How to Modify Your Mortgage

There's no question that times are hard in this economy. Wages have been frozen for many. Some have received paycuts. And many more have even lost their jobs. Unfortunately, the loss of income doesn't mean that you no longer have to pay the bills. It just means that you no longer have the money to pay.

If you're a homeowner, this can mean that you're facing the possibility of losing your home. Don't panic. There are options available to you, but they aren't always easy to navigate and they certainly take persistence.

An important step is to call your mortgage company. If possible, this should be done before you fall behind, but if you already are behind, you still need to make that phone call. Most mortgage companies offer plans for homeowners who have fallen on hard times.

Don't listen to them if they say you have to miss a certain number of payments before you get help. This is not true. If you aren't getting the right information from the representative you're speaking to, or if you just want to talk to someone else, ask to be transferred to someone who can better serve your needs.

This process takes patience and work. You have to be willing to make phone calls, write letters and don't give up when your case is mismanaged (because unfortunately that seems to be the norm for this process). Sometimes you will have to send the same information multiple times. Just do it.

If you aren't making any progress, or feel like your case has been mishandled, you can have your case escalated to the office of the president. You can either ask to be transferred there from customer service or you can look for the number yourself on the company website. Many direct numbers can be found on Loan Safe (a forum for homeowners with lots of information about different loan companies and people's success and failure stories).

I've personally navigated this long and difficult process and got through it successfully. The plan we qualified for was the Making Home Affordable plan. This lowered our interest rate to 2.785% for five years, then 3.785% in the sixth year, and finally it stays at 4.75% for years 7-28 (the remaining term of our mortgage).

If we pay our mortgage on time every year for five years, we can get up to $5,000 extra paid toward the principal balance of our mortgage. That works out to be $1,000 for each year you make all twelve mortgage payments on time.

Getting this modification was an 18 month long process and was full of headaches, twists and turns. But it was all very much worth it to us in the end and dropped our payment by over $400 a month.

If you want to know more about our experiences throughout this process, you can find out all about it on my website, The Juggling Homemaker.

Don't worry if you don't have money to modify your mortgage. You shouldn't have to pay a cent to get this process done (unless you decide to hire an attorney to do the work for you). Modifying your loan is free if you do it on your own. Should you decide to hire someone to do the process for you, then make sure they're reputable. Don't do it without checking them out thoroughly with the Better Business Bureau. 

Also, know that your modification has to be done through your current mortgage company. If you do anything with another mortgage company, it would be a refinance, not a modification. So be careful with those fliers or advertisements you've been getting in the mail.

This process takes time, patience and perseverence. It can be done, but there are a few things you have to know to be successful.

• Be informed. If you're going through the government modification plan, then go to the Making Home Affordable website and read up on it. This helped us through the first hurdle of getting to do the trial after they first turned us down for being current on our loan. By reading that site, I was able to determine that I didn't have to miss any payments to get approved for the plan. I only had to show that I was in danger of default by providing them with our financial records.
• Find Support. Loan Safe was an invaluable resource for me. I got tips, ideas and phone numbers when things stalled for our case. I also was able to avoid some common pitfalls by finding out what went wrong for other people.
• Don't give up. It can be a long drawn-out process, but the sense of relief and accomplishment you get at the end of it is great!
• Don't be quiet! Tell anyone who will listen about what's going on with your case. The squeaky wheel gets the grease, right? However, don't get so irrate with the people handling your case that you cuss and disrespect them. This will not help your case. If you can't get on with the person you're working with, ask for someone else. It's that easy.
• Check, double-check and triple check. If something sounds wrong to you, or you aren't sure about what you're being told, look into it further. Make sure you take notes of what you were told and who told it to you. Keep asking until you're sure of the answer.

This isn't an easy process, but it's one that can make the difference in whether or not you lose your home.