How to Get a Mortgage Loan Modification

A mortgage loan modification changes the terms of an existing mortgage to help homeowners struggling to keep up with their monthly payments. It is not the same process as refinancing a new loan. Instead the lender will modify an existing loan with new terms and interest rates that hopefully will lower monthly payments. A mortgage loan modification can be an lifeline for anyone facing the possibility of foreclosure.

Difficulty: Moderate

Instructions

1. Determine if you are eligible for a mortgage loan modification by reviewing some general qualifications. Each lender will have there own criteria, but generally the most common conditions include: missing three or more payments, experiencing a significant financial setback (job loss, medical illness), owning the home as your primary residency and not being in the process of bankruptcy.

2. Contact the lender who currently holds your mortgage. This group, bank or financial institution is the only place that can modify your loan. If your mortgage has been sold and bought by others, it can be tricky to contact the right group. Look at the name on top of your mortgage statement or coupon book. This is a good starting point. Be very wary of any company promising a loan modification is you just pay an upfront fee. This is a growing scam. Instead work with your lender directly.

3. Request a loan modification application. Be prepared to explain your current financial situation. The bank wants to make money, and it’s up to you to convince them that a loan modification is in the best interest of all involved. Be honest and show you have made a sincere attempt to make your payments. Explain the circumstances behind your financial hardship. Be truthful but professional. The bank wants to know if you’re given a loan modification that you’ll still be able to pay the revised monthly amount.

4. Review the package carefully and gather all the requested documents. You’ll have to prove your existing income and document all monthly expenses. The bottom line? The bank wants to know if you can pay them back, even at a reduced rate. Otherwise it’s not in their best interest to complete the mortgage loan modification. Complete all sections completely. Send the package back by certified mail and follow-up with a phone call.

5. Contact the lender on a regular basis to determine the status of your application. Don’t get discouraged by the lack of response. They are processing several requests at once. Be prepared to follow up with their service department. Ask to speak with a supervisor if you’re not getting adequate service.

6. Get any mortgage loan modification in writing. Review all the terms carefully. If possible review the loan modification with a real estate attorney.