This is a quick overview of some of the things you need to know if you want to work out a mortgage loan modification with your lender. If you are able to come to an agreement, you may be able to use this to keep your home and stop it from going through foreclosure.
First and foremost, always remember that the loss mitigation worker is working against you. His employer is the bank, and the bank has trained him to try to get you to agree to pay as much as possible. That is why it 'loss mitigation, ' not 'mortgage assistance.' Loss mitigation is the bank's attempt to limit the amount of their losses. They will not give up a cent that they don't think they have to.
Prepare yourself thoroughly before you speak to your lender's loss mitigation department. Arm yourself with copies of all of your bills for the past year, both paid and unpaid. Also have copies of your pay stubs or other proof of income for at least one or two months. You might also be required to produce copies of your tax returns for the past two to three years. If there is a specific hardship that has come up which has impacted your ability to pay, you need to be able to prove it.
When you are working with a lender to get a modification, you must keep records of everything that is said, as well as any correspondence sent or received. Some banks are notorious for saying they didn't receive something when they did or trying to change the terms that were agreed to. Get a recording device for your phone and use it. Keep anything you get from the lender in the mail and keep copies of anything you send to the lender.
Don't spend your mortgage payments. Just because you are not paying the payment on the house right now doesn't mean it's all right to use the money to pay other debts or worse, to blow on things you don't need. Your lender will expect you to have some money to pay them as soon as you come to an agreement. Save the money so that you are ready when the time comes.
Most important of all, don't make an agreement that doesn't work for you. The bank will often make you an offer that actually increases your payment amount for a period of time to get you current, and then goes back to the normal payment amount. Unless you have gotten a raise since you started having trouble making ends meet, this is obviously not going to work. Keep at it until you get something that will work for you, and be prepared to walk away if no agreement can be made. Foreclosure is not the end of the world, and you may even find yourself better off if you can get yourself into a cheaper home with management rent or payments.
Janian & Associates
