How to Reduce the Interest on My Mortgage With the Loss Mitigation Office
If you feel your home mortgage rate is too high, you can request a lower interest rate without going through an arduous home refinance process. Following the 2008 economic recession and the subsequent housing industry bust, the government created loss mitigation programs such as Making Home Affordable (HAMP) to lower interest rates and prevent distressed borrowers from losing their homes to foreclosure. With a few financial documents and a call to your lender's loss mitigation center, you can lower the interest rate on your mortgage to adjust your monthly mortgage payments.
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Things You'll Need
- Recent pay stubs
- Recent proof of unemployment, disability or Social Security income
- Income tax return
- Monthly mortgage statement
- Credit card balance statements
- Statement of general debt balances
- Hardship affidavit
Instructions
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Visit the Making Home Affordable website to determine if your lender is among the list of mortgage companies participating in the HAMP program. If your lender is on the list and your home is your primary residence, you obtained your mortgage prior to January 1, 2009, you owe less than $729,750 on your mortgage and your mortgage payment exceeds 31 percent of your total income, you are eligible for loan modification consideration. However, it's ultimately up to your mortgage lender to grant an interest rate reduction.
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Gather documents such as your recent pay stubs, credit card balance statements and a list of all other debts to prove your financial burden. The more financial information you gather, the stronger the case you make to your lender's loss mitigation office that you are indeed in danger of defaulting on your mortgage loan and in need of an interest rate reduction.
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Obtain a Hardship Affidavit form from the Making Home Affordable website. Complete the form detailing your name and the address of the property in question, along with the servicer and loan number. If you lose your job or have an overwhelming amount of medical bills, include these details in your affidavit by checking the appropriate boxes, and sign your name on the form.
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Contact your lender's loss mitigation office to discuss why you missed your mortgage payments or may be in danger of missing future payments. Share how you tried to prevent missing payments, if your problem is temporary or long-term and how you would like to keep your home with the help of an interest rate reduction. Take notes during your communication with the loss mitigation servicer, noting dates, times and names.
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Follow up your oral requests and communication with a mailed package that includes your Hardship Affidavit and copies of all pertinent financial documents. Your lender will perform a Net Present Value (NPV) assessment to determine if a modified interest rate will provide greater value to the property, possibly and lower your mortgage payment to 31 percent or less than your income. If the lender decides to grant an interest rate reduction, your loss mitigation representative will contact you and she will provide information on your modified interest rate, including a schedule of trial payments.
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Tips & Warnings
Make all of your trial payments on time and meet all deadlines your lender sets. Lenders have been known to deny distressed homeowners requests for mortgage modifications for missed deadlines and late correspondence.
