Home Loan Modification Requirements

The primary consideration for approval for a home loan modification is that the home owner(s) can afford the new payment structure of the modified home loan. The applicant must produce the appropriate documentation to be considered for a modified home loan. These documents are outlined under “what we need to get started”.What you need to get started:

  • your Monthly mortgage statement
  • Information about other mortgages on your home, if applicable
  • Two most recent pay stubs for all household members contributing toward the mortgage payment
  • Last two years of tax returns
  • If self-employed, the most recent quarterly or year-to-date profit and loss statement
  • Documentation of income you receive from other sources (alimony, child support, social security, etc.)
  • Two most recent bank statements
  • A utility bill showing home owner name and property address
  • Unemployment insurance letter, if applicable
  • Account balances and minimum monthly payments due on all of your credit cards
  • Information about your savings and other assets
  • It can also be helpful to have a hardship letter describing any circumstances that caused your income to be reduced or expenses to be increased (job loss, divorce, illness, etc.)

Basic tips to help you down the path of qualifying for a home loan modification

Banks and home loan lenders do not give out home loan modifications to just anyone, the home owner must demonstrate that they are facing or enduring a financial hardship that, without assistance, will yield an inability to maintain their original agreement with their lender to keep their agreement current and possibly face foreclosure.

To increase your chances of qualifying and succeeding with a home loan modification, here are a number of suggested actions you can take;

  • Start the process by coming to terms with the fact that you are doing all of this because you are fighting for your home.
  • Start by making a complete list of your income and expenses and be fairly harsh when it comes to which expenses you must keep and which you can eliminate. A lender might not look favorably upon a request to modify a home loan when the household generates a $100 / month cable bill, has excessive and expensive cell phone accounts (minimum work and safety accounts can be rationalized), or any other expenses that are not a priority such as food, clothing and shelter. Providing an income and expense sheet may feel like you are exposing your personal life, but this information will allow a lender to draw a more clear picture of the type of renegotiated home loan you can afford, and that can only be beneficial to the home owner.
  • Using this list of revenue and expenses, take a moment to consider what your future monthly home loan payment might look like and what you can afford to pay.
  • Research your original home loan, if you were unrealistically approved then this can go towards an argument that supports your hardship statement. Don’t forget that the main reason for a home loan modification is to avoid foreclosure, so if that is something you want to avoid, then make sure that your idea of what you can afford in the future is a more desirable situation for the bank than to foreclose on your property.
  • You’ll need to write a Letter of Hardship which outlines the reasons as to why you are making the decision to go through with a home loan modification. They need to describe the reasons as to how you found yourself in this situation and what is preventing you from maintaining your original home loan agreement.

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Comments ( 9 )

If the borrowers on the loan ARE NOT Living in the home that they want to do a Principle Mortgage reduction, Will they qualify for the program?

Dresden Tuggle added these pithy words on Dec 18 14 at 6:44 pm

It depends on which bank that you are applying at for the loan modification. A lawyer can help you do what Is called an ‘assumption’. You would assume the rights and the responsibilities of the mortgage. The bank may not agree to do this. If the property is in a ‘negative equity’ position then they may be more inclined to do this. Or if the property is in a ‘judicial state’ then then may be more inclined to approve the loan modification application.
I would call on of our advisors for a free private consultation regarding your options at 888-980-7566.

Attorney Load Mod added these pithy words on Dec 29 14 at 9:38 pm

Thank you for this site. my husband and I would like to know what happens to the money taken off the loan , is it put as a lean against the house or is this money forgiven in the sale of the home or is it part of the pay off in a reverse mortagage or any re- mortagaging thank you we really need to know this information Peggy Garcia ph. 804-346-xxxx 12/28/2014

PEGGY GARCIA added these pithy words on Dec 28 14 at 9:58 pm

It depends on the type of loan that you have. In many cases we negotiate a straight principle deduction on your loan modification. If your mortgage is an FHA loan that it is considered a principle deferment. The principle deferment is that set up as a second lien at 0% interest for the life of the loan. There is a maximum principle deferment of 30%. For example; if you presently have a 200,000 mortgage the maximum principle deferment is $60,000. So your new loan would be $140,000. Please free to call 888-980-7566 to speak with one of our advisors for a free consultation.

Attorney Load Mod added these pithy words on Dec 29 14 at 9:30 pm

do I have a better chance of getting a loan mod.(HAMP), I am not Freddie or Fannie, if I am delinquent on my mortgage?

Debbie added these pithy words on Jan 06 15 at 6:13 pm

Many banks do what is called an in-house modification if you are a non Fannie or Freddie loan. If you have an FHA mortgage there would also be a different set of guidelines. An in-house loan modification can really be a great alternative as some lender will either reduce or defer principle to make the loan more affordable. You make speak to a representative free of charge by calling 888-980-7566.

Attorney Load Mod added these pithy words on Jan 08 15 at 10:57 pm

December 2010, missed 1st payment in 20 years due to pending divorce. Family Court forced me to re-locate for 1 year, had to pay rent and couldn’t pay mortgage AND rent for 2011. During that time, applied for loan mod multiple times, was approved for trial mod, made the 3 payments on time, only to be denied a permanent mod. Moved back in for 2012, continued applying for loan mods and being denied. Fended off Sheriff sale in 2013 w/Ch13. Withdrew that when I engaged a “foreclosure rescue” service which has proven to be a scam that I paid $1000/mo for over a year. Another Sheriff sale in 2014 was foiled when the scammers filed a bogus Ch13 in New Jersey ??!!! Since then, New Jersey Bankruptcy Trustee is seeking to shut down the scammers and trying to get our money back. Not holding my breath. All I needed for Ocwen to do was agree to take my one year out of the house and put it on the back end of my loan; just extend my mortgage for ONE year! I certainly make enough money to pay my mortgage and simply can’t understand why I can’t get these folks to listen to reason and just get back on track. At this point, I’m 50 months behind on the mortgage. Right now, the foreclosure process is tied up in the Ch13 in New Jersey, but, once its cleared from their docket, I’m certain to be on Ocwen’s fast track to foreclosure. My principal is only $135,000. Any thoughts on my chances for my ultimate goal of staying in my home?

David Z. added these pithy words on Jan 15 15 at 4:01 pm

Because your mortgage is an FHA mortgage you are entitled to a loan modification as a matter of law. It doesn’t matter if you are in California, New Jersey or Florida. An FHA mortgagor has the same rights. One of these rights is that the lender is required to mitigate their loses and to avoid filing a claim against the FHA insurance fund at all costs. This means your bank HAS to work with you as long as:

1) you want to stay in the house
2) you have the ability to make a regular lower mortgage payment.

If you answered yes then call one of our advisors at 888-980-7566 immediately and they can tell you what mortgage modification programs you qualify for and what your new payment could be.

Attorney Load Mod added these pithy words on Jan 16 15 at 10:17 am

I have a question. I have a rental property with tenants and im 8 payments behind. The tenants received foreclosure paperwork and i too received paperwork from a foreclosure attorney. I have a court date of 9-21. I want to keep the property however i need a loan mod and it was denied by the bank because i wasnt living in the property. I have very great tenants and i dont want to lose the home. I also spoke to a realtor and they have an investor that will purchase the home and my hands will be completely washed of the issue but i get nothing out of it. This was my wife and i first home and its sentimental to us we just ran into a tough financial time that we feel we have recovered from. The home is valued at 104 and i do have equity in the home. If we sell it we would at least like to get something out of it. Any suggestions?

Jim B added these pithy words on Aug 12 15 at 12:47 pm

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