How to Speed Up the Loan Modification Process
The recent national housing crisis and resulting recession caused many homeowners to declare bankruptcy or end up in the foreclosure process. In response to the foreclosure crisis, Congress enacted a home loan modification program to help homeowners stave off foreclosure. Although banks can offer their own private modification programs to homeowners struggling to pay their mortgage, banks can use their own internal guidelines. Banks are not required to expedite the modification process. However, homeowners who apply for the federal Making Home Affordable Modification Program (HAMP) may receive an expedited review of their modification applications.
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Instructions
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Establishing Eligibility
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Determine whether you qualify for a federal modification. The government imposes strict financial requirements to qualify for a HAMP modification, and applicants must have first liens originating before Jan. 1, 2009. Furthermore, a homeowner's mortgage payment must exceed 31 percent of his monthly pre-tax income, including any homeowners' association fees, insurance premiums and real estate taxes.
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Contact your loan servicer or lender to tell them you are applying for HAMP by written correspondence. Since the HAMP modification program expires at the end of 2012, all lenders providing Fannie Mae and Freddie Mac loans must process their applications to meet the deadline.
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Ask your lender or loan servicer to contact you by mail for further documentation. Since lenders must cease any pending foreclosure actions during the application process, they often seek to quickly process borrowers' applications. If your lender needs additional documents from you, do so in writing to avoid any future problems.
Complete and Submit a Modification Packet
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Obtain a copy of the Request for Modification packet from your lender or download an electronic copy from the official MakingHomeAffordable.gov website.
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Complete the modification request by providing your personal and financial information. Complete the request form in its entirety, including supplying co-borrower information, as applicable.
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Complete your Modification Affidavit. This is the official hardship affidavit that your lender will review to determine whether your current financial situation qualifies as a financial hardship.
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Complete your tax form request or Form 4506T. By completing this form and submitting it to the Internal Revenue Service, you are permitting the IRS to send your tax returns for the last few years to request to your bank. Your bank will let you know if you need to request more than one year of tax returns on line 6 of the form.
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Complete the income verification process. As specified on the modification request form, your bank will ask for at least the last 60 days of your most recent pay information, which includes your gross pay and deductions.
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Complete the Dodd-Frank form to certify that you have not been convicted of federal money laundering, theft, forgery, evading taxes or felony larceny within the last 10 years. By signing the certification under oath and penalty of perjury, you understand that the U.S. Department of the Treasury and federal agents can conduct background investigations.
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Sign and date your entire packet. Send your packet to your mortgage company listed on the MakingHomeAffordable.gov website.
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Tips & Warnings
The U.S. Department of Housing and Urban Development offers a free counseling service for homeowners experiencing difficulty completing and submitting their initial modification applications. Approved housing counselors with the "HOPE" Program can help struggling homeowners at no cost, and there is no fee to apply for the HAMP program.
Under federal law, lenders cannot proceed with any pending foreclosure sales under HAMP until they have processed, evaluated and provided a determination decision to borrowers applying for HAMP.
If approved, the government requires lenders to enter into a trial mortgage modification period before receiving a permanent federal modification. Homeowners must make sure they send timely mortgage payments during the trial period.
The information in this article should be used for general guidance. For specific assistance, seek the advice of a licensed attorney in your state.
