A mortgage modification is a procedure wherein a homeowner and the mortgage company work together to change the terms of the mortgage. Modifications include lowering the rate of interest, reducing the monthly fee, and sometimes both. Loan modifications are not easy and require patience and organization on the part of the homeowner. In the event the alteration saves you from losing your home, but the procedure is worth the effort.
Compose a hardship letter, addressed to your lender. Summarize why you are having difficulty paying your mortgage and what steps you have taken to mitigate the circumstance. This letter would be the single most important document that you will submit to the lender, so spend some opportunity to write a compelling letter.
Ascertain your debt-to-income ratio. You ought to have the ability to show the lender that your monthly mortgage payment exceeds 31 percent of your gross monthly income. To calculate this ratio, add up all your fixed monthly expenses, including auto payments, student loan payments, service payments and credit card payments. Don’t include utility or grocery bills, as these are not fixed. Insert your mortgage payment to the total and divide the result by your gross monthly income.
Prove your claim. Collect pay stubs from before and after the hardship started, to corroborate a fall in pay. Create copies of any invoices that are contributing to this hardship. These don’t include utility, cable or telephone bills. Major medical invoices or a rise in spousal or child support would be the forms of invoices the lender might believe as contributors to hardship. Include your most recent tax return, your mortgage statement and your second mortgage statement if you have one.
Fill out the Request for Modification and Affidavit form, available at the Making Home Affordable Site.
Create copies of all of the files you may submit. Write your name and loan number on the top of these copies and submit these, keeping the originals. Get receipts for anything that you mail, fax or email, showing who it was sent to and the date.
Submit your paperwork. Call the lender. The telephone number is listed on the mortgage payment voucher book or the monthly statement you receive.
Check in with the lender frequently to get an upgrade on the status of your alteration.