How to Get a Loan Modification

How to Get a Loan Modification: 4 Tips for Loan Modification Success

 

Learning how to get a loan modification can be extremely beneficial for distressed homeowners who are having trouble keeping up with their current mortgage payments. A loan modification may help stop the foreclosure process while:

  • Lowering interest rates
  • Lowering monthly mortgage payments
  • Extending the life of the mortgage loan
  • Lower the mortgage loan’s principal

It is important to note however, mortgage lenders can be very frustrating to negotiate with and loan modifications can be difficult to qualify for. For this reason, homeowners should consider learning more about how to get a loan modification by reviewing these 4 tips for loan modification success.

Tip #1 How to Get a Loan Modification

Learn as much as possible about potential loan modification programs and your lender’s loan modification process.

Homeowners may put themselves at a serious disadvantage by applying for a loan modification program without having a keen understanding of how the process works and which program to apply for. Mortgage lenders may receive thousands of documents every day from homeowners applying for loan modifications or loss mitigation. This can include various mortgage documents, hardship letters and financial documentation.

The last thing homeowners want is to have a loan modification application immediately denied or delayed because of errors in paperwork or missing financial documentation. Homeowners may reduce the chance of this occurring by researching as much as possible about their lender’s loan modification process.

The MakingHomeAffordable.gov website can be a place for homeowners to start learning about what mortgage modification programs may be available and the requirements for applying.

Tip #2 How to Get a Loan Modification

Write a phenomenal hardship letter.

The hardship letter can be one of the most important aspects of the loan modification application. Nearly all mortgage lenders require a well-crafted hardship letter to be considered for a loan modification program.

Mortgage lenders typically like these questions to be answered in the hardship letter:

  • What caused you to default on your mortgage?
  • What is the cause of your financial hardship?
  • What are you doing to improve your financial situation?
  • How long will the financial hardship last?
  • How many mortgage payments have you missed?

Great hardship letters should answer the mortgage lender’s important questions while staying concise and to the point. Mortgage lenders may sort through thousands of hardship letters every day.

It can be very helpful to review this example of a hardship letter to get pointed in the right direction when formulating a hardship letter.

Tip #3 How to Get a Loan Modification

Stay persistent & document everything.

When communicating with mortgage lenders, it is of paramount importance to document everything with explicit detail. With every communication, be sure to write down who you spoke with, the date you spoke with them, and what they said in the conversation. This information will likely be invaluable should the need arise to speak with a housing counselor or foreclosure defense attorney later on down the road.

When submitting any documentation, make sure to get a tracking number with delivery confirmation for anything mailed, and label all your documents very clearly. On every document, make sure to include your name and loan number. After receiving delivery confirmation, call the mortgage lender and confirm all documents were received and filled out correctly. Do not leave anything to chance.

After submitting all of the required documents, continually check on the status of your application, but remain patient. Try not to get too frustrated if the lender asks you to resubmit some documents. Homeowners often achieve favorable outcomes with mortgage lenders by staying persistent yet cooperative.

Tip #4 How to Get a Loan Modification

If all else fails, speak with a housing counselor or foreclosure defense attorney.

The truth is, some mortgage lenders may be far easier to work with than others. Some lenders may easily approve a loan modification request while others may seem to give you the constant runaround. When mortgage lenders become unreasonable or hard to work with after patient cooperation, it may be helpful to pursue professional help.

A certified housing counselor can be very efficient in negotiating with mortgage lenders. Housing counselors are typically well aware of the loan modification process and how to cut through mortgage lenders’ red tape.

A HUD-approved housing counseling agency may help you by providing advice on buying a home, renting, defaults, foreclosures, and credit issues (typically at a reduced cost or free of charge). Check out the U.S. Department of Housing and Urban Development’s website for more information on locating a HUD certified housing counselor in your area.