The Process of Loan Modification
By Sandy Flores
Many homeowners facing financial hardship are struggling to keep their property. They need help to maintain and continue payments on their mortgages. Keep in mind that this does not have to be like that and if you are in a difficult financial situation, the first thing you should do is call your bank as soon as possible. The sooner you contact the bank, more choices you will have and its very likely that the bank can help you with alternatives available to you.
The home loan modification is one of the solutions under Affordable Modification Program for Homeowners, known by its acronym in English as HAMP.
The loan modification includes four steps to complete the process:
- Prepare documentation : you as the homeowner must provide your bank a letter detailing your current financial situation. Also, you will need to meet its most basic documentation, such as copies of your federal taxes for the last two years, his statements most recent bank statement, pay stubs for the last period issued, list your monthly income and expenses, and any other documentation that your bank deems necessary, taking into account that applications for modification orders are evaluated case by case individually.
- Review and analyze : your bank will take some reasonable to review all the information submitted to determine and confirm whether it meets the requirements to modify your loan time. Your bank may also request additional information from you and third parties such as appraisers, mortgage insurance, etc.. It is important to perform appropriate follow-up with your bank, as this will enable you probably know how much the bank will take to complete this review and analysis, based on your individual situation.The decision has been taken : Your bank will let you know if you meet the requirements to qualify for the loan modification. If so, you will receive a letter confirming the terms, including the next payment date, the amount of new payment and any contribution by you if this is the case.
- Make the commitment letter : Once the modification agreement signed by your bank is received, this paperwork for terminating the process of loan modification, whether for initial trial period or permanently, depending on each case.
Is important to know if your bank has registered the nonpayment notice (“Notice of default”), and if you’re scheduled foreclosure (“trustee sale”). If this is the case and you are dealing with your loan modification, be sure to request an extension on the date of foreclosure until the modification process is concluded favorably for you.
banks do not want the property back and will do best to help, however, if you do not qualify for a modification, there are other alternatives to avoid foreclosure.
It is advisable to seek professional advice as always and keep informed of any and all of the options and alternatives available and especially prevent you from falling victim to mortgage fraud.