How To Get A Loan Modification Approved

You must demonstrate a real financial need to qualify for a mortgage loan modification, and you will be required to provide documentation to support your request for a loan modification to get approved. Normally you will need to provide last two months bank statements as well as pay stubs. Remember you need to prove to the lender that you are in fact in need of help but can and will have the means to continue payment. You will be required to complete a financial form, listing all forms of income and your monthly debt obligations such as credit cards, car loans, utilities, etc. A quick analysis of your debt to income ratio (gross monthly income divided by your total monthly obligations) will give your mortgage lender a clearer picture of your current financial position. Unfortunately, most mortgage lenders will not consider a loan modification request until the debtor is severely delinquent on their current mortgage, which often begins when the mortgage is more than 90 days delinquent. You will be required to provide some form of proof of income, such as recent pay stubs or a recent bank statement.

6 Steps To Get Your Loan Modification Approved

1. Describe how the borrower got in trouble. Provide a loan hardship letter. What caused the borrower to fall behind in his mortgage payments? Give as much detail as possible. Did the payment amount recently reset on his or her ARM mortgage to a higher monthly payment? Did your borrower suffer a loss of a job or lengthy illness? Did your borrower go through a separation from his or her spouse and now only one person's income is being used to make the payment?

2. Express your borrower's desire to keep his or her home and to make the modified payment in the future. Tell a story that convinces the lender that the borrower will pay on the modified payment terms in order to keep their home for the long term.

3. List borrower's attempts to sell the property if any.

4. Describe the occurrence of recent events that will help the borrower make the modified payment. Did the borrower regain employment recently? Did the borrower just now recover from an illness and is back to work?

5. Make a statement regarding how the proposed modification will improve the situation for the lender. For example, without this modification, your client will lose his property in foreclosure and the lender will have to take extreme losses by selling the home in this market.

6. List your expenses correctly. Although I put this at number six, it is one of the most important parts of the process. The first five above are part of your sob story to win them over. Now, you go for the jugular with the numbers. You have to prove your situation by documenting all of your expenses without remorse. In the past you would list just mortgage payments, car payments, and credit card payments to qualify for a loan. For a loan modification to be approved you must list all of your expenses including diapers and all living expenses including granpas medication. This is where you throw the kitchen sink at them (hint). Take some time to write this all down. Do it right the first time, you might only have one shot at this.

Talk to your bank. Find out what it takes to be offered a loan modification. Second mortgages are more vulnerable to loss of their position if the home goes to foreclosure auction. First mortgages have first claim on the money generated at the sale. Bids usually do not go high enough to pay the second mortgage any of the proceeds. This means that they would far rather offer a loan modification than receive nothing from a foreclosure sale. It may be that a loan modification could indeed save your home and your credit. To say that it is more than worth it to find out if you can get one, would be the understatement of the decade. Call, talk, plead, see what kind of deal you can get from your lender. I wish you good luck and success as you try to get a loan modification in place to your benefit.

If you would like to learn more and really increase your odds at getting your loan modification approved, get a copy of the free loan modification help and strategy ebook for yourself or a friend with mortgage troubles.