you in the litigation or help you with foreclosure prevention.
Call every day until you get an answer. Be polite but persistent. It can take anywhere from 30 days to 90 days to get a response.
Step 3 Accept or Counter the Offer
You don’t have to take the first offer the lender offers either. You can counter their offer. However, if you are about to have a foreclosure judgment entered against you or the property is going to foreclosure sale, time is of the essence naturally. By that time though, your attorney will be helping you with the resolution.
As you can see, the paperwork and the process is not that difficult, but you must be a good negotiator and get your case across to them. The lenders are more apt to work with you more now than ever before because of all the recent government legislation and pending legislation, the backlog of foreclosures and the high volume of foreclosure inventory on the lender’s books. Remember, lender’s don’t need any more foreclosure property. They want to work with you.
