How to Prevent Foreclosure With a Modified Loan

You will successfully stave off foreclosure with a modified loan. Act quickly though; the longer you wait, the higher the cost to get the loan modified. If you wait too long, you won't qualify for a loan modification at all. Here is how the process of getting a modified loan works.

Difficulty: Challenging

Instructions

Things You'll Need:

• Hardship letter
• Bank statements
• Tax returns
• Proof of income
• Monthly bills
• Cashier's check or money order

1. Grasp the concept of a modified loan. Your lender takes the total amount of your late payments and moves it to the end of your loan, essentially lengthening the term of the loan.

2. Contact your lender. Talk with either the Loss Mitigation or Work-Out Department if you are behind on payments but not yet in foreclosure and the Home Retention Team if you already are in foreclosure.

3. Gather your financial information such as monthly expenses, tax returns, proof of income (pay stubs or 1099 forms) and bank statements. Your lender will request them to assess your financial situation.

4. Write a hardship letter to explain to the lender why you have fallen behind on your mortgage payments.

5. Get certified funds. Your lender will require you to pay upfront funds in either a cashier's check or money order. These funds are generally equal to one mortgage payment and are deducted from the total amount you owe.

6. Submit a completed paperwork packet to your lender. Fill out and sign the paperwork and include your financial paperwork, hardship letter and up-front funds in this packet.

Tips & Warnings

• Stay in touch with your lender to keep updated on the loan modification application so the process is completed as soon as possible.
• Copy everything you send to your lender for your own records so you can refer to them when you speak with your lender.

Resources

• Get help writing a hardship letter.
• Learn about all the alternatives to foreclosure.

[markvee]

on 8/20/2009 I have just started a loan modification with a company and am keeping a daily blog on how it's going. I hope it helps!
http://loanmodificationcityfinancial.blogspot.com

[marysusanallen]

on 5/6/2009 Another excellent article. Keep posting! And for those who need loan modification, you can avail of free consultation at http://houseloanhelp.com/help/loan-modification-help.php