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THE INS AND OUT OF A LOAN MODIFICATION

 

If you have found yourself falling behind on your mortgage payments, you are not alone.  Many families find themselves in the same position as you.  There is a potential remedy to this stressful dilemma.  It is called a Loan Modification.

Although the results of an application for a Loan Modification are not guaranteed, as the mortgage lender has the final decision making authority, the effort to apply for a Loan Modification can be a worthwhile venture.

A Loan Modification is the official process by which you would ask the mortgage lender or bank to rewrite your loan into more favorable and affordable terms so that you can avoid foreclosure.

In most instances, you must be at least three months behind on your mortgage before you apply.  The lender, in turn, will request the following information from you:

What you will need:

  1. An application for a Loan Modification;
  2. A hardship explanation;
  3. Your household monthly income;
  4. Your household monthly expenses;
  5. A disclosure of any additional monthly debt obligations;
  6. A copy of your most recently filed Federal Tax Return;
  7. Proof of your income (i.e. paystubs, rental leases, evidence of child support/alimony, evidence of self-employment income;
  8. Two months of bank statements; and,
  9. Your assent for the mortgage lender to officially request tax transcripts from the Internal Revenue Service.

The Loan Modification Process:

The process of a applying for a Loan Modification will take time and patience.  It will also take the skilled knowhow of how to craft an application that places you in the best light to qualify for a loan modification.  If successful, a Loan Modification will usually address the mortgage arrears, the interest rate, the length of your mortgage and potentially the write off of principle.

If you have no other financial issues, a Loan Modification may be the answer for which you are looking.  If there are other financial issues and/or the Loan Modification is unfortunately denied, you still have options.  If this is the case, please see the discussion regarding Chapter 13 Bankruptcy.

An attorney skilled in this matter can assist you through this process and provide you your best shot at being successful in this endeavor.  An attorney will properly prepare the required documentation, meet all deadlines and assist you in gathering all necessary supporting documentation.  An attorney will also continue to follow up with the mortgage lender to ascertain the status of your application for a Loan Modification.   Finally, an attorney will guide you through the final process of making sure that your Loan Modification is permanent.