What Is Needed to Do a Loan Re-modification?
Whether the initial modification was insufficient or your situation has changed necessitating a new one, re-modifying your loan is a less cumbersome process than refinancing. A loan modification involves less underwriting and less documentation. As a result, the turnaround time is often quicker and the fees can be substantially less.
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Formal Request
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To re-modify your loan, you will need to make a formal request in writing. Write a letter to the lender. Include your personal information -- name, address, phone number -- along with your account number. Give a brief overview of your loan history, including the original request and subsequent modification. Go on to describe your current situation and the reason you feel a new modification is necessary. Finish by requesting a meeting with your lender to discuss the potential re-modification.
Financial Information
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Regardless of your reasons for requesting a re-modification, the lender will need to see at least your most current year’s financial statements. The underwriter will need to determine your ability to pay the loan in its current form. It will also assess your capacity to service the debt in its modified form. Provide pay stubs, W2s and tax returns. If you have income from a part-time or second job, include that as well.
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Supporting Documents
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Depending on the type of loan, the bank will need to see other supporting documentation. For business loans, it may ask for lease agreements, accounts receivable aging reports, inventory listings and proof the business remains in good standing with the state. For mortgage loans, it may require an updated appraisal, home inspection and updated title work. Some of this information you will provide to the bank. The rest of it will be ordered through bank vendors at your expense.
Fees
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Any modification, but especially a second modification, will not be performed for free. You will incur a number of fees during the process. You will pay a modification fee commensurate with the amount of work it took for the bank to approve the re-modification. The bank may also require a small documentation fee. Also, you may be held responsible for reimbursing any vendor costs such as appraisals, property searches and credit checks the bank paid for on your behalf.
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