How to Get a Mortgage Loan Modified

A mortgage loan modification occurs when your lender agrees to modify your existing mortgage.  There are different variations of loan modifications.  Typically, the lender lowers the interest rate at least 2% and extends the loan terms.  Some lenders may reduce the principal.  Getting a mortgage loan modification can be complicated and time consuming.  Lenders are difficult to work with.  It is recommended that you hire a loan modification attorney to help you with the negotiations.

Loan Modification Process 

To obtain a mortgage loan modification, you need to contact your lender and explain your financial hardship. Your attorney can do this on your behalf if you sign a third party authorization form.   The lender is looking to make sure you have sufficient income to make the new payment.  So you will have to convince the lender of this by showing them that your financial hardship is temporary and that you have steady income before they will approve your application.  To qualify for a loan modification, your current mortgage payment must exceed 31% your gross monthly income.  The lender will require that you submit the following financial documentation to them: 

• W-2’s or 1099’s
• Last two year’s income tax returns
• Recent bank statement
• Financial statement 

Be sure to complete all the information requested on the application, and send all the required documentation to the lender to make sure your application is not rejected.  If you are handling the modification on your own, then you should follow up a few days after submitting the paperwork to your lender’s loss mitigation department to make sure they received everything.  Be patient. The process can take 90 days or longer.  Once a negotiator has been assigned to your file, the negotiator will contact you to let you know if your modification request has been approved.  Don't be afraid to negotiate better terms if you don't like the ones that they offer you. The worst that can happen is they say no.

How to Increase Your Chances of Getting Your Modification Approved? 

The primary reasons why some applications are not approved are the borrower fails to submit all the required financial information in a timely manner or omits information on the application.  To avoid your application being denied, it is recommended that you have your attorney negotiate the mortgage loan modification on your behalf. The attorney is skilled at handling modifications on a regular basis and can handle any objections or concerns raised by your lender.  The attorney can also conduct a forensic loan audit looking for violations that your lender may have committed.  If the attorney finds any irregularities, your attorney can use this information as leverage to negotiate better loan terms for you.  You only get one opportunity to obtain a modification so why take a risk of losing your home?  

 Hire an Attorney

Hiring a loan modification attorney is the smartest thing a borrower can do to increase their chances of getting their loan modification approved. The attorney has relationships with lender’s loss mitigation departments, and familiar with the loan modification process.  The attorney is an expert at mortgage laws, and can help you negotiate a modification with favorable terms.