Loan Modification: 10 Simple Tips for Success

If you’re behind on your mortgage or if you’re having trouble making payments, Bridge Street Development Corporation can help you find a solution to save your home through the Making Home Affordable Loan Modification program.

While this can be a complicated process, follow these 10 tips to help ensure a smooth and successful outcome:

1. Explain your hardship. Why are you behind? Was it a result of unemployment, or excess medical bills, or family emergencies that are making it difficult to make your mortgage payments? You’ll need to be able to explain your circumstances to your counselor and your mortgage company. Start by writing a hardship letter to illustrate to your lender exactly why you fell – or why you are falling – behind.
2. Document your income. Now is the time to gather your paystubs, bank deposits etc. – whatever documentation you can provide that will make up your total income. If you’re self employed, you’ll need to provide a profit and loss statement for the last 3 months or more.
3. Outline your expenses. In order to determine your mortgage payment’s affordability, the lender will evaluate your income vs. your expenses. As accurately as possible, write a list of your 3 monthly payments for groceries, utilities, child care, medical expenses, loans and credit cards, car payments, insurance, student loans, etc. Note: Current affordability guidelines require that your mortgage payment be no more than 31% of your total gross monthly income.
4. Gather your Federal Tax Returns. You’ll need to provide federal tax returns for the past two years as part of your financial picture.
5. Provide proof of insurance. You’ll want to have proof of insurance on hand to provide to the lender/counselor, as well.
6. Be prepared to interview with a counselor. As part of the process, you may need to meet with a counselor. At that meeting, the Counselor will explain how the program works, determine the best options for your situation and explain what happens next.
7. Stay connected. Follow up with all appointments, meetings, phone calls etc. and stay in contact with your counselor. Provide current contact information so that you can be reached quickly during the process.
8. Deliver documents as requested. Be sure to provide all documentation and information the lender and counselor requests as quickly as possible. Failure to follow up with any requests for information may delay the processing of your loan modification.
9. Keep careful records. Be diligent and document your conversations, the names of the people and organizations you spoke with, their phone numbers, when you spoke with them and what was discussed. Keep copies of all communications – letters, faxes, emails etc. – exchanged throughout the process.
10. Protect Yourself. Check out our pointers on Traps to Avoid When Modifying Your Mortgage and learn simple guidelines to avoid Foreclosure and Loan Modification Scams.