Banks can be difficult to deal with when you are asking for a loan modification. They will only grant a modification to borrowers that can demonstrate that they have legitimate financial hardships such as loss of a job, reduced wages, illness, disability, death in the family or job relocation. They also require financial documentation proving that the borrower has enough income to make their new mortgage payments. They will cancel or deny your application if you fail to provide the information they request, and they may not notify you. If you need to obtain a modification, the best way to assure you get one is to have a loan modification attorney negotiate the modification with your bank. The attorney understands the modification process and knows how to deal with banks.
The Process
To start your loan modification process, you should contact your bank’s loss mitigation department to let them know you have a financial hardship and cannot afford to continue making your current mortgage payments. Be sure to explain that your hardship is only temporary and let them know how you plan on resolving your financial situation. Ask them what type of modification programs you are eligible for, and request that they send you an application. Many banks have their modification forms on their websites easily available for customers to access. You may want to have your attorney complete the application for you so you don’t make any mistakes. Ask the bank where to return the completed application, and find out what other documentation your bank requires. Typically, banks want to review the following information before making a decision on whether to approve your modification:
- Hardship letter.
- Third party authorization letter allowing your attorney or authorized representative to negotiate with the bank on your behalf.
- Last two paycheck stubs.
- Copy of your most recent bank statements.
- Last two year’s tax returns.
- Copies of W-2’s or 1099’s.
- Financial Statement.
The reason most people fail at obtaining a modification is they don’t submit all the necessary paperwork. You should keep calling to find out if the bank received the documents and whether they need any additional documents. They lose paperwork so you may have to send it a couple times. Don’t give up because the process can take a few months before you hear from the bank. Call every week and be persistent. Once a negotiator has been assigned to your case, you will be able to find out if your request has been approved. Many banks offer their modification customers a trial period for three months to see if they are able to make the payments and then give them a permanent modification.
Consult with an Attorney
If you decide to hire a loan modification attorney, your attorney can prepare the application, submit the documentation and handle all the negotiations with your lender. Since the attorney understands the process and has established relationships with banks and their loss mitigation departments, the attorney is able to negotiate better loan modification terms for you than if you try and do it alone.
