A Mortgage Modification is the desirable resolution to financial trouble for mortgagees in need of mortgage aid, and as such has been the focus of a substantial degree of press recognition following the coming of the credit crisis.

Most reasonably, you are here on grounds that you in fact have discovered Loan Workouts, the aptitude they have to aid just about all homeowners, regardless if you are behind or current on your loan, and your as likely as not hunting for more enlightenment on Loan Modifications and loss mitigation practice.

My design through this post is to help you become a Home Loan Modification pro, so read on!

We’re going to review the essentials first:

What is a Mortgage Loan Modification?

A Loan Modification is a permanent alteration in the conditions of your existing mortgage as aceded to by you, the borrower and your mortgage lender.

Why on earth do I want a Loan Modification?

A Loan Workout can do many great things for you. Most importantly, succesful Mortgage Modifications lower interest rates, and of course, lower payments. There are borrowers throughout the USA saving tons each month because of Mortgage Modifications.

Further benefits of a Mortgage Loan Modification include the prospect of a decrease in the amountunpaid (principal balance reduction), a revision in the number of years of the loan, converting the loan into a lower, fixed-rate mortgage, and even clearing of late fees and legal fees.

Saving money each month? Lowering my interest rate? Wow that sounds great. What’s the catch?

Why would my lender help me?

Your mortgage lender has lost a huge amount of money due to foreclosures; most of the homes they foreclose on are underwater, meaning that the defaulted loans are significantly higher than the values of the properties. Sure, your lender will “lose” money when your payments go down, however, receiving any mortgage payment from you is better than no payment at all, or worse, having to foreclose on you.

How do I get a Mortgage Modification?

Friends, the name of the game is hardship. Well, it goes a little beyond simple hardship, but that’s what we’re going to start with. The first step to getting a Home Loan Modification is showing your lender that you simply can no longer afford to make your mortgage payments on time.

Now, different lenders adhere to different criteria for determining your “affordable” payment. Many lenders participate in Making Home Affordable, for example, wherein and aside from other guidelines, your “affordable” payment is 31% of your gross income (income before taxes).

Other lender’s use different guidelines to qualify you. With Indymac, for example, the magic percentage of your gross income is 38% (under FDIC’s Mod-in-a-Box program). This “affordable” payment is the total of your Principal, Interest, Taxes, Insurance, and HOA Fees (if applicable).

Still other lenders utilize an archaic system of totaling up your total net income, then subtracting expenses. For many “in-house”, non-Government backed Loan Workout programs, lenders may use a combination of both qualification methods.

Getting qualified is as simple as contacting an expert who can aid you. An expert can also ensure you hit key target hardships that will help you qualify for a Mortgage Modification, and, being a wonderful expert, I’m going to give you a couple of the best hardship’s for free, right here!

Justin’s Acceptable Loan Modification Hardships

  • Reduction of Income. I.e. – Unemployment, underemployment, reduction in work hours, reduced pay, decrease in business earnings (if you are self-employed).
  • Change in household finances. I.e. – Death in family, illness, divorce, incarceration, disability, adoption, child birth, care of relatives and family.
  • Increased expenses. I.e. – ARM (Adjustable Rate Mortgage has adjusted or will adjust), medical and health care bills, utility bills, increased taxes.
  • Insufficient assets. I.e. – Cash reserves are not enough to pay mortgage and basic living expenses.
  • Monthly debt payments are too much! I.e. – Too many credit cards, home equity loans, other credit loans are choking me!

A Quick Guide to the Loan Workout Process

  1. Write a Hardship Letter. Need help writing a hardship letter?
  2. Get on the phone with your loss mitigation department. (There’s a complete list of lender loss mitigation department contact numbers at the bottom of the resources page of this website.)
  3. Set realistic expectations, and document your conversation with your lender – start a log – called Countrywide, 12:00 pm Saturday the 29th, spoke with Dave regarding HAMP Loan Modification, faxing over required documents.
  4. Send required documents that your lender needs – Bank statements, tax returns, paystubs, etc.
  5. Negotiate for the best terms that you can on your Loan Modification.
  6. Sign your Loan Workout agreement.

Alrighty, hopefully you’ve got a pretty good idea of what to do to get a Loan Modification. If you need assistance, the best place to get aid is by completing the form to the right. I know that we’ve covered a good deal of Loan Modification information, but there’s a good deal more Mortgage Loan Modification facts that you should know prior to contacting your lender, for example, which programs your lender participates in, and what the guidelines are of those programs. Also, you may want to find a direct contact number so that you don’t have to wait on hold for hours and hours. We’ve got that and more throughout this website, and experts are always standing by to offer you free advice and offer free consultation. We ask that if you do need loan modification representation, that you consider Modification Zoom first!