Paying too much for your mortgage? Are you going through a financial hardship that has made it difficult to make your monthly payments? Don't despair, help is just around the corner!

What is a mortgage loan modification?
A mortgage loan modification is very similar to a refinance, allowing you to lower the amount you are paying each month, with the exception that it is your existing home loan that is modified.

Why a get a home loan modification instead of refinancing?
Refinancing may actually still be a plausible alternative, however, the majority of homeowners facing financial hardship may have too low credit, too little equity (or negative equity), or too little income to qualify for a refinance; Qualifying for a loan modification is much easier!

Additionally, it's possible to get a much lower interest rate (as low as 2% fixed) and a much lower payment through a loan modification, and fees associated (if any) are much, much lower.

Do I qualify for a loan modification?
Loan modification program eligibility is first and foremost depends on who your lender is. Here at Modification Zoom, we have detailed posts on most every major lender's requirements and guidelines to help you get a loan modification on your own! If you need professional help determining if you qualify, contact us by completing an application on any page of this website!

What documents will I need?
Putting together a strong modification request package is probably the most important factor in getting a loan modification. Typically, lenders will require the following documentation:

• Hardship Letter - A letter detailing your financial hardship.
• Financial Prospectus - A detailed report of all sources of income, all expenses, and all assets.
• Mortgage Statement - Your most recent mortgage statement or coupon.
• Income Documentation - Typically most recent 2 Years Tax-Returns, 3 Months Bank Statements, 2 Months of Paystubs, and a 3 month Profit & Loss Statement (if Self-Employed).

Your lender may require additional documentation to complete your loan workout, however, this covers the majority of the documentation typically required.

Why would my lender modify my mortgage?
Lenders have been hit very hard by the mortgage crisis; when a lender or bank forecloses on a homeowner typically they lose money, and lot's of it. Banks are very much interested in preventing the staggering losses associated with foreclosures, and as such, are willing to help homeowners lower their payment to affordable amounts, rather than having the homeowner default.

Loan Modification Programs

At the onset of the financial crisis there was little standardization among lenders regarding guidelines for loan modifications and the loss mitigation process. With on average 200,000 new homeowners facing foreclosure each month, lenders and the Federal Government realized the need to implement effective loan modification programs with set, specific guidelines to help homeowners modify their mortgages quickly. Here are a couple of the most prevalent loan modification programs in existence today:

Obama Loan Modification Program - The Obama Administration's Making Home Affordable Program (MHAP), also known as the Home Affordable Modification Program (HAMP) allows homeowners to achieve affordable mortgage payments by lowering their monthly housing expense to 31% of their gross monthly income. Need more information on Making Home Affordable?

FDIC Mod-in-a-Box - When the FDIC took over Indymac Bank it became immediately apparent that to stop the huge losses that Indymac was facing due to foreclosing on homeowners, there was a need for a large loan modification program. FDIC's Mod-in-a-Box was the solution, and is quite similar to Making Home Affordable, with the exception that the "affordable" payment is 38% of the homeowners gross income. Here's more information on the Indymac Loan Modification Program.

FHA Loan Modification - FHA HAMP helps homeowners that are facing foreclosure with similar guidelines to Making Home Affordable. Find out more about FHA HAMP here.

Federal Housing Finance Agency Loan Modification Program - The FHFA supervises Freddie Mac and Fannie Mae, and offers a comprehensive program to help homeowners who's mortgages are held by Freddie and Fannie. You can learn more about this program here.