How Does One Apply for the Loan Modification Program?
If your monthly mortgage payments are becoming a financial burden, you might find relief through the federal government's Home Affordable Modification Program. This program provides financial incentives to mortgage lenders who are willing to modify the home loans of homeowners who are struggling financially. The goal is to reduce the amount of money the homeowner has to pay each month. To qualify for the program, though, you'll have to meet certain requirements.
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Work With Your Lender
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To apply for the government's assistance program, you first have to call your existing mortgage lender. This is because the federal government does not modify any home loans on its own. It only provides financial bonuses to encourage mortgage lenders to take part in the program. Start the application process by calling the customer service number on your most recent mortgage bill. Ask to speak to someone about the Home Affordable Modification Program.
Explain Your Hardship
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Once you get in touch with the appropriate person at your mortgage lender, explain that you are struggling to pay your mortgage bill each month and that you need a lower monthly payment. At this time, explain to your lender exactly why you are struggling to make your payments. Maybe your working hours have been reduced. Perhaps your spouse recently lost a job, severely cutting into your monthly income. Maybe you've suffered a serious illness or injury that has kept you from working. Whatever the reason, explain it clearly to your lender.
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Write a Financial Hardship Letter
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Compose a financial hardship letter that outlines the reasons for your inability to pay your monthly mortgage bill. This letter should clearly explain your financial setbacks and provide an estimate of how much you think you can pay each month on your mortgage loan. Send this letter by email, mail or fax to your mortgage lender. This will start the modification process.
Make Sure you Meet the Requirements
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Not everyone who is struggling to make mortgage payments qualifies for the federal assistance program. Make sure that you do by reviewing the government's guidelines for it. You'll need to have a mortgage loan with a principal balance of $729,750 or less and have a monthly mortgage payment that totals 31 percent or more of your gross monthly income. You must also be seeking a modification of a loan on your primary residence, and must have taken out your mortgage loan on or before Jan. 1 of 2009.
Submit the Paperwork
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To start the modification program, you must first submit a completed Initial Package to your lender. First, complete the Request Form. You'll have to provide basic information about your monthly income and home, including its location, age and the price at which you bought it. Next, complete the Tax Authorization Form, which gives your lender the authority to access the most recent tax form that you have submitted to the IRS. Finally, gather proof of your income, including copies of your two most recent paycheck stubs and any benefits statements that you might have. Send all of this information to your lender by mail, email or fax.
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