Four Tips for a Successful Loan Modification

For homeowners that are facing financial trouble and worried about foreclosure, loan modification (like the HAMP program) may represent the way out. In a loan modification, the lender and the homeowner agree to new terms, providing the homeowner with lowered monthly payments. This typically benefits both parties and the homeowners is able to keep the home while the lender is able to avoid the foreclosure process. But the process isn’t easy. Here are four tips to increase your chances of success:

Understand what you’re up against. The odds are not in your favor: in 2010, less than half of all loan modifications were successful, and not much has changed since. Once you accept this reality, you won’t be blindsided by unpleasant surprises.

Document everything. Seemingly everyone who has sought a HAMP modification has reported miscommunications and document losses. Different answers to the same question and being told to resubmit paperwork are common complaints. To speed up the process, keep a file of everything you send, update your file as you get new documents (such as a pay stub or bank statement), call the lender regularly for status reports on your modification, and make your trial payments as scheduled.

Inform yourself about the latest loan modification guidelines. While the HAMP program guidelines are quite specific (for example, they state that retirement assets are not considered) loan modification employees frequently reinterpret the rules, causing stress and confusion for applicants. Familiarize yourself with the guidelines and be prepared to defend your position if necessary.

If you are denied, re-apply. Although there are no provisions for an appeal process, you are allowed to reapply if your circumstances change after the denial.

Securing a loan modification is challenging, and it’s important that you have an experienced attorney on your team throughout the process. Please contact us today if you’d like to learn more!