May 19, 2024


Mad about real estate

Putting Together the Best Loan Modification Application

With the word “foreclosure” becoming a commonplace in our society, many are looking for solutions to avoid it.  A loan medication is an increasingly popular option and can help a homeowner avoid a foreclosure.  When a borrower shows that they absolutely cannot pay the existing terms of their loan, then a modification can change things, resulting in lowered interest, a loan extension, or the refinancing into a different loan.

Loan medications are not an easy fix, and must follow some stringent criteria in order to be approved.  The biggest reason is a financial hardship due to the result of a death, divorce, job loss, military service, loss of income, etc.  Sudden increases in interest are also viable.  Through the application process, the borrower needs to provide a compelling reason for them to qualify for the loan modification.

Getting a loan modification is not as easy as it sounds, and is a lengthy process.  It is best to involve a lawyer who specializes in real estate law that can guide through the process more seamlessly.  The first thing that they will ask of the homeowner is for some necessary documents.

An attorney will work with the borrower and the lender to assemble these necessary pieces for the application process:

  • Mortgage statements showing the loan number, amount paid to date, amounts paid delinquent, and any other pertinent information for the lender.
  • If self employed and  wages have changed due to hardship, then the last two years of W2 forms are needed.
  • Last two or three pay stubs from the names represented on the mortgage.  This is also a requirement that will also show if there is hardship from change in wages.
  • Last three bank account statements showing proof of liquid assets, as well as if the account has decreased proving hardship.
  • The self-employed also need to provide business bank statements as proof of liquid assets.  If there are decreases in deposits or daily balances, this is another option of proving hardship.
  • Any other signed documents that prove hardship:  Divorce decrees, death certificates, termination from work, health issues, etc.

While this is all a lengthy process, it will be beneficial to the homeowner in the long run.  The homeowner does not get penalized on their credit report, and is making the right step to get out of debt.  A loan modification specialist will provide the best advice to make this work.