How to Get a Loan Modification

Are you Trapped with a High Mortgage Payment?

Ok face it, everything is tough these days, and you might as well see where all you can save some money. Whether or not you are behind on your mortgage, you can still try for a loan modification! A modification is simply a short (but fully legal) contract modifying the terms of your mortgage loan. The documents you end up signing are far fewer than what you signed at the original closing. It is a new agreement between you and your lender that replaces the old interest and payment agreement.
The reason you would do this is simple: thousands of dollars in interest savings and quite possibly a significantly reduced monthly payment. This is no joke. I just modified my main mortgage and the interest savings are in excess of $300,000 over the life of the loan. Note that it *DID NOT* extend the length of my loan-it simply reduced the outrageous ARM rate to an affordable fixed rate for the duration of the loan. After doing this with one property I have also gone back and asked for loan modifications for my rental properties as well. One was approved. Two more to go....

Things You'll Need

• Financial documents, checkstubs, etc
• List of all your expenses
• Patience
• Fortitude

Instructions

1. Gather the following information:
   Copy of last 2 years tax returns
   A list of all your sources of income and all your expenses.
   Copies of all income source documents (check stubs, or P&L statements if self employed)

2. Contact Your Mortgage Company
   Over the phone they will take a statement from you regarding your income and expenses. If the surplus or defecit (amount you have left or amount you are negative each month) is within their parameters (each company has different ones) then you will be "pre approved" to go through the loan modification system. IF YOU ARE TURNED DOWN AT THIS POINT, WAIT A COUPLE WEEKS AND TRY AGAIN WITH "UPDATED" FIGURES. Tell them your previous figures were inaccurate because you did not have the documents in front of you.

3. Keep Copies of Everything
   You absolutely must keep a copy of every letter you send them, every fax confirmation, and send all important documents via certified mail with delivery confirmation. I am not kidding on this part. If you can, record your phone calls with the company every time you call. (There are plenty of free call recording devices or Skype offers a good one.)

4. Send in all the documents they request within a week or two. You would be safe to both FAX and MAIL copies of everything. If you receive anything in the mail, keep it with your files.

5. Call them relentlessly to check the status on your loan modification request, make sure they got your documents, see if they need anything else, and find out what else you can do. Call them at least once a week.

6. Wait, be patient, keep in contact, and Don't Give Up. Beat them at their own game! In a nutshell, you are proving to them that you can afford the house, but you just need help lowering the payment to make it more affordable. This works great if you started out with an ARM that kept going up (funny how they don't go back down with the market) and as well if you had some sort of loss in income.
   Every mortgage company is different. They all have their own criteria for what will and will not work. And it changes quite often. Some companies are harder to get through than others. It is a vicious game they play that they often win simply because the average person will give up during the process. I am not going to kid you, it is a pain in the you-know-what. The mortgage I told you about earlier, took 18 months to get modified. I spent about 80 hours of work on it. But when you consider the savings, not only a *GREAT* reduction in my monthly payment, but the hundreds of thousands of interest savings, it was worth the time and effort.

Tips & Warnings

• Be persistent and keep calling

• If one option doesn't work, try another

• May also work for 2nd homes and rental properties

• Don't use false information - they will check it

• Don't give up!