The credit crisis of 2008 increased the likelihood of American mortgage modifications. Following the crisis, as more consumers descended into foreclosure and default, lenders with and without the support of the federal government began offering reductions to term, interest rate and payment on mortgages for their consumers. The most crucial component of a loan modification is completing the Financial Worksheet.
Things You'll Need
- All income documents
- All appraisals for assets (furniture, art)
- Statements for all investments
- All monthly obligations (copies of bills)
Contact your mortgage or loan lender. While not all mortgage and lenders offer modifications, you must acquire a modification under the auspices of your original lender, not the government.
Calculate your mortgage Debt to Income Ratio (DIR). While modifications are handled exclusively by lenders, there is a federal mortgage DIR target cap of 31 percent. Divide your monthly mortgage payment (including all taxes, insurance, homeowner's association fees) by your gross monthly income.
Obtain the financial worksheet from your lender. This is usually between one and five pages long. It will always contain sections for: personal information (name, address, social security number), income information, and asset information.
Begin filling in the necessary sections. It's best to make a photocopy of the document first, and complete a rough draft to make sure all the figures are accurate.
Fill in the hardship information, if available. This is a critical component of the worksheet---it essentially gives the lender or loan modification representative a human explanation for the reason for a modification. This can be an illness, job loss or disability.
Review the entire worksheet before handing it back to the lender. You should also have trusted adviser, such as an accountant, look it over. This document will ultimately end up determining your eligibility for a loan modification.
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