It is imperative at the beginning stages of applying for a Loan Modification that you submit a complete Loan Modification package to the bank. Every bank has different guidelines, but generally request the same type of financial documentation to begin the Loan Modification process. If you are applying for the Obama Plan, which is known as the Home Affordable Modification Program (HAMP) it is essential that you submit the government form with the required financial documentation. A good tip when completing this form is to attach a separate sheet detailing your expenses, as this form does not allow for enough space to breakdown individual expenses. This will allow the bank to better assess your debt to income ratio when they begin to process your file.
The bank will require you to submit a Hardship Letter detailing the circumstances of your economic situation. It is important that you “briefly” explain to the Lender why you have not been able to pay your mortgage, but more importantly they want to be assured your financial situation will improve in the near future and that you will be able to afford your monthly mortgage payment. The banks will require that you submit your three most recent paycheck stubs, along with your three most recent bank statements. If you are self employed, you must provide a profit and loss statement. These financials are imperative to the package as the bank will use these financials to verify your income. The bank will require you provide two consecutive years worth of taxes, along with a 4506-T form. Make certain your taxes are signed and that your 4506-T is dated and your phone number is filled in. Many Borrowers leave these simple details undone and this can delay the processing of your file for weeks. The bank will want to verify that you live at the property, therefore a copy of a utility bill should be included in your package. Not including a copy of your utility bill could delay the process an entire month. It is best to include it from the beginning. If part of your income is based on a rental property, you must provide a copy of the rental lease agreement. Failing to do so will halt the income verification process. Remember, if a co-borrower’s income will be used to qualify for the Loan Modification, the above referenced financials must be submitted for them as well.
In terms of your monthly income, if you will claim someone contributes to your monthly income, you will be required to submit a Contribution Letter. This letter must be written by the contributing person and must include the amount they are contributing on a monthly basis. The contributing person will have to submit three paycheck stubs and a 4506-T form in order for the bank to verify their income. Many borrowers fail to include this contribution letter in their package and this too can delay the process needlessly. Submitting a complete financial package to the bank will not guarantee a Loan Modification, but it will ensure you do not have needless delays which can sometimes delay the process for months.
By: Ray Garcia, Esq.
Board Certified in Real Law by the Florida Bar
In my years of loan modification experience in the State of Florida, I’ve noticed several improvements in the loan modification process. The improvement that recently stands out to me the most comes courtesy of Bank of America. Bank of American has recently begun to implement a much more efficient method of collecting and reviewing documents for loan modifications. Now home owners are able to submit their documents for a loan modification via firstname.lastname@example.org.
The reason this method of collecting documents for a loan modification is so much more efficient than those methods used by other lenders is because the problem with other lenders is that they are unable to properly manage their files. Many lenders either lose the documents sent to them by the homeowners or they fail to upload them into their systems and thus allow the loan modification to fall through the cracks. Using Bank of America’s new method not only automatically uploads the documents into their modification review system. This system also assigns an analyst to review the information immediately rather than having to wait as long as 30 days to simply have an analyst assigned to review your documents.
Hopefully, procedures such as Bank of America uploading system will continue to catch on and allow the loan modification process to become, easier quicker and simply better.
In order to make Floridians more knowledgeable about the loan modification process, the Law Office of Ray Garcia, P.A. has published a series of tips that may help you in modifying your loan. These tips are not legal advice just actions to consider when attempting to do a loan modification.
Tip #1: Find out if your lender participates in the HAMP Program.
The Home Affordable Modification Program (HAMP) is the government sponsored loan modification program that many lenders are now participating in to modify loans for primary residences. When attempting to modify your loan you want to find out if your Florida lender provides HAMP loan modifications because if they do, you have a reference point for income and expense requirements along with qualification ratios. HAMP has published guidelines that allow you to determine what the lender is looking for and what calculations does your lender perform in order to determine whether you qualify for a loan modification. If you are able to determine whether or not your lender participates in the HAMP loan modification program you have a much better chance of modifying your loan, especially, if you are able to make this determination before you submit any financial information to your lender.