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Loan Modification

Loan Modification Documentation Checklist

I had heard of loan modification for many years. In a few cases I actually helped some of my customers with loan modifications. In most cases however, I felt and guided my clients to other avenues that I felt would help them best. However, with the economy and credit and all the other new things going on in America right now, I have taken a second look at this whole Loan Modification idea. After searching high and low, I have found a program that I believe satisfies a clients needs in a straight forward way.

Since the time the world economic crisis hit the American society, numerous American homeowners found themselves struggling to make their monthly mortgage payments due to the increase of their interest rate or because of the households’ significant income reduction. On many instances the things went so bad that some families moved close to facing the horrifying threat of their homes running the risk of being foreclosed.

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Solution is offered by President Obama’s Home Affordable Modification Plan. This federal government sponsored program is intended for helping millions of homeowners to save their homes, the more so that it is being participated by the majority of lenders across the USA. Even if the program doesn’t cover all borrowers, still many of those who are able to provide proof of their income along with meeting certain other criteria do qualify for having their mortgage loan modified provided they take the necessary steps and apply for their loan modification instead of waiting in hope their situation will get settled on its own.

If you failed with making one or several scheduled monthly mortgage payments or if you feel the hardships you are experiencing are likely to make it hard for you to fulfill your mortgage repayment obligations in the near future unless the interest rate on your loan is reduced, it is a must that you do not delay with negotiating your loan modification terms with your lender based on Obama’s Home Affordable Modification Plan provisions.

It is important to act promptly before it is too late. You should realize that even if you are a homeowner who has already entered the process of foreclosure, there are still chances your home could be saved at this stage too, because the foreclosure process is bound legally to be stopped for the time you are being considered for the HAMP.

If this is your first mortgage on your primary residence, which originated before 1 January 2009, and if your monthly mortgage payment also exceeds 31% of your gross monthly income, then delay no further and contact your lender as soon as possible and offer them discuss the possibility of working out an agreement on loan modification for you. Currently the US government encourages financially the lenders who offer a loan workout to their clients. With 75 billion dollars in subsidies coming through Obama’s HAMP, there is a monetary incentive for the banks to co-operate with borrowers who qualify.

Here is the checklist of the financial documentation you are advised to have in your disposal while talking to your loan servicer asking to consider you for loan modification under HAMP:

  1. Information about monthly gross income, including recent pay stubs, if you are the borrower who receives salary
  2. Documentation confirming income you receive from other sources, if any
  3. Your latest income tax return
  4. Information about your assets
  5. Documentation confirming any subordinate lien mortgage on your home
  6. Account balances and minimum monthly payments due on all of your credit cards
  7. Account balances and monthly payments on all other debts (say, car loan)
  8. A hardship letter explaining why your mortgage has become not what your can currently afford (for example, your expenses could have increased because of the urgent need to undergo an expensive medical treatment)

These should cover also other borrowers, if any.

Author’s Box: Have questions? Looking for assistance? No need to hire an attorney – you can have your loan modification done with ease using the Loan Modification Wizard, designed to lead you step by step through the entire process of your home loan modification.

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