You can do your own loan modification without paying a high fee to outside companies and lawyers. If you are having trouble paying your mortgage, have an adjustable rate or your value is upside down, it is possible to renegotiate your loan terms.
Instructions - Things You'll Need:
- two recent pay stubs
- two recent bank statements
- hardship letter
- financial budget
- recent comparable sales within a one mile radius
Step 1 - First write down your monthly budget before you contact the mortgage company.
They may ask you for this information over the phone on the first contact and you want to be prepared. You will have to have an income in order to qualify. And your income will have to cover your monthly expenses plus your proposed mortgage payment. They will ask you every detail. Car fuel, groceries, utilities, credit cards, cell phone, car insurance, etc. So carefully plan this out to show that you have enough money leftover to pay your proposed mortgage. If you do not have an income, skip this step and move to step 6
Step 2 - You have to have a hardship.
Such as illness, job loss, payment has adjusted and you can no longer afford it, etc. Write this down in a tear jerking letter. Include exact dates if laid off or change of job or hours have slowed down. This includes illness whether it's yours or a family member that you have to take care of. Also death in the family. Or whatever the problem is.
Step 3 - Contact your mortgage company.
If you have two, you will need to contact both. Ask for the loan workout department. They may have their own forms or they will advise you exactly what they need. Let them know your dilemma, they may just walk you through it themselves. It may be easier than you thought. All mortgage companies are different!
Step 4 - Depending on your situation, you will either be requesting;
A) payment deferment.
B) modification of interest rate.
C) principal balance to be lowered to the present market value.
D) combining your first and second loan (This is possible if you have a first and second with the same company)
Again this will all depend on the mortgage company who handles your loan. At this point, your mortgage company should be walking you through the follow up steps.
Step 5 - Very important to follow up constantly and consistently!
They should assign you to a case worker. If they tell you it takes 3 weeks for an answer, call back in two! Especially if you are in a foreclosure situation.
Step 6 - If you do not have an income due to lay off, illness or other, you may not qualify.
However, contact your mortgage company anyways and give them a proposal as to how you plan on getting back on your feet. They may offer a payment deferment. (put the past due payments at the end of the loan)
Tips & Warnings
If you do not have cooperation from the first person answering your call, ask for a supervisor and do NOT let them tell you they cannot transfer you, be insistent!! If you are still not successful, ask for the investor's phone number that owns your home. Most people do not realize that the mortgage companies are usually only servicing companies and are not the ones who loaned you the money, even the bigger companies.
If you are prepared with comparable sales in your area (you can get them from real estate web sites)..you may be able to negotiate the balance of your loan. Some companies have actually lowered balances to the current market value.
Lawyers and mortgage brokers are charging a high fee for this service. Sometimes as high as $3000. You can do this for free by doing your own leg work. Most mortgage companies are open late evenings and Saturdays to accept calls.
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