How to Negotiate a Mortgage Loan Modification

Using this guide, you will learn the steps you need to take to successfully negotiate a mortgage loan modification.

Difficulty: Moderately Challenging

Instructions

Things You'll Need:

• personal financial records

1. Decide if a mortgage modification is really the answer for your financial situation. If you are currently behind on your mortgage payments, seek out your lender with your plan for receiving a mortgage loan modification, instead of making them come after you.

2. Do some research to find out if there are any programs that you might qualify for, as well as there being any programs or agencies on the federal, state or local level that might be able to help you. Before starting the negotiation process, make sure your lender is aware of any assistance or incentive programs you will be leveraging as part of your mortgage loan modification.

3. Take a close look at your finances, and get accurate records of your monthly expenses and monthly income. In order to be considered and approved for a mortgage loan modification, you are going to have to provide detailed information about your expenses, as well as prove that you would be able to afford your mortgage payments, if your modification is approved.

4. If you are experiencing short-term financial problems, you might be able to negotiate a postponement of a few of your payments. In order to do this, make sure to be prepared to demonstrate why you are currently having problems, and provide documentation why (and when) the issue will be resolved. If you can do this, you may be able to avoid a more in-depth mortgage loan modification.

5. Your best chance of being successful in your negotiations will depend upon proving, through your financial history, that you will be able to afford your mortgage if the mortgage loan modification is granted. In order to do this, you’ll have to show ways that your budget has been modified to save you money, and any sources of additional income that you now have (such as a second job).

6. During your actual negotiations with your lender, make sure you have all of your financial paperwork in order and easily accessible. Be prepared to present your plan for how you feel the mortgage could be restructured so that you can afford it. Answer any questions your lender has for you in a complete and honest fashion. Make sure you thoroughly understand any fees or penalties, and how the mortgage loan modification will handle (or won’t handle) them.

Tips & Warnings

• After receiving a mortgage loan modification, be very careful to make all your payments on time. This is important as you try to rebuild your credit.

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on 11/20/2009 Loan modifications take time so be sure you can survive for awhile til you hear back from your bank.