If you are facing financial difficulty, but still want to keep your house you need to know how to negotiate a mortgage loan modification. The first thing that you need to do is face the situation and realize that it is a process; it will take time and perseverance. Any time that you invest in educating yourself about the options that may be available to you will be well worth it. There are two important places in the internet where you should begin your education.
The first is MakingHomeAffordable.gov. There you can learn if your mortgage loan is eligible for modification under the government's program, and where you can find valuable resources such as HUD (Housing and Urban Development) counselors who can answer your questions. You will also find forms with instructions that you can download which will be an important part of negotiating a mortgage loan modification.
The second stop on the internet should be your mortgage lender's website. Every lender has a place on their website for distressed homeowners to get more information; some lenders may require additional forms.
The single most important thing that you can do to ensure a successful mortgage loan modification is to gather all of your income information and complete every form neatly, completely and accurately. Valuable time will be lost if the lender has to return your loan modification request to you because it was incomplete - and when you are having trouble making your payments, the last thing you want to do is waste time.
Regardless of whether or not it is asked for, prepare and submit a carefully worded cover letter or "hardship letter" that outlines your financial situation and why this modification is necessary. Try to keep the letter to a single page, and typed is always best as it is the easiest to read. Build your case for negotiation by pointing out that you were well qualified for the loan at the time that it was given to you, and state the reasons for your financial reversal, such as a job loss. Even if your overall credit is not perfect, point out your great record of making your mortgage payments until this unusual change in circumstance.
Be extremely cautious about getting involved with any third party companies that promise to negotiate a loan modification for you; it is up to the lender. You can negotiate best on your own behalf with honesty and detailed preparation.
