How to do your own Loan Modification for FREE
Buyer beware. There are hundreds of loan modification companies popping up everywhere. Just like during the real estate boom, everyone and their brother went out and got real estate licenses and starting advising people to buy buy buy. Well we know where that got us right?
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Instructions
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Contact your lender. Tell them you need to talk to the Loan Workout or Loss Mitigation department (name will vary from lender to lender). Once you have this contact, make sure you get their direct line and email address. You can quickly get the status of your file if you have their email. NOTE: Some lenders will not give you this information to avoid being bombarded by 100's of emails, but if you can get it then do so.
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Keep in mind that the person working on your file probably has 100's of other loan modifications on their desk. So you may be tempted to hire outside help from one of those companies you've been hearing advertised lately. I caution you on this. You do not have to pay an up front fee to get someone to help. Go to: http://makinghomeaffordable.gov/modification_eligibility.html to see if you are even eligible before giving anyone a dime! You can also visit HUD's FREE Foreclosure Prevention site: http://www.hud.gov/foreclosure/index.cfm. They also have FREE counseling services to help you avoid foreclosure. (See the resources section below and click on the links or cut/paste into your browser).
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You need to start gathering all of your financial information (and P&Ls if you are self employed). Your lender will ask you to fill out a form detailing your monthly cash flow. This form will include expenses, income, account balances etc.
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Check in with your lender frequently to get a status on your progress. Usually 2-3 days each week you should be checking in. Keep in mind the people you pay thousands of dollars to do your loan modification are going to be doing nothing more than this too. So why pay them thousands for something you can do on your own?
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If your lender does not allow a loan modification do a short sale instead. For more info see my article about doing a short sale.
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Tips & Warnings
Check in with your lender every 2-3 days on the progress
Have patience
Contact a reputable real estate attorney
Do not pay an upfront fee
Check out the BBB or ask for references
Beware of any company making guarantees
