Loan Modification

In the midst of sub-prime loans and adjustable interest rates, homeowners today are facing the inevitable results of higher rates and unaffordable increased monthly payments. One potential cure for what appears to be becoming a widespread epidemic is the potential for borrowers to renegotiate and restructure the terms of their loans.

Mortgage restructuring allows qualified borrowers the opportunity to modify the terms of their existing loan in order to avoid default and foreclosure. Such possibilities may include an agreement between the parties to place the amounts in default onto the loan principal allowing the borrower to recommence its regular payment thus removing the borrower from default status. Other possibilities include, but are not limited to, an increase in the terms of the borrower’s current loan so as to reduce the monthly payment or renegotiating an adjustable rate to a more stable and affordable fixed rate. Although lenders may maintain differing criteria that must be met to consider any of these options, the most important requirement for any candidate is that they are able to comply with the renegotiated or restructured terms.

Loan Modification guidelines could differ from lender to lender. The most common factors are the following:

•    Have a provable hardship
•    Are delinquent on your payments
•    In an adjustable rate mortgage
•    Have high debt to income ratio
•    Could prove that you have enough means to support modified rate on your mortgage
•    Are unable to refinance

To get the process started, you will be asked to submit supporting documents such as:

•    Hardship Letter- Include dates, reason for delinquency, what you have done to attempt to workout problem in the past; also include any supporting documents for hardship. While Debt Pro Law Center will be happy to provide guidance if needed, the short and straightforward letter must be in your own words.
•    Bank Statements – Last two (2) months.
•    Proof of Wages and Salary – Employed – Pay stubs for the last 30 days; Self-employed – current profit and loss schedule.
•    Federal Tax Returns – W2′s for the last two (2) years; 1040′s for the last (2) years if self-employed.