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- Complete our secure form
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- You review their proposals and decide what works best for you
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The Loan Modification Process
Once a homeowner realizes that they are unable to make payments they should immediately contact their lender. Do not take out a loan to pay your mortgage; this is one way to sink further into debt.
The homeowner must then evaluate their finances using an income v. expense worksheet. This should include all expenses minus the mortgage, this will allow the homeowner to see where they spend a majority of their money each month, and possibly make adjustments. This is not just for the homeowner to review, the bank will ask for this information with the loan mod request. The homeowner must be sure to be accurate with the amounts they report, as the bank will most likely ask for proof.
Based on what the homeowner finds through evaluating their finances, they should then establish a reasonable monthly payment amount, and present this along with the loan modification proposal.
The lender will have the homeowner contact the loss mitigation department to review their options. It is important to find out exactly what the loss mitigation officer wants. They will typically ask for an income v. expenses worksheet, so it is important to have this ready ahead of time, this will help speed the process along. This may also give them the ability to freeze the loan, so that the homeowner is not accruing any additional late fees or debt.
Once the homeowner has submitted their worksheet they can begin negotiations. There is a chance the lender will accept the original request, but often this process requires negotiations. If the homeowner is denied a loan modification it is important not to give up, and to consult an attorney or attorney-based loan modification company regarding the situation. It is important that the terms agreed upon are in fact terms the homeowner can meet. It will do the homeowner no good to modify their loan to terms that are okay in the short-term, but questionable for the future because they could just be delaying a foreclosure.
Act Before You Miss a Mortgage Payment
It is important to act fast on loan modifications for several reasons. Lenders are more likely to work out a deal with troubled borrowers if they perceive the borrower as responsible and trying their best to meet their loan obligations. Acting before you reach the point of not being able to make a payment gives you time to negotiate with the bank and demonstrates your desire to maintain your credit and fulfill your obligations.
The foreclosure process differs from state to state. Below is a list of each state’s estimated time for the foreclosure process; this is the amount if time it takes for a foreclosure to be complete following the Notice of Default. (Typically a Notice of Default is sent 90-120 days after the account becomes delinquent). As you can see, some states can move through the foreclosure process very quickly. Once a foreclosure sale date is set, a loan modification is difficult to obtain.
