Do it Yourself Loan Modification



Loan Modification Why can't I just get my loan modified on my own? It is possible to get your loan modified on you own, but the process of loan modification is not easy. It takes determination and a bit of salesmanship to get the job done. Be forewarned it involves a lot of phone calls, a lot of bad hold music and a bunch of number crunching. It can be enough to make your head spin. You will need to collect and organize many documents to put together a case to negotiate with your lender. Some of the first documents you will need to find or create are as follows:
  • Payroll stubs and/or proof of income verification for the last two months
  • Bank statements from the last two months
  • Financial statements detailing your current debts and expenses
  • A detailed Hardship letter - this needs to be a detailed as possible explaining your reason for delinquency, what you have done to attempt to workout the problem and what you have done to prevent this problem from occurring again in the future.
  • Supporting Hardship information - i.e. letter of termination, lay-off notice, letter from doctor, medical documentation, etc.
The first step is to contact your mortgage company. If you are sinking it is up to you to pick up the phone and call the customer service number. Identify yourself and ask to speak with the loss mitigation department. Do not spend too much time with the customer service representative - they cannot help you - save your breath and ask to be transferred to the loss mitigation department.

When you get to the loss mitigation department, they will ask you some basic questions. You MUST be honest, but you want to be frank in your assessment of your financial situation. If you're the eternal optimist now is not the time to be upbeat about your financial wherewithal. Within the bounds of honesty you must show that you are in a bad financial place.

If they assess that you're situation qualifies for a loan modification they will send you an information packet along with a worksheet to calculate your monthly expenses. Think of this process as similar to when you qualified for the loan but in reverse. You must un-qualify yourself to prove that you are financially incapable of making the increased mortgage payment. You also must prove that a modification is going to improve your situation to a point where you will be an acceptable risk for them. This is where the real work begins. Many calls later, and after many, many documents get emailed, faxed and/or shipped back and forth between you and the lender, you will be a little bit closer to getting your loan modification completed. If they calculate that even after a loan modification you're still too deep in the red to be helped they will deny you a chance at modifying your loan.

All in all the process can take several months, dozens of phone calls and many trips to Fed-Ex jus to hear a "no" from the lender at the end.

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