How to Qualify for Home Mortgage Modification

Mortgage modification can be a tough negotiation.

Qualifying for a mortgage modification can be a frustrating experience. It seems logical that lenders would be willing to modify mortgages, particularly when foreclosure can be such a common occurrence. There's even a subsidy provided for mortgage modification under the Making Home Affordable program. Despite this, it takes a strong credit rating, negotiating skills, and persistence to successfully modify a mortgage. Unfortunately, it can be difficult to modify your mortgage if you're in financial distress.

Instructions

1. Pay your mortgage on time and ensure that you have no other late payments on your credit report. You're more likely to get farther in the negotiation for a mortgage modification if you're current on your payments, and if the home value exceeds the mortgage value. You can order copies of your credit reports by contacting the major bureaus (Transunion, Experian, and Equifax) to see your credit accounts and their status.

2. Reduce your spending, try to improve your income, and build up savings. When you have a strong income and an asset base, banks will be more willing to lend to you. If you can demonstrate long-term employment, that will also increase your chances of modifing your mortgage. Banks prefer borrowers that have a strong record of responsible financial behavior.

3. Contact your lender using the customer service telephone number on your monthly statement. Request a modification to your mortgage.

4. Negotiate with the customer service representative. It may improve your position to point out that you have the choice of refinancing the mortgage with another lender. It may be beneficial to request a meeting in person with a loan officer. If you can prove that your financial position is strong, you may be successful. In some cases, you may be able to request either a reduced principle or interest rate.

5. Sign any mortgage agreement once your negotiations conclude.

Tips & Warnings

• Use the eligibility tool (see Resources) to determine if you're eligible for the Making Home Affordable mortgage subsidy. That will provide a payment to your lender in return for modifying your mortgage.

• All contracts are negotiable. It's always possible to alter the terms of a loan agreement as long as the lender is amenable to it.

References

• Mortgage Modification Tips
• HUD.gov: Mortgage Modification FAQ

Resources

• Making Home Affordable: Eligibility Tool
• FDIC.gov: Loan Modification Guide