How to Negotiate a Mortgage Loan Modification With Your Lender
The Making Home Affordable Modification Program (HAMP) is available to homeowners who are on the verge of foreclosure because of financial hardship. As part of the federal economic recovery plan to help revive the national real estate market and to help homeowners afford their mortgage payments, the Obama administration enacted this legislation. Eligible homeowners can apply for a mortgage loan modification through their lenders. Lenders must use the HAMP federal guidelines to determine eligibility. Under federal law, lenders cannot charge homeowners an application fee and must work with a homeowner's debt relief counselor, if necessary.
- Difficulty:
- Moderate
Instructions
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1
Download a Request for Modification and Affidavit from the MakingHomeAffordable.gov website. The federal modification program requires lenders to follow strict guidelines, and in general, the guidelines obviate the need for you to negotiate a modification.
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2
Complete both "borrower" and "co-borrower" columns of the affidavit if you qualified for your original loan with another applicant. Otherwise, complete the first column. Under HAMP, you must use your home as your principal residence to qualify for a modification.
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Sign and date the affidavit.
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4
Download Internal Revenue Service Form 4506T-EZ or 4506T from the MakingHomeAffordable.gov website. Your lender will require an original tax transcript directly from the Internal Revenue Service.
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5
Complete each line of your tax return transcript request. On line 6, enter the last tax year. Your lender may require one additional year of tax returns.
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6
Sign and date your tax transcript request. If you filed a joint tax return, your spouse will also need to sign and date the form.
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7
Gather your last two pay stubs. Your pay stubs must show your annual earnings. If you receive government benefits, unemployment insurance benefits or disability insurance benefits, you need to include a letter from the agency providing the benefits that states the amount and frequency of payments.
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8
Download the Dodd-Frank Certification affidavit from the MakingHomeAffordable.gov website. Under federal law and penalty of perjury, you must certify that you have not been convicted of felony larceny, money laundering, forgery, tax evasion, theft or fraud within the last 10 years.
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9
Sign and date the certification. If you applied for your loan with a co-applicant, he also needs to sign and date the certification.
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10
Send your packet to your lender. Typically, your lender will contact you once your application is in the underwriting process. Your lender will contact you if it needs further information and will generally provide you with at least a week to provide missing information.
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Tips & Warnings
If you receive spousal or child support, you must include a copy of your divorce decree stating the method and frequency of payments if you counted the benefits as income to qualify for your original loan or choose to use the income to qualify for the modification. Under federal law, your lender cannot require you to disclose this information.
If you are self-employed, you need to include a profit and loss statement. You can find a sample copy on the MakingHomeAffordable.gov website.
The information in this article should be used for general guidance. For specific assistance, seek the advice of a licensed attorney in your state or contact your state's bar association for information on pro bono legal assistance.
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Comments
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Thank you very Helpful.
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I know for a fact that lenders are not afraid of homeowners. Although you can get a modification without help, your results are almost always better if you have someone on your side working for your best interest. I can answer any questions you have FOR FREE. Call me today. 866 808 6363.
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No one actually gets one of these. It's a big lie.
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HAMP runs about a 5% success rate for homeowners trying to do it on their own, and internal loss/mit mods run about 10%--the best way is to sit down with a professional who can gauge your odds and steer you along the appropriate direction, whether that's pursuing the mod or doing a short sale. (Not everyone is qualified for a mod). If you have questions, just shoot us a call--The Law Office of Patrick M. Sutton, 952-831-5652.
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Anonymous
Sep 11, 2011
The only way to get a good modification is to sue the lender / bank. I purchased my investment property in 2005 for $2.1 million dollars. Recently, (over the past 18 months) I’ve had a tremendously high vacancy rate due to the poor economy and it began taking a toll on all my reserves just to maintain the property. I tried to negotiate with my lender (Bank of America) for a modification. I went round and round with the bank, submitting documents and so on and in the end, Bank of America denied me for a modification. I couldn’t understand why they wouldn’t modify my loan when it was clear that the economy hamstringed my ability to service the debt. The only thing that Bank of America could tell me was that the investor was the one who declined the modification. I asked who the investor was and they would not tell me. It was then that I began to look closer at my original loan and I saw on the Deed of Trust that MERS was listed as the Beneficiary. With all the information about MERS in the news I decided to talk to an attorney. My attorney had an auditing company called Lighthouse Consulting Group review my documents for both a forensic analysis of my original loan documents as well as a Mortgage Securitization Audit. It turned out that my loan was securitized in a trust called “Structured Asset Mortgage Investments II Trust 2005- 8. It was in this trust; there is a pooling and serving agreement, which governs the rules of the REMIC Trust. In my loans pooling and servicing agreement, it said specifically that any loan modified would require a buy-back from the servicer. Now, it was about this time that I began to default on my loan and was looking at ultimately losing my investment property. I was already 6 months in default at this point. The individual I talked to that is an attorney and real estate broker immediately ordered a forensic audit for predatory lending. Commercial properties do not have TILA and RESPA violations. The attorney also ordered a securitization audit to verify if the lender that filed the NOD was actually in proper standing. Both audits reveled several issues about my loan. First, the forensic audit proved that my lender had wrongfully calculated my payment it was overstated by $350 per month. Secondly, the loan itself was an adjustable loan based off the Libor Index, which was dropping, but the loan always adjusted up. This was a major development in a very positive way for me. Then, I had the securitization audit show that my loan was never securitized properly and the note and deed were not even with the same party. My attorney drafted a complaint, outlining everything I have mentioned. As soon as the lender was served, they contacted my attorney and settled without going to court. The settlement I got was a principal balance reduction of $400,000; my interest rate was reduced to 4.5% fixed for 30 years.
