|
|
Loan Modification Process
| 
 |
| |
 |
To help you understand how the Loan Modification process works and what you can expect,
here are our top facts about Loan Modifications.
A Loan Modification is a permanent or temporary change in one or more terms of a mortgage loan and
allows the loan to be reinstated. It might include an interest rate reduction, a longer loan term, principal
reduction or a combination of all three. A Loan Modification should offer the homeowners an affordable
monthly loan payment. Most lenders will waive the late fees or allow us to include any outstanding amounts
into the modified loan. We always ask the lender for a complete description of all fees and penalties (some fees
may not be justified and should be waived).
Most of the lenders will accept loan modification applications from borrowers who foresee a problem meeting
their loan payments due to interest rate changes or financial hardship even if they are not currently delinquent
on their loan payments. Not all borrowers will qualify for a loan modification. The lenders have predetermined
criteria or guidelines in place to determine if a modification is appropriate and they use those when they
review the borrower’s loan modification application.
The lender will approve the modification if the homeowner is able to prove the ability to afford the new
loan term in the future. We will need to show the lender your complete financial information including proof of
income, pay stubs, bank statements, etc….
We will need a hardship letter. A well written, compelling hardship letter is crucial because the lender
needs to understand the homeowner’s unique situation, circumstances and intentions. Hardship
situations that lenders consider as acceptable include divorce or separation; death of spouse or borrower;
illness and medical bills; military services; loss of job or income.
Some of the Loan Modification forms required are:
Proposal Letter: a form showing the client’s name, property address, mailing
address, lender loan number and request for a loan modification. The proposal letter will the show the
lender a comparison between your current mortgage term(s) vs. our proposed mortgage modification terms
and conditions.
Hardship Letter: a compelling and brief description of the client’s current
financial hardship, what caused him or her to become delinquent, what steps have been taken to remedy the
situation, and how they plan to keep the payments current in the future if granted the Loan Modification.
Current Financial Worksheet: a detailed breakdown of the client’s current
financial picture: wages, other sources of income, all monthly bills and expenses, current
mortgage statement. Our experience tells us that the customers who are most likely to have success in
modifying their loans are those with a minimum negative cash-flow or a minimum positive cash-flow. It is
always crucial for clients to disclose all income from anyone living at the mortgaged property.
After we submit these and other documents, you should wait for us to Contact the Lender and begin
negotiations. This may take anywhere between 30 to 90 days. Once we received the modification response, we
will send you a notice to come meet with us to sign the agreement, accepting the lender’s Proposal.
It is very important to know how to complete the forms correctly. It will determine the
success of the client’s loan modification. Even the most deserving homeowners can be denied for a Loan
Modification if their petition is not presented properly to the Lender.
|