Have Documentation Ready Before Seeking a Mortgage Loan Modification

Posted by  on Jan 29, 2010

Many homeowners have complained about delays when trying to get a mortgage workout through the government's loan modification or refinance program. While procedures in place at mortgage lenders (or a lack of them) have certainly contributed to some of the problems, borrowers also may bear some responsibility for delays by not having paperwork together. Use the following guide to better communicate with your home loan servicer from the beginning of the process.

Have Documentation Ready

Gather necessary financial documents before contacting the lender to discuss your mortgage loan. Among the documents you need are:

  • Most recent mortgage statement;
  • Pay stubs or statements that show pretax income;
  • Most recent tax return;
  • Account balances and minimum payments for credit cards, auto loans, and other debt;
  • Statement for home equity line of credit (HELOC);
  • Hardship letter detailing your financial situation and why you are seeking a loan modification or refinancing.

Mortgage Loan Servicers Are Overwhelmed

"America's servicers are handling an extraordinary volume of calls from distressed borrowers seeking an Home Affordable Modification under the President's program. By taking a few moments to gather these documents borrowers can help their servicer understand their financial situation and reduce the need for repeat calls," said Ingrid Beckles, senior vice president of default asset management at Freddie Mac.

Who Has Been Helped?

More than 850,000 homeowners have median mortgage loan payment reductions exceeding $500, according to the U.S. Department of the Treasury and the Department of Housing and Urban Development. Also, more than 100,000 mortgages have been permanently modified. Another 1 million have received temporary mortgage modifications.

Efforts to work with distressed homeowners have moved slowly at times. But homeowners should do their part to provide necessary documents on time and work with mortgage loan servicers. If you don't qualify for a modification, discuss the possibility of a refinance.


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